Which of the following explains why flood control is a public good?
A. It is not divisible and therefore cannot be kept from people who do not pay.
B. Flood control is paid for by taxpayers.
C. There are external benefits associated with its consumption.
D. The private sector usually produces flood control projects.
Answer: A
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Government shares in the gains to risk-bearing activities but does not _____
a. share in the losses when depreciation is straight-line b. share in the losses when the investor has no other income c. share in the losses when depreciation is accelerated d. share in the losses when capital losses are allowed
The marginal tax rate is defined as
a. tax liability divided by taxable income. b. tax liability multiplied by taxable income. c. the change in tax liability divided by the change in taxable income. d. the change in tax liability minus the change in taxable income.
You love peanut butter. You hear on the news that 50 percent of the peanut crop in the South has been wiped out by drought and that this will cause the price of peanuts to double by the end of the year. As a result, your demand for peanut butter
a. will increase but not until the end of the year. b. increases today. c. decreases as you look for a substitute good. d. shifts left today.
In a free-market economy, a product that entails a spillover benefit will be:
A. overproduced. B. underproduced. C. associated only with goods and services provided by the government. D. produced at the optimal level.