Category: Economics

[4] Suppose for the State of Missouri currently is $30 million allocated from the a $5 million categorical block grant is issued from the federal government to Missouri for transportation.
Total transportation spending in Missouri must increase to $35 million because categorical grants must be used for the specified purpose.[3]
Federal law requires states to have a balanced budget.[3]
Local governments can file for bankruptcy if they are unable to pay debt service when it is doe, but states cannot.[3]
Businesses are not taxed by local governments except in the rare case where the local government (like New York City) has a corporate income tax.[3]
Ad valorem severance tax collections are more volatile than per-unit severance tax collections.[3]
Severance taxes are intended to compensate residents in the state in which they are levied for the extraction of the state’s natural resources.[3]
A resident of Kansas City, MO, or St. Louis, MO, who earns income only from interest and dividends still must pay the Earnings Tax.[3]

2 Consider the abatement of a pollutant, where A denotes the units of abatement of the pollutant. Suppose that the marginal social benefit of abatement is MSB(A) = 1200 – 2A.
Also, Firm 1’s marginal abatement cost equation is MAC₁(A) = 4A, Firm 2’s marginal abatement cost equation is MAC₂(A) = 2A, and the marginal cost of enforcement and compliance equation is MCE(A) = 200 (i.e., 200 for every level of abatement A).
Illustrate areas by identifying and labeling the vertices of the areas.
On the graph below, illustrate MSB(A). Construct (derive algebraically) and illustrate the overall or total market (industry) marginal abatement cost equation, MAC(A). Construct and illustrate the marginal social cost of abatement equation, MSC(A). Calculate, illustrate, and explain the socially efficient abatement level, A*. Calculate and illustrate the total social benefit of abatement at A*, TSB(A).
Suppose the government imposes a uniform abatement standard policy:

Use the following to answer questions 47-49
Answer the next question(s) on the basis of the following marginal product data for resources a and b. The output of these independent resources sells in a perfectly competitive market at $1 per unit.
Marginal Product Data
Units of Resource
MP of a
MP of b
1
25
40
2
20
36
3
15
32
4
10
24
5
5
20
6
2
16
7
1
8
Assuming the prices of resources a and b are $5 and $8 respectively, answer the following questions.
Refer to the above data. Assuming the prices of resources a and b are $5 and $8 respectively, what is the least costly combination of resources for the firm to employ in producing 192 units of output?
A) 2 of a and 6 of b
B) 6 of a and 2 of b
C) 4 of a and 4 of b
D) 3 of a and 4 of b
Refer to the above data. Assuming the prices of resources a and b are $5 and $8 respectively, what is the profit-maximizing combination of resources?
A) 7 of a and 7 of b
B) 6 of a and 4 of b
C) 5 of a and 7 of b
D) 4 of a and 4 of b
Refer to the above data. When the firm hires the profit-maximizing combination of resources, its economic profit will be:
A) $170
B) $76
C) $145
D) $138

a.
Jackson manages his father’s fruit stand. He takes an accounting of all of the company’s assets, including equipment, tools, financial assets, and inventory. These items are examples of
b.
Abe owns a candy shop and at year-end calculates his revenue minus his explicit costs. The result is his
c.
Hailey decides to buy a pretzel from the cart outside her office. She pays $3.25 in cash for her lunch. The $3.25 is an example of
d.
Annabelle runs a tutoring company. In determining her costs and benefits from the venture, she includes her opportunity costs from choosing to open the tutoring business. She is evaluating the firm’s
e.
Sacha leaves his job as a nuclear engineer to become a train conductor. One day, while riding the rails, he considers the salary he could have earned had he remained an engineer. This is an example of
f.
Ginny works for an investment firm, and, after reviewing the investment decisions her firm made in the last year, she considers other ways the funding could have been used. She is considering the

30. Which of the following statements are TRUE?
a) When a factor or relationship is ordinal it cannot be measured, only ranked.
b) The meaning of utility in economic jargon is all about the usefulness of something
c) Utility in economic jargon is the satisfaction or happiness one derives from consuming a good.
d) Indifference curves represent different levels of happiness which can be ranked as representing more or less happiness (or utility) but not by how much.
e) Indifference curves must be monotonic and non-intersecting
f) Each indifference curve represents a specific level of utility or happiness.
g) A cardinal factor or relationship is one that can be measured.
h) The preferences mapped by Indifference curves are not always Transitive.
i) The three slopes of the Happiness Mountain are (change in U)/(change in quantity of good X): Marginal Utility of good X , (change in U)/(change in quantity of good Y): Marginal Utility of good Y, and (change in Y)/(change in X): slope in the X-Y plane.
j) The Happiness Mountain models the Production Process.