1.Before the flu season begins, Jeremy gets a flu shot. As a result, Jeremy and
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Question
1.Before the flu season begins, Jeremy gets a flu shot. As a result, Jeremy and several of his friends and relatives avoid the flu for the entire flu season. It would make sense to argue that
2.
Which of the following goods is rival in consumption and excludable?
3.Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $50,000?
4.A firm that produces and sells furniture gets to choose
A. the size of its factories in the short run but not in the long run.
5.The average-fixed-cost curve is constant.
Which of the following goods are likely to be sold in a monopolistically competitive market?
7.Table 17-14 This table shows a game played between two players, A and B.
The payoffs in the table are shown as (Payoff to A, Payoff to B).
Refer to Table 17-14. If both players choose their best strategies, player A will earn a payoff of
8.A pretzel-stand owner in Chicago hires workers to make hot pretzels and sell them to customers. If the firm is competitive in both the market for pretzels and in the market for pretzel-makers, then it has
A. flu shots provide a positive externality, and that flu shots should be subsidized. B. the externality generated by flu shots is more like the externality generated by education than the externality generated by pollution. C. if flu shots are not subsidized, then the number of people getting flu shots will be smaller than the socially optimal number. D. All of the above are correct.2.
Which of the following goods is rival in consumption and excludable?
A. national defense B. a box of sparklers C. a parade D. a fireworks displayExplanation / Answer
Answers,
1. B) the externality generated by flu shots is more like the externality generated by education than the externality generated by pollution.
2. B) a box of sparklers
3. C). $6,000 and 20 percent, respectively
Tax liability Calculated by,
Tax Liability = ($40000 x 0.10 ) + ($ 10000 x 0.20 ) = $ (4000+ 2000) = $ 6000
Marginal Tax rate= 20% ( From the tax slab of the tax payer's income level)
4. D). All of the above are correct.
Since he being the producer can think of all the above alternatives, he is the boss.
5. b). FALSE
Since AFC (Average Fixed cost ) = Fixed Cost / Quantity
Fixed cost is constant , but as Q, a variable is included the AFC becomes a variable too.
6. C) breakfast cereal
Since the breakfast cereal has different varieties and the competetion is on the variety of same cereals.
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