If the government used the revenue from the excise tax on cigarettes to fund research on lung cancer treatment programs, this would be an example of
A. a benefits-received tax.
B. an ability-to-pay tax.
C. a vertical equity tax.
D. a user fee.
Answer: A
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Recall from Chapter 5: Other things constant, when households lower their time preferences, and demonstrate a willingness to postpone some present consumption for future consumption,
A) their savings increase. B) their savings decrease. C) the budget deficit increases. D) the budget deficit decreases.
Refer to Figure 16-7. The owners of the Lizard Lounge are considering the following four pricing options:
a. A single price scheme where the cocktail price equals the monopoly price.
b. A single price scheme where the cocktail price equals the competitive price.
c. A two-part tariff: a monopoly cocktail price and a cover charge that will generate total revenue equal to the area X.
d. A two-part tariff: a competitive cocktail price and whatever cover charge that will generate a total revenue equivalent to the area X + Y + Z.
Which pricing scheme(s) achieve the economically efficient outcome?
A) schemes a and c B) scheme b C) schemes b and d D) scheme d only
If a perfectly competitive firm with a known demand and random marginal cost is producing at a level in which the marginal cost is less than the expected marginal cost and the marginal revenue, which of the following is true?
A) To maximize expected profit, the firm should decrease production. B) To maximize expected profit, the firm should decrease production by one -half. C) The firm is maximizing expected profit. D) To maximize expected profit, the firm should increase production.
Consider the market for new DVDs. If DVD players became cheaper, buyers expected DVD prices to fall next year, used DVDs became more expensive, and DVD production technology improved, then the equilibrium price of a new DVD would
a. rise. b. fall. c. stay the same. d. could rise, fall, or remain unchanged.