Social Security benefits paid by the federal government
A. Are income transfers financed by taxes on workers and employers.
B. Have no effect on the decision of for whom output is to be produced.
C. Are not a transfer program because people must contribute to the fund in order to receive benefits.
D. Are classified as in-kind benefits.
Answer: A
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When people cannot be excluded from consuming a good, even if they have not paid for the good, competitive markets would
A) produce more of the good than society needs. B) allocate more resources than the efficient amount to the production of the good. C) produce the good so that people could enjoy a "free ride." D) produce less than the efficient quantity. E) eliminate the deadweight loss.
According to your authors, which of the following is necessary for real-world markets to clear?
A) Supply and demand curves B) The hard work of expert economists C) A well-managed national economic plan D) "Rules of the game," which allow for competitive bidding on scarce goods E) Nothing more than pure luck
Refer to Figure 4-11. Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?
A) The consumer will bear a greater share of the tax burden if the demand curve is D2. B) The consumer will bear a greater share of the tax burden if the demand curve is D1. C) The consumer will bear the entire burden of the tax if the demand curve is D1 and the producer will bear the entire burden of the tax if the demand curve is D2. D) The consumer's share of the tax burden is the same whether the demand curve is D1 or D2.
When choosing the right amount of a public good to supply, the government often:
A. guesses, because people have an incentive to overstate a good's value. B. provides too much, because people have an incentive to understate a good's value. C. provides too little, because people have an incentive to overstate a good's value. D. fails to provide it, because people have an incentive to understate a good's value.