Questions 7-10

QUESTION 7 The negative effect of a tax on the economic surplus of participants in a market should: be enough to convince the government that the tax is a bad idea. be weighed against the potential benefits of the public goods financed by the tax. O Insure that the tax will never be approved by voters. be ignored if the government needs to generate tax revenue. QUESTION 8 A good or service that is rival but nonexcludable is called a , and a good or service that is nonrival but excludable is called a O public good; private good commons good; public good commons good; collective good O public good; collective good QUESTION 9 Even if a tax imposed in a market generates a loss in surplus for the participants in that market, the tax could still increase economic efficiency if: O voters approve of the tax. the government needs to generate tax revenue. O the public expenditures financed by the tax lead to a big enough Increase in economic surplus. O the tax revenue is used to fund spending by local governments. QUESTION 10 Curly and Moe are considering living alone or being roommates and splitting the rent for the next twelve months. If they live alone, they each rent a one bedroom, one bath apartment for $500 per month, while if they are roommates, they can split a two bedroom, one bath apartment for $800 per month. The one difficulty they have is that Moe snores very loudly, Curly estimates the cost of poor sleep due to Moe's snoring at $150 per month. Moe could obtain a snore eliminating device for $50 per month. Curly would be willing to pay_ _per month to eliminate Moe's snoring. O exactly $50 O no more than $100 O up to $150 O nothing Click