5 Written Questions

1. a situation in which quantity demanded is greater than quantity supplied
2. the study of how the allocation of resources affects economic well-being
3. a tax for which high-income taxpayers pay a larger fraction of their income than do low-income taxpayers
4. the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold
5. the idea that taxpayers with a greater ability to pay taxes should pay larger amounts

5 Matching Questions

1. equality
2. quantity supplied
3. quantity demanded
4. regressive tax
5. proportional tax

1. a the amount of a good that sellers are willing and able to sell
2. b the amount of a good that buyers are willing and able to purchase
3. c a tax for which high-income and low-income taxpayers pay the same fraction of income
4. d the fairness of the distribution of well-being among the members of society
5. e a tax for which high-income taxpayers pay a smaller fraction of their income than do low-income taxpayers

5 Multiple Choice Questions

1. the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
   1. Laffer curve
   2. law of demand
   3. lump sum tax
   4. law of supply
2. the manner in which the burden of a tax is shared among the participants in a market
   1. elasticity
   2. tax incidence
   3. total revