Unit 6

Question 1

private good

Answer 1

not produced by gov

1. Rivalry
2. Excludability

Question 2

public good

Answer 2

produced by gov

1. non-rivalry
2. non-excludability

Question 3

effciency losses in public goods

Answer 3

MB>MC

Question 4

quasi-public goods

Answer 4

underproduced by private sector, benefit beyond individulal buyers (education, police, etc)

Question 5

gov expenditure

Answer 5

1. purchases (exhaustive)

2. transfer payments

Question 6

transfer payments

Answer 6

nonexhuastive (don’t create, SS or welfare)

Question 7

propietary income

Answer 7

lottery, tolls

Question 8

spending

Answer 8

1. pensions
2. defense
3. healthcare
4. interest

Question 9

revenue

Answer 9

1. personal income tax
2. Corporate tax
3. payroll tax
4. sales + excise tax

Question 10

deductions

Answer 10

donations, mortage, etc

*marg tax rate is highest paid > find AVG tax rate

Question 11

corporate tax

Answer 11

on profit, old (35%) v new(20-25%), progressive

Question 12

payroll tax

Answer 12

taken out of paycheck, regressive

Question 13

FICA

Answer 13

social security+medicare, proportional

Question 14

sales/excise tax

Answer 14

sin tax, proportional

Question 15

tax burden

Answer 15

1. benefits recieved principle

2. ability to pay principle

Question 16

benefits recieved principle

Answer 16

use service, pay taxes to finance
probs:
1. how gov determine benefits?
2. can’t apply to certain programs

Question 17

ability to pay principle

Answer 17

based on income, how much afforded

Question 18

progressive

Answer 18

income increase, % rate increase (personal income tax)

Question 19

regressive

Answer 19

rate decreases as income increases (sales tax, payroll, property)

Question 20

proportional

Answer 20

same for all (sales, corporate)

Question 21

tax incidence

Answer 21

degree to which tax falls on person

Question 22

tax elasiticty

Answer 22

more demand inelestic = more tax shifted to consumer

elastic = seller takes on

Question 23

effciency loss

Answer 23

DWL, society sacrifice net benefits, greater elasticity=great loss
- taxes may have=revenue not social cost

Question 24

minimize effciency loss

Answer 24

redistributive goals:

1. taxes redristribute income
2. reduce negative externalities

Question 25

anti-trust laws

Answer 25

1. Sherman Antitrust act 2. Clayton antitrust act 3. Federal trade commison act 4. Wheeler lea act 5. Celler-Kefauver act

Question 26

sherman antitrust act

Answer 26

fixing prices, vague, won 1 case

Question 27

clayton antitrust act

Answer 27

fix sherman a) outlaw price discrimination b) prohibit tying contract c) eliminate interlocking directorates

Question 28

federal trade commission act

Answer 28

send cease orders

Question 29

wheeler lea act

Answer 29

stop false advertising

Question 30

Celler-Kefauver act

Answer 30

limits mergers

Question 31

court interpretations

Answer 31

a) policy on monopolist be behavior/structuralist? | b) how should markets be defined?

Question 32

structuralist

Answer 32

#'s, too high market share=regulate

Question 33

behavorialist

Answer 33

if serves society, allow

Question 34

rule of reason

Answer 34

size doesn't matter, look at intent, carnegie

Question 35

90-60-30 theory

Answer 35

90 are, 60 prob, 30 no | loop hole - Du pont cellophane

Question 36

2 perspectives of gov involvement

Answer 36

1. active anti-trust | 2. laissez faire (market corrects it)

Question 37

3 types of mergers

Answer 37

horizontal, vertical, conglomerate

Question 38

horizontal merger

Answer 38

2 comp of same field

Question 39

vertical merger

Answer 39

buys manufacturing process

Question 40

conglomerate

Answer 40

owns businesses in mult. fields

Question 41

free rider

Answer 41

benefits but no contribution, demand down

Question 42

price fixing

Answer 42

collusion, per se violation (fines)

Question 43

other anti-trust activities

Answer 43

1. mergers 2. price fixing 3. price discrimination 4. tyingn contract

Question 44

tying contract

Answer 44

to get a, must buy b

Question 45

income inequality cause

Answer 45

1. ability 2. education+training 3. discrimination 4. preference+risks 5. unequal distribution of wealth 6. market power 7. luck/connections/misfortunes

Question 46

quintile/lorenz curve

Answer 46

Gini ratio 0(equality) - 1(inequality) problems: 1. income mobility 2. gov. redistribution of income

Question 47

growth of income inequality

Answer 47

why? a. demand of high skill workers b. demographic change c. trade/immigration

Question 48

equality efficiency trade-off

Answer 48

more income equality comes at cost of lost production/income

Question 49

accuracy of poverty #'s

Answer 49

1. cities (high cost of living) | 2. income v consumption

Question 50

entiltlements

Answer 50

transfer payments, us income maintenance system

Question 51

social insurance

Answer 51

partially replace lost earnings i. social security ii. medicare iii. unemployment

Question 52

public assistance

Answer 52

unable to earn income/have dependents i. supplemental security income (can't get SS) ii. temporary assistance for needy families (welfare) iii. SNAP iv. Medicaid (people on SSI or TANF)

Question 53

trade deficit

Answer 53

import greater than export (china)

Question 54

trade surplus

Answer 54

export greater than import (canada)

Question 55

3 types of goods

Answer 55

1. labor intensive 2. land intensive 3. capital intensive

Question 56

absolute advantage

Answer 56

who produces better

Question 57

comparative advantage

Answer 57

who gives up the least

Question 58

terms of trade

Answer 58

whats traded to get what you want

Question 59

avg tax %

Answer 59

avg tax%= tax/income

Question 60

marginal tax %

Answer 60

highest paid