Econ 201 Exam 3 Questions and
Answers 100% Pass
Once it becomes obvious that a public good is being underprovided, - ✔✔the marginal
benefit of further production to a individual fails to outweigh the individual's marginal
cost.
Conditions under which externalities can be solved in a decentralized manner. - ✔✔The
Coase Theorem
3. The market failure of moral hazard may occur when one party - ✔✔-Has symmetric
information about the other party's ACTION
4. The libertarian position on redistributing income (distinct from antipoverty
programs) is that - ✔✔-The govt transferring money among people after incomes were
fairly earned, is unjust
5. Two firms each pollute 50 tons. Permit for each ton polluted. Dow got 10 and dupoint
got 30. And each can be either used or sold. It costs Dupoint $100 for each ton before it
pollutes and costs dow $50 for each ton. It is likely that - ✔✔5. Two firms each pollute
50 tons. Permit for each ton polluted. Dow got 10 and dupoint got 30. And each can be
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, either used or sold. It costs Dupoint $100 for each ton before it pollutes and costs dow
$50 for each ton. It is likely that
6. Many economists like the flat income tax (in which there is a large standard
deduction but no (or few) itemized deductions and a single non-zero marginal tax rate)
because - ✔✔it would be much simpler than the current tax code.
Regarding the value of education, the human capitla views says that education_______,
while the signaling view says that education______ - ✔✔enhances productivity; is
merely correlated with natural ability
Last year Bert earned 75k and paid 9k in taxes while Ernie earned 75k and paid 3.2K.
whether this system is fair is a question of - ✔✔Horizontal equity
A fundamental similarity of common resurces and public goods is that in both cases -
✔✔consumption is not excludable
Unemployment Insurance is both mandated and provided by the govt, whereas
workers compensation insurance (WCI) is merely mandated by the govt. The best
economic explanation for this difference is that - ✔✔the market for UI suffers from
aggregate risk, but the market for WCI does not
Economists r generally favorable to Earned Income TaxCredit because - ✔✔All
theory predicts--> increase labor force participation
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2
Answers 100% Pass
Once it becomes obvious that a public good is being underprovided, - ✔✔the marginal
benefit of further production to a individual fails to outweigh the individual's marginal
cost.
Conditions under which externalities can be solved in a decentralized manner. - ✔✔The
Coase Theorem
3. The market failure of moral hazard may occur when one party - ✔✔-Has symmetric
information about the other party's ACTION
4. The libertarian position on redistributing income (distinct from antipoverty
programs) is that - ✔✔-The govt transferring money among people after incomes were
fairly earned, is unjust
5. Two firms each pollute 50 tons. Permit for each ton polluted. Dow got 10 and dupoint
got 30. And each can be either used or sold. It costs Dupoint $100 for each ton before it
pollutes and costs dow $50 for each ton. It is likely that - ✔✔5. Two firms each pollute
50 tons. Permit for each ton polluted. Dow got 10 and dupoint got 30. And each can be
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 1
, either used or sold. It costs Dupoint $100 for each ton before it pollutes and costs dow
$50 for each ton. It is likely that
6. Many economists like the flat income tax (in which there is a large standard
deduction but no (or few) itemized deductions and a single non-zero marginal tax rate)
because - ✔✔it would be much simpler than the current tax code.
Regarding the value of education, the human capitla views says that education_______,
while the signaling view says that education______ - ✔✔enhances productivity; is
merely correlated with natural ability
Last year Bert earned 75k and paid 9k in taxes while Ernie earned 75k and paid 3.2K.
whether this system is fair is a question of - ✔✔Horizontal equity
A fundamental similarity of common resurces and public goods is that in both cases -
✔✔consumption is not excludable
Unemployment Insurance is both mandated and provided by the govt, whereas
workers compensation insurance (WCI) is merely mandated by the govt. The best
economic explanation for this difference is that - ✔✔the market for UI suffers from
aggregate risk, but the market for WCI does not
Economists r generally favorable to Earned Income TaxCredit because - ✔✔All
theory predicts--> increase labor force participation
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2
