1. Markets produce 95 artichokes. The efficient quantity is 110. Which of the following is correct? A. Artichokes have no externalities. B. Artichokes have external costs. C. Artichokes have external benefits.

2. Hilary W. Haynes and Ankur J. Patel examined the effects of the Earned Income Tax Credit (EITC) on employment and poverty of single mothers. What was one of their conclusions?

A,Most of the benefits of the EITC went to high-income households.

B.The EITC did not have any effect on poverty.

C.Most of the benefits of the EITC went to businesses in the form of higher profits.

D.All of the above are correct.

E.None of the above are correct.

3.When the government gives a subsidy to sellers of donuts, what happens in the market for donuts?

When the government gives a subsidy to sellers of donuts, what happens in the market for donuts?

A.Demand shifts up.

B.Demand shifts down.

C.Supply shifts down.

D.Supply shifts up.

4.Nihau and Reifler ran an experiment in which they presented participants with a false claim that was consistent with their political beliefs. Then the researchers corrected the false claim. How did participants react to the correction?

Nihau and Reifler ran an experiment in which they presented participants with a false claim that was consistent with their political beliefs. Then the researchers corrected the false claim. How did participants react to the correction?

They accepted the correction, which supports the theory of rational irrationality.

They rejected the correction, which supports the theory of rational irrationality.

They rejected the correction, which is contrary to the theory of rational irrationality.

They accepted the correction, which is contrary to the theory of rational irrationality.

5.The government imposes a tax. Tax revenue is $50, and deadweight loss is $400. Which of the following is correct?

The government imposes a tax. Tax revenue is $50, and deadweight loss is $400. Which of the following is correct?

Supply and demand are price inelastic.

Supply and demand have the same price elasticity.

Supply and demand are price elastic.

6.The external cost of coal is $7. The private cost is $10. What is the optimal Pigouvian tax on coal?

The external cost of coal is $7. The private cost is $10. What is the optimal Pigouvian tax on coal?

$7

$17

$10

$3

7.Every year, the European Union collects millions of pounds of unsold butter from farmers and places the unsold butter in government warehouses. What could explain this?

Every year, the European Union collects millions of pounds of unsold butter from farmers and places the unsold butter in government warehouses. What could explain this?

The EU places a price floor on butter that is below the equilibrium price.

The EU places a price ceiling on butter that is above the equilibrium price.

The EU places a price ceiling on butter that is below the equilibrium price.

The EU places a price floor on butter that is above the equilibrium price.

8.What causes rational ignorance?

What causes rational ignorance?

It is costly to search for information, so it is not in your self-interest to become perfectly informed.

Politicians frequently break their promises, so it is rational to not believe them.

Information has an external cost, so markets provide less information than the efficient quantity.

Public funding for education has fallen over the past 30 years.

9.There is no tax or subsidy, and the equilibrium price is $20. After the government implements a policy, the pricethat buyers pay is $25, and the pricethat sellers receive is $17. What is the policy?

There is no tax or subsidy, and the equilibrium price is $20. After the government implements a policy, the pricethat buyers pay is $25, and the pricethat sellers receive is $17. What is the policy?

A tax of $5

A tax of $8

A subsidy of $8

A subsidy of $3

10.Exclusionary zoning would create $300 million in benefits and $500 million in costs. 6000 people would receive the benefits, and 4 million people would pay the costs. If voters are rationally ignorant, then...

Exclusionary zoning would create $300 million in benefits and $500 million in costs. 6000 people would receive the benefits, and 4 million people would pay the costs. If voters are rationally ignorant, then...

people who receive the benefits have a strong incentive to be informed about the policy.

people who pay the costs have a strong incentive to be informed about the policy.

All of the above are correct.

None of the above are correct.