Question 1

Education has an impact on labour supply because:

Accepted Answer

A)  students choose university programs based on the consumption benefits they will receive
B)  it is costly and time-consuming
C)  it exhausts students who later do not have the energy to look for employment
D)  the opportunity cost of education is zero since government institutions subsidize the cost
E)  college and university graduates find it more difficult to acquire jobs than do those without any postsecondary educationF) A) and D)
G) A) and B)

Question 2

The most important determinant of labour income is:

Accepted Answer

A)  education
B)  experience
C)  job segregation
D)  working conditions
E)  productivityF) B) and D)
G) All of the above

Question 3

Price ceilings and price floors:

Accepted Answer

A)  cause surpluses and shortages, respectively
B)  make the functioning of free markets more efficient
C)  interfere with the efficient operations of free markets
D)  shift demand and supply curves
E)  shift demand curves but not supply curvesF) B) and C)
G) B) and E)

Question 4

0 and S1 represents all spillover effects in this market,excess benefit when output is at Q0 equals the area: A) under the entire demand curve D B) separating the lines S1 and D between Q1 and Q0 C) separating the lines D and S1 between the vertical axis and Q1 D) separating the lines D and S0 between the vertical axis and Q0 E) separating the lines D and S1 between the vertical axis and Q1, minus the area separating the lines S1 and D between Q1 and Q0" class="answers-bank-image d-inline" rel="preload" >
-In the first diagram,if the distance between S0 and S1 represents all spillover effects in this market,excess benefit when output is at Q0 equals the area:

Accepted Answer

A)  under the entire demand curve D
B)  separating the lines S1 and D between Q1 and Q0
C)  separating the lines D and S1 between the vertical axis and Q1
D)  separating the lines D and S0 between the vertical axis and Q0
E)  separating the lines D and S1 between the vertical axis and Q1, minus the area separating the lines S1 and D between Q1 and Q0F) A) and D)
G) B) and D)

Question 5

If the demand for a product is perfectly inelastic,the incidence of an excise tax will be:

Accepted Answer

A)  entirely on buyers
B)  mostly on buyers
C)  entirely on sellers
D)  mostly on sellers
E)  neither on buyers nor sellersF) All of the above
G) D) and E)

Question 6

Which of the following contributes to income inequality?

Accepted Answer

A)  differences in ability
B)  differences in consumer tastes
C)  differences in the use of leisure time
D)  differences in the number of newspapers delivered to various regions
E)  the transfer payments provided by various levels of Canadian governmentsF) None of the above
G) A) and D)

Question 7

The existence of spillover effects weakens the efficiency with which the market system functions because they:

Accepted Answer

A)  are a major source of inflation
B)  mean that certain essential goods and services do not get produced at all
C)  are a major source of employment
D)  cause certain goods to be overproduced or underproduced
E)  can cause deflationF) C) and D)
G) B) and E)

Question 8

Which of the following involves the creation of human capital?

Accepted Answer

A)  the XYZ Corporation upgrades the machinery on its assembly line
B)  a worker becomes more satisfied with his/her job
C)  Smith buys 30 shares of common stock
D)  a homemaker decides to enter the labour force
E)  Jones receives apprenticeship training as a carpenterF) All of the above
G) A) and D)

Question 9

Which of the following is most likely to be accompanied by spillover benefits?

Accepted Answer

A)  the construction of a nuclear power plant
B)  purchasing a car
C)  eating dinner at an expensive French restaurant
D)  being immunized for measles
E)  watching a situation comedy TV showF) All of the above
G) A) and B)

Question 10

The highest 20 percent of households in the income distribution receive about:

Accepted Answer

A)  35 percent of total pre-tax income
B)  47 percent of total pre-tax income
C)  52 percent of total pre-tax income
D)  60 percent of total pre-tax income
E)  63 percent of total pre-tax incomeF) A) and B)
G) B) and D)

Question 11

-The imposition of the tax causes:

Accepted Answer

A)  no change in the consumer surplus and producer surplus
B)  the consumer surplus to rise and the producer surplus to fall
C)  the consumer surplus to fall and the producer surplus to rise
D)  the consumer surplus and producer surplus to both fall
E)  the consumer surplus and producer surplus to both riseF) A) and D)
G) A) and B)

Question 12

0 and S1 represents all spillover effects in this market,then the requirement of marginal-cost pricing is met: A) at the point on S1 whose horizontal coordinate is Q1 B) at the point on S0 whose horizontal coordinate is Q1 C) at the point on S1 whose horizontal coordinate is Q0 D) at the point on S0 whose horizontal coordinate is Q0 E) at the origin" class="answers-bank-image d-inline" rel="preload" >
-In the first diagram,if the distance between S0 and S1 represents all spillover effects in this market,then the requirement of marginal-cost pricing is met:

