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The Gini coefficient represents the - ratio of income

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Subject: Economics
Due on: 06/11/2017
Posted On: 06/11/2017 08:58 AM

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Question 1 (Multiple Choice Worth 4 points)

The Gini coefficient represents the

ratio of income between the richest and poorest nations in the world.
ratio of income between the richest and poorest families in the United States.
progressive tax system in the United States.
New York Stock Exchange index.
ratio of labor per manufacturing industries in the United States.


Question 2 (Multiple Choice Worth 4 points)

In an income distribution graph,

  1. the “y” axis measures the real gross domestic product (GDP) of the United States.
  2. the “x” axis measures the total population of the United States.
  3. the Lorenz curve measures and represents the distribution of income.
  4. the Lorenz curve is not required in an income distribution graph.
Only I
Only II
I and II
II and IV
I,II and III


Question 3 (Multiple Choice Worth 4 points)

Transfer payments such as food stamps are used by the government to

help small business sell more products.
help women and children in the United States.
redistribute income in the United States.
off set the cost of living.
all of the above.


Question 4 (Multiple Choice Worth 4 points)

The United States government uses the _______________________ as the official benchmark to distribute food stamps.

Herfindhal Hirschman index
poverty line index
Gini coefficient
Lorenz Curve
Social Security index


Question 5 (Multiple Choice Worth 4 points)

To promote private sector investment, a good or service can be made more attractive by making it more

rival.
non-rival.
expensive.
non-excludable.
excludable.


Question 6 (Multiple Choice Worth 4 points)

On a Lorenz Curve Graph, the space between the straight Line of Equality and the bowed Lorenz Curve identifies

  1. the Gini ratio
  2. the area of income inequality
  3. the area of income equality
  4. the area of economic potential
  5. the area of dead weight loss
Only I and II
Only I and III
Only I and V
Only I, II and V
Only IV and V


Question 7 (Multiple Choice Worth 4 points)

Government approach to the problem of externalities include

  1. regulations.
  2. taxes and subsidies.
  3. sales of licenses.
only I
only II
only III
I and II
I, II and III


Question 8 (Multiple Choice Worth 4 points)

The selling of fishing licenses by the government is an attempt to

  1. generate more money for the federal government.
  2. avoid situations like the Tragedy of the Commons.
  3. regulate the use of common resources.
only I
only II
only III
I and II
II and III


Question 9 (Multiple Choice Worth 4 points)

The federal government uses public policy and regulations in the economy in order to

  1. ensure fair competition.
  2. eliminate private property.
  3. control business transactions.
only I
only II
only III
I and III
II and III


Question 10 (Multiple Choice Worth 4 points)

A_____________ is imposed by the government on activities that have negative externalities

subsidy
tax
property rights
licensing agreement
state regulation


Question 11 (Multiple Choice Worth 4 points)

Angus cattle and American buffalo are both animals that can provide humans with food and hides for shoes and clothing. Buffalo nearly became extinct in North America. Angus cattle were never endangered. Which of the following statements about these facts is correct?

  1. There are clear property rights to the cattle, but not to the buffalo.
  2. Buffalo meat was in greater demand than Angus steaks.
  3. Ranchers have an incentive to protect and nurture the Angus cattle.
  4. Buffalo were public goods; angus cattle were private goods.
  5. Buffalo were private goods; angus cattle were public goods.
All statements are correct.
Only statement II is correct.
Only statements I, III, and IV are correct.
Only statements I, III, and V are correct.
Only statement III is correct.


Question 12 (Multiple Choice Worth 4 points)

Jeff Brooks has recently moved into an apartment and has discovered that the previous tenant forgot to turn off the cable TV service. Jeff plugs his new big screen into the cable and enjoys the cable service without paying for it. Economists would describe Jeff Brooks as a

consumer of toll goods.
free rider.
careful consumer.
user of a common pool resource.
user of a public good.


Question 13 (Multiple Choice Worth 4 points)

Which of the following cannot have free riders?

  1. Streetlights
  2. Ticket you have purchased to the latest movie
  3. Planting, by the Arbor Day Foundation, of new trees next to a group of homes
  4. Renovation of the town hall
  5. The toll road to the airport
All these examples can have free riders.
Only II and V cannot have free riders.
Only IV and V cannot have free riders.
Only I and III cannot have free riders.
Only III cannot have free riders.


Question 14 (Multiple Choice Worth 4 points)

The retirement home in Hallyho charges its users for all the services it provides. The home is a

pure private good.
pure public good.
common pool resource good.
toll good.
free rider good.


Question 15 (Multiple Choice Worth 4 points)

A new children’s park is built by the city of Highland. This park is a good that has

exclusion and non-rival non-shared consumption.
nonexclusion and non-rival shared consumption.
exclusion and non-shared consumption.
nonexclusion and non-shared consumption.
exclusion and rival non-shared consumption.


Question 16 (Multiple Choice Worth 4 points)

Common traits of those Americans below the poverty line include which of the following?

  1. Those likely to be very young or very old
  2. Those likely to be a minority or person of color
  3. Those more likely to be male than female
  4. Those more likely to have low levels of educational attainment
  5. Those less likely to be from a single parent home
All statements are correct.
Only statements I and V are correct.
Only statements I and III are correct.
Only statements I, II, and IV are correct.
Only statement IV is correct.


Question 17 (Multiple Choice Worth 4 points)

The residents of Hallyho face a progressive income tax, which means that they

pay a higher percentage of their income in the tax if they earn less.
pay a lower percentage of their income in the tax if they earn more.
pay the same percentage of their income in the tax, regardless of their income level.
pay a higher percentage of their income in the tax if they earn more.
get an allowance from the state.


