Economics Quiz

What is the formula for consumer surplus (CS)?

• CS = WTP - P

• CS = P - cost

• CS = WTP + cost

• CS = P + WTP

What is the world price of a good referred to as?

• PW

• PD

• PS

• CS

What is the domestic price without trade referred to as?

• PD

• PW

• PS

• CS

In Figure 9-1, what is the domestic price without trade?

• $4

• $6

• $9

• $5

In a proportional tax system, who pays the same fraction of income?

• Only high-income taxpayers

• Only low-income taxpayers

• Both high-income and low-income taxpayers

• Only middle-income taxpayers

What is a characteristic of a progressive tax?

• High-income taxpayers pay a smaller fraction of their income

• Low-income taxpayers pay a larger fraction of their income

• High-income taxpayers pay a larger fraction of their income

• All taxpayers pay the same fraction of their income

What does a progressive tax system aim to achieve?

• Equal tax rates for all

• Higher tax rates for higher incomes

• Lower tax rates for higher incomes

• No taxes for low-income earners

What does the budget constraint represent in consumer choice theory?

• The maximum amount a consumer can save

• The limit on the consumption bundles a consumer can afford

• The minimum income required for survival

• The total expenditure on luxury goods

What does the budget constraint line represent in a graph?

• The total income of a consumer

• The maximum quantity of goods a consumer can purchase

• The minimum price of goods

• The average consumption of goods

In the context of optimization, what does point A represent?

• The lowest possible indifference curve

• The point on the budget constraint that touches the highest possible indifference curve

• The point where the budget constraint is tangent to the lowest indifference curve

• The point of maximum expenditure