Any efficient allocation of public goods will be such that the sum of the marginal benefits is equal to the marginal cost -- but the level of the public good may differ depending on how income is distributed in the population.
Answer the following statement true (T) or false (F)
True
Rationale: Unless tastes are quasilinear in the public good, redistribution of income gives rise to income effects that will cause the demands (and MWTP) for public goods to shift.
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Consider a good whose own price elasticity of demand is -1.5 and price elasticity of supply is 0.5. The fraction of a specific tax that is borne by producers is ________
A) 0 B) 0.25 C) 0.5 D) 0.75 E) 1
Financial institutions are known as financial intermediaries because they serve as go-betweens, which link _____ and _____
a. the government; the taxpayers through IRAs b. savers; borrowers c. employers; employees d. firms; the government e. firms; consumers
The price received by sellers in a market will decrease if the government
a. increases a binding price floor in that market. b. increases a binding price ceiling in that market. c. decreases a tax on the good sold in that market. d. None of the above is correct.
Suppose that Thom experiences a greater loss in utility if he loses $50 than he would gain in utility if he wins $50 . This implies that Thom's
a. marginal utility diminishes as wealth rises, so he must be risk averse. b. marginal utility diminishes as wealth rises, but we can't tell from this if he is risk averse. c. marginal utility increases as wealth rises, so he must be risk averse. d. marginal utility increases as wealth rises, but we can't tell from this if he is risk averse.