Suppose the government imposes a tax of 10 percent on the first
$40,000 of income and 20 percent on all income above $40,000. What are
the tax liability and the marginal tax rate for a person whose income
is $50,000?

$6000 and 20 percent, respectively.

In a long run equilibrium

excess capacity applies to monopolistically competitive firms but not
to competitive firms

for a monopolist, marginal revenue is

less than price, whereas marginal revenue is equal to price for a
perfectly competitive firm

in designing a tax system, policymakers have two objectives that are
often conflicting. they are

efficiency and equity

firms may experience diseconomies of scale when

large management structures are bureaucratic and inefficient

a city street is

a common resource when it is congested, but it is a public good when
it is not congested

why is the commercial value of ivory a threat to the elephant, while
the commercial value of beef is the cows guardian?

elephants are a common resource

by driving onto a congested road for which no toll is charged, a driver

all of the above are correct

when a monopolistically competitive firm is in long-run equilibrium

price is equal to average total cost

how many streetlights would the greens like to install

3

in comparison to perfect competition, monopolistic competition is
characterized by

excess capacity

a rational pricing strategy for a profit maximizing monopolist is

price discrimination

how much profit will the airline earn If it engages in price discrimination

55000

the freerider problem makes it unlikely that poverty will be entirely
eliminated through private charity

TRUE

one benefit of the patent system is that it encourages the production
of technical knowledge

TRUE

farmer McDonald sells wheat to a broker in Kansas city, Missouri.
because the market for wheat is generally considered to be
competitive, mr. McDonald maximizes his profit by choosing

the quantity at which market price is equal to mr. mcdonalds marginal
cost of production

the cost of producing an additional unit of a good is not the same as
the average cost of the good

TRUE

if revenue from a gasoline tax is used to build and maintain public
roads, the gasoline tax may be justified on the basis of

the benefits principle

wanda own a lemonade stand. she produces lemonade using five inputs:
water, sugar, lemons, paper cups, labor. her costs per glass are as
follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for
cups, an $0.10 for the opportunity cost of her labor. she can sell 300
glasses for $0.50 each. what are wandas implicit costs per glass

$0.10`

the competitive firms short run supply curve is that portion of the

marginal cost curve that lies above average variable cost

firm c is experiencing diseconomies of scale

TRUE

which of the following best describes the tax schedule in 2009?

progressive tax

when the marginal product of an input declines as the quantity of
that input increases, the production function exhibits

diminishing marginal product

if the firms marginal cost is $11, it should

reduce production to increase profit

efficient scale is reached

at 154.92 units

what is marginal revenue from selling the third unit

$120

for a profit maximizing monopolistically competitive firm, marginal
revenue exceeds marginal cost in

neither the short run nor the long run

which of the following is not a characteristic of a perfectly
competitive market

many firms have market power

when a certain monopoly sets its price at $8 it sells 64 units. when
the monopoly sets its price at $10 it sells 62 units. the marginal
revenue for the firm over this range is

$54