ECO 204 Week 4 Quiz
1. Marginal damage cost is the
additional harm done by increasing the level of an externality-producing activity by one unit.
additional cost to society resulting from a privately owned firm producing one more unit of a product.
amount a consumer pays to produce an additional unit of a good.
additional cost to society resulting from a consumer consuming one more unit of a good.
2. Tax shifting ________ .
is the way in which a tax is structured
is the ultimate distribution of a tax's burden
occurs when taxes cause prices to increase, but wages to fall
occurs when taxed agents can alter their behavior and do something to avoid paying a tax
3. The official poverty line in the United States is set ________ .
equal to one-half the average income in the United States
at three times the cost of the Department of Agriculture's minimum food budget
at three times the cost of the Department of Housing's minimum housing allowance
at the amount necessary to allow an individual to buy the same market basket of goods that the average urban wage earner can afford
4. If the marginal tax rate equals the average tax rate, the tax would be
5. Air pollution generated by a steel mill is an example of
a positive production externality.
a negative production externality.
a public good.
the free-rider problem.
6. In 2007 about 14% of personal income in the United States came from
wages and salaries.
7. If the government levies a tax on a chemical company that created an external social cost, the tax should equal marginal ________ to ensure an efficient correction.
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