Leo is a welfare recipient who qualifies for two means-tested cash benefit programs. If he does not earn any income, he receives $225 from each program. For each dollar he earns (which his employer is required to report to the welfare agency), his benefit from each program is reduced by 75 cents until the benefit equals zero. Suppose Leo earns $10. He will lose ________ from each benefit, for a total loss of ________.
A. $7.50; $15.00
B. $7.50; $7.50
C. $.75; $1.50
D. $.75; $1.00
Answer: A
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Both firm A and firm B emit 300 tons of pollution. Suppose both firm A and firm B have permits that allow each to emit 100 tons of pollution
If it costs $5,000 for firm A to eliminate 100 tons of pollution and it costs firm B $6,000 to eliminate 100 tons of pollution, then A) firm B will sell its permits to firm A for a price above $6,000. B) firm A will sell its permits to firm B for a price below $6,000. C) firm A will sell its permits to firm B for a price above $6,000. D) firm B will sell its permits to firm A for a price below $6,000.
For some fisheries in the U.S., the state or federal government imposes "gear restrictions" that limit the size of boats, nets, or other equipment that may be used to harvest the fish in a given body of water
The purpose of the gear restrictions is to: A) prevent everyone from using the common property resource (fish). B) make it harder for other members of society to harvest the resource. This reduces the opportunity cost of the resource for other members of society, and the marginal social cost is closer to the private cost. C) increase the private cost of using the resource so that the private cost is closer to the marginal social cost. D) maintain traditional ways of harvesting fish, which is valuable for promoting tourism.
A prisoner's dilemma illustrates situations in which:
A. there is a conflict between the narrow self-interest of individuals and the broader interests of a group. B. efficiency is an important social goal. C. resources with the lowest opportunity cost should be used first. D. everyone does best when each person specializes in the activities in which he or she has a comparative advantage.
For a normal good, an increase in consumer income will cause the market demand for the product to:
A. decrease, which is a shift to the left of the demand curve. B. decrease, which is a shift to the right of the demand curve. C. increase, which is a shift to the left of the demand curve. D. increase, which is a shift to the right of the demand curve.