Accepted Answer

A)  at the point on S1 whose horizontal coordinate is Q1
B)  at the point on S0 whose horizontal coordinate is Q1
C)  at the point on S1 whose horizontal coordinate is Q0
D)  at the point on S0 whose horizontal coordinate is Q0
E)  at the originF) A) and B)
G) A) and C)

Question 13

Risk-taking contributes to income inequality because:

Accepted Answer

A)  regardless of the size of the risk, the returns of risk-taking remain fairly constant
B)  the rewards from risk-taking fluctuate widely
C)  all risk-takers are characteristically high-income earners
D)  all risk-takers face the threat of bankruptcy
E)  all risk-takers receive financial help from governmentsF) A) and E)
G) All of the above

Question 14

-The consumer surplus when 1 million units of the product in this market are consumed is:

Accepted Answer

A)  $2 million
B)  $4 million
C)  $6 million
D)  $8 million
E)  $10 millionF) B) and E)
G) B) and D)

Question 15

Human capital is best defined as:

Accepted Answer

A)  the income-earning productive skills and knowledge that workers acquire from education and training
B)  the substitution of labour for machinery in the production process
C)  any productive asset that must be combined with labour to be productive
D)  the exchange of money for other assets
E)  the substitution of machinery for labour in the productive processF) A) and E)
G) A) and D)

Question 16

-A market's consumer surplus and producer surplus are maximized when:

Accepted Answer

A)  the market's total benefit is maximized
B)  the total costs of producers in the market are minimized
C)  the consumer surplus minus the producer surplus is maximized
D)  the producer surplus minus the consumer surplus is maximized
E)  at the perfectly competitive equilibriumF) C) and D)
G) B) and D)

Question 17

Which of the following statements is correct?

Accepted Answer

A)  Private goods yield direct benefits to the purchaser and are financed by government.
B)  Public goods yield widespread spillover benefits and are purchased by government with tax revenues.
C)  Public goods are bought voluntarily out of private incomes and yield no significant spillover benefits.
D)  Public goods are bought voluntarily out of private incomes and yield widespread spillover benefits.
E)  Private goods are often public goods as well.F) A) and E)
G) None of the above

Question 18

Job discrimination occurs when:

Accepted Answer

A)  a worker is hired, paid, or promoted based on aspects other than credentials or performance
B)  a worker is promoted based on skill
C)  workers receive equal pay for providing identical services
D)  equilibrium is affected by shifts in labour demand
E)  equilibrium is affected by shifts in labour supplyF) A) and E)
G) C) and D)

Question 19

-The total tax collection of the excise tax shown in the graph is the area:

Accepted Answer

A)  acdf + efd
B)  acdf
C)  efd
D)  0cdg
E)  0afgF) A) and E)
G) B) and D)

Question 20

A price ceiling means that:

Accepted Answer

A)  the relevant product is currently available in excess supply
B)  the government is imposing a legal price that is below the equilibrium price
C)  sellers are trying to impose a minimum price to raise their revenues
D)  the government is imposing a legal price that is above the equilibrium price
E)  buyers are attempting to impose a minimum price to minimize their expendituresF) A) and E)
G) C) and D)

Exam 7: Economic Welfare and Income Distribution

The most important determinant of labour income is:

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Which of the following is most likely to be accompanied by spillover benefits?

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The highest 20 percent of households in the income distribution receive about:

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Price ceilings and price floors:

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-A market's consumer surplus and producer surplus are maximized when:

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Education has an impact on labour supply because:

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A price ceiling means that:

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Which of the following involves the creation of human capital?

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If the demand for a product is perfectly inelastic,the incidence of an excise tax will be:

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Job discrimination occurs when:

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-The total tax collection of the excise tax shown in the graph is the area:

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The existence of spillover effects weakens the efficiency with which the market system functions because they:

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-The consumer surplus when 1 million units of the product in this market are consumed is:

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Human capital is best defined as:

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Risk-taking contributes to income inequality because:

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Which of the following contributes to income inequality?

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Which of the following statements is correct?

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-The imposition of the tax causes:

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-In the first diagram,if the distance between S0 and S1 represents all spillover effects in this market,then the requirement of marginal-cost pricing is met:

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-In the first diagram,if the distance between S0 and S1 represents all spillover effects in this market,excess benefit when output is at Q0 equals the area:

Correct AnswerverifiedShow Answer

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-In the first diagram,if the distance between S₀ and S₁ represents all spillover effects in this market,then the requirement of marginal-cost pricing is met:

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-In the first diagram,if the distance between S₀ and S₁ represents all spillover effects in this market,excess benefit when output is at Q₀ equals the area:

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