As the tax on a good increases from $1 per unit to $2 per unit to $3 per unit and so on, the

a.tax revenue always decreases, and the deadweight loss always increases.

b.tax revenue always increases, and the deadweight loss always increases.

c.deadweight loss increases at first, but it eventually peaks and then decreases.

d.tax revenue increases at first, but it eventually peaks and then decreases.

2.A tax on imported goods is called a

a.trade tax.

b.quota.

c.tariff.

d.supply tax.

3.If the demand for leather decreases, producer surplus in the leather market

a.may increase, decrease, or remain the same.

b.remains the same.

c.decreases.

d.increases.

4.Which of the following is an example of a positive externality?

a.An avid fisherman buys new fishing gear for his next fishing trip.

b.The mayor of a small town plants flowers in the city park,

c.A college student buys a new car when she graduates.

d.Local high school teachers have pizza delivered every Friday for lunch.

5.If a sawmill creates too much noise for local residents,

a.noise restrictions will force residents to move out of the area.

b.a sense of social responsibility will cause owners of the mill to reduce noise levels.

c.the government should avoid intervening because the market will allocate resources efficiently.

d.the government can raise economic well-being through noise-control regulations.

6.The particular price that results in quantity supplied being equal to quantity demanded is the best price because it

a.maximizes costs of the seller.

b.minimizes the expenditure of buyers.

c.maximizes the combined welfare of buyers and sellers.

d.maximizes tax revenue for the government.

7.Because rhinos roam freely in many countries in Africa, each individual rhino poacher has

a.a strong incentive to kill as many rhinos as he can find.

b.a strong incentive to protect the rhinos.

c.the ability to save the rhinos.

d.None of the above is correct.

8.Hiring a lawyer to write and enforce a contract between parties wishing to solve an externality is an example or

a.an implicit cost.

b.a sunk cost.

c.an opportunity cost.

a.a transaction cost.

9.Anna is a part-time piano tuner. Those who use her service are willing to pay $135 per tuning. In a typical week, Anna would be willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. If Anna is rational in deciding how many pianos to tune, her producer surplus would be

a. $-15.

b. $20.

c. $75.

d. $30.

10.Jane is willing to pay $129 for a pair of shoes for a party. She finds a pair at a discount outlet for $109. Jane's consumer surplus is

a. $20.

b. $109.

c. $29.

d. $129.

11.A town with 30,000 residents recently conducted a survey in which the 30,000 residents said that a public library would be worth $30 to each of them. The cost to build the library is $500,000, so it is built. The town's residents all enjoy the library, but when asked for donations to pay for the library, the contributed only a total of $100,000. This is likely because

a. this library was an example of the Tragedy of the Commons.

b. the survey overstated how much the library benefited each resident; otherwise, they would have given $500,000 in donations.

c. most residents are probably free-riders at the library.

d. the cost of the library exceeded the social benefits.