SOLUTION MANUAL FOR ECON 320 FINAL
EXAM QUESTIONS WITH ANSWERS
LATEST UPDATE ALREADY GRADED A+
A market equilibrium in which all types of individuals buy full
insurance even though it is not fairly priced to all individuals is
called a _________ equilibrium and occurs when all consumers
are ___________. - correct answer- pooling; risk averse
A tax levied on producers is fully shifted to producers when -
correct answer- supply is perfectly inelastic
All other things equal, the deadweight loss of a tax on producers
is higher when supply is ________. All other things equal, the
deadweight loss of a tax on producers is higher when demand is
__________. - correct answer- elastic; elastic
Economic analysis of the relationship between taxation and
work reveals that: - correct answer- high taxes may
discourage work effort, causing output and income to fall.
For each of the following, determine which group would have
higher Social Security Wealth (SSW), all other things equal.
Explain your answers.
,(a) male or female
(b) born in 1925 or born in 1985
(c) single or married(
d) low-wage earner or high-wage earner
(e) single-earner couple or double-earner couple - correct
answer- a) Even though both males and females pay the
same taxes, females will have higher SSW because females tend
to live longer than males, so they receive benefits for a longer
time.
b) People born in 1925 would have a higher SSW because
population growth got smaller starting in the 70s. Also, tax rate
growth and wages played a factor.
c) Someone that is married would have higher SSW because
spouses of workers are entitled to 50% of the workers' benefits,
and whoever survives receives 100% of the workers' benefits.
Other words, a married worker gets their own benefits, but also
their spouses as well.
d) Based on how social security redistributes income, low-wage
workers would have higher SSW.
, e) Single-earner couple would have higher SSW. The two-earner
couple has to pay taxes on their earnings.
For which of the following events is the consumption-smoothing
benefit from first-dollar coverage small? - correct answer-
predictable events
If a person has imperfect or partial self-insurance against job
loss, they are likely to: - correct answer- smooth
consumption to some extent, but not fully
If the payroll tax were to be lowered, empirical evidence
suggests that: - correct answer- secondary earners would
work more hours.
If the tax rate on income is given by t and the wage is given by w,
what is the after-tax wage? - correct answer- w(1 - t)
In 2015, the lowest tax rate on taxable income was ________,
while the highest tax rate on taxable income was _________. -
correct answer- 10%; 39.6%
EXAM QUESTIONS WITH ANSWERS
LATEST UPDATE ALREADY GRADED A+
A market equilibrium in which all types of individuals buy full
insurance even though it is not fairly priced to all individuals is
called a _________ equilibrium and occurs when all consumers
are ___________. - correct answer- pooling; risk averse
A tax levied on producers is fully shifted to producers when -
correct answer- supply is perfectly inelastic
All other things equal, the deadweight loss of a tax on producers
is higher when supply is ________. All other things equal, the
deadweight loss of a tax on producers is higher when demand is
__________. - correct answer- elastic; elastic
Economic analysis of the relationship between taxation and
work reveals that: - correct answer- high taxes may
discourage work effort, causing output and income to fall.
For each of the following, determine which group would have
higher Social Security Wealth (SSW), all other things equal.
Explain your answers.
,(a) male or female
(b) born in 1925 or born in 1985
(c) single or married(
d) low-wage earner or high-wage earner
(e) single-earner couple or double-earner couple - correct
answer- a) Even though both males and females pay the
same taxes, females will have higher SSW because females tend
to live longer than males, so they receive benefits for a longer
time.
b) People born in 1925 would have a higher SSW because
population growth got smaller starting in the 70s. Also, tax rate
growth and wages played a factor.
c) Someone that is married would have higher SSW because
spouses of workers are entitled to 50% of the workers' benefits,
and whoever survives receives 100% of the workers' benefits.
Other words, a married worker gets their own benefits, but also
their spouses as well.
d) Based on how social security redistributes income, low-wage
workers would have higher SSW.
, e) Single-earner couple would have higher SSW. The two-earner
couple has to pay taxes on their earnings.
For which of the following events is the consumption-smoothing
benefit from first-dollar coverage small? - correct answer-
predictable events
If a person has imperfect or partial self-insurance against job
loss, they are likely to: - correct answer- smooth
consumption to some extent, but not fully
If the payroll tax were to be lowered, empirical evidence
suggests that: - correct answer- secondary earners would
work more hours.
If the tax rate on income is given by t and the wage is given by w,
what is the after-tax wage? - correct answer- w(1 - t)
In 2015, the lowest tax rate on taxable income was ________,
while the highest tax rate on taxable income was _________. -
correct answer- 10%; 39.6%
