Suppose that in a month the price of a gallon of milk increases from $2 to $2.50. At the same time, the quantity of gallons of milk demanded decreases from 100 to 80. The price elasticity of demand for gallons of milk (calculated using the midpoint formula) is approximately:
A. 0.11.
B. 0.2.
C. 1.
D. 1.2.
Answer: C
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Which of the following is an asset of a family?
A. Unpaid credit card balance B. Mortgage C. Checking account balance D. Student loan
Suppose the tax amount on the first $10,000 income is $0; $2000 on the next $20,000; $4000 on the next $20,000; $6000 on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $30,000 and Family B has income of $80,000 What is the marginal and average tax rate for each family?
A) Family A: marginal—10 percent; average—6.7 percent; Family B: marginal—30 percent; average—15 percent. B) Family A: marginal—10 percent; average—20 percent; Family B: marginal—30 percent; average—23 percent. C) Family A: marginal—10 percent; average—10 percent; Family B: marginal—40 percent; average—40 percent. D) Family A: marginal—10 percent; average—15 percent; Family B: marginal—40 percent; average—20 percent.
Those who argue that welfare programs are a drag on the economy are of the view that welfare programs funded by taxes:
a. reduce the opportunity cost of labor. b. raise the incidence of poverty and income inequality. c. raise the incentive to work. d. reduce the tax-liability of the tax-payers. e. reduce the demand for labor.
The World Bank defines severe poverty as
A. An income level of less than $3.10 per person per day. B. An income level that does not allow an individual to buy basic necessities. C. An income level of less than $1.25 per person per day. D. An extreme lack of food.