Question 18 (Multiple Choice Worth 4 points)

Jack earns $90,000 while Priscilla earns $130,000. A regressive social security tax of 5%, paid only up to $90,000, would mean that

Priscilla pays more tax dollars than Jack
both pay the same amount of dollars in the tax, but Jack pays a lower tax rate.
both pay the same amount of dollars in the tax and pay the same tax rate.
both pay the same amount of dollars in the tax, but Jack pays a higher tax rate.
Priscilla pays no taxes (income over $90,000) so the burden falls on Jack.


Question 19 (Multiple Choice Worth 4 points)

Assume that the state of Florida has a 40 cent per gallon gasoline tax. Karen makes $60,000 per year and buys 1,000 gallons of gas each year. Hank makes $30,000/year and buys 700 gallons of gas each year. If these two individuals are typical, is the state’s gasoline tax progressive, proportional, or regressive, and why?

The tax is progressive because as income increases, you pay more in the tax.
The tax is proportional because everyone pays the same 40 cent per gallon rate.
The tax is progressive because as the amount of gas purchased increases, the amount of money paid in the tax increases.
The tax is regressive because as your income rises, you pay a lower percentage of your income in the tax.
The tax is regressive because as your income falls, you pay a lower percentage of your income in the tax.


Question 20 (Multiple Choice Worth 4 points)

Virtually all economists agree that sales taxes are regressive, and the burden of the sales tax falls most heavily on those with lower incomes. Most consider this to be unfair. Which of the following statements correctly explain why most states have a sales tax?

  1. The sales tax gives the poor an incentive to work harder.
  2. There are more poor people, so to have them pay their fair share, they have to pay a higher percentage.
  3. The sales tax is relatively easy for the state and local governments to collect.
  4. If the rich pay most of the income taxes in America, then the poor can pay the sales tax.
  5. States without sales taxes tend to have the lowest average incomes.
All statements are correct.
Only statement III is correct.
Only statements II and V are correct.
Only statements I and IV are correct.
Only statements I and V are correct.


Question 21 (Multiple Choice Worth 4 points)

Ms. X pays a flat tax of 15% on her income of $100,000 while Mr. Y pays a flat tax of 15% on his income of $80,000. Which type of tax is this?

Effective proportional tax
Effective progressive tax
Effective regressive tax
Nominal tax
Standardized tax


Question 22 (Multiple Choice Worth 4 points)

Which of the following is an example of a negative externality?

Your new sweater fades after the first wash.
Your English Literature teacher adores her new pen.
Your neighbor’s new heating system is not working properly.
Your father is fed up with his new lawn mower that won’t start.
Your sounding the horn on your new BMW sport car wakes up the entire neighborhood.


Question 23 (Multiple Choice Worth 4 points)

If there are positive externalities involved with the delivery or consumption of a product, the level of output will be

more than the efficient amount of production.
equal to the efficient amount of production.
less than the efficient amount of production.
dictated by public demand.
decided by the imposition of government quota.


Question 24 (Multiple Choice Worth 4 points)

Which is an acceptable market method of regulating negative externalities?

Legal action against the source creating the externality
Tradable pollution credits
Huge penalty payable to society for the externality
Cash incentive given by the government for creating a positive externality
Closure of the production unit by government regulation


Question 25 (Multiple Choice Worth 4 points)

Which situation does not require government interference?

Increasing numbers of ATVs are increasing the level of carbon monoxide in the air.
Salt brine pollution is threatening the coastal mangrove vegetation.
Excessive electronic dumping has increased the risks of radiation.
An oil spill has spread along the coast of Alaska.
Obesity is increasing in the middle-income group.


Question 26 (Multiple Choice Worth 4 points)

Products with positive externalities are underconsumed, thus creating a market failure. How can the government correct this failure?

  1. By taxing the output of the product to increase tax revenue
  2. By paying subsidies to the producers, to lower the cost of the product to potential buyers
  3. By reducing the marginal social benefit of the product, thus eliminating the externality
  4. By requiring producers to manufacture more of the product
  5. By producing it themselves and distributing it free or at very low cost to consumers
All statements are correct.
Only statements I, III, and IV are correct.
Only statements III and IV are correct.
Only statements II and V are correct.
Only statements I and IV are correct.


Question 27 (Multiple Choice Worth 4 points)

A free rider problem can occur when the good or service concerned has

exclusion and non-rival shared consumption.
exclusion and rival consumption.
nonexclusion and non-rival shared consumption.
nonexclusion and rival shared consumption.
been imported.


Question 28 (Multiple Choice Worth 4 points)

When there is an external benefit involved in the production of a good or service, the marginal social cost is

lower than the marginal private cost.
the same as the marginal private cost.
higher than the marginal private cost.
higher than the marginal variable cost.
higher than the average variable cost.


Question 29 (Multiple Choice Worth 4 points)



Assume that the government has created a per unit tax on the production of a product, whizbangs, as illustrated in figure 5-1, above. Which of the following statements about this action is true?

  1. This action was taken to increase output and cure a positive externality.
  2. This action was taken to decrease production and reduce a negative externality.
  3. This tax will increase the price and reduce the quantity produced.
  4. This tax will reduce the abuse of a toll resource.
  5. The seller will bear the entire burden of this tax.
All statements are correct.
Only statement II is correct.
Only statements II and III are correct.
Only statements II and IV are correct.
Only statement III is correct.


Question 30 (Multiple Choice Worth 4 points)

Pollution occurs in the environment because

it can be a natural event such as a volcanic eruption.
it is a by-product of producing goods and services we want and need.
the marginal social cost of preventing all of it is greater than the marginal social benefit of preventing it.
the market economy encourages producers to externalize some of their costs.
All of the above.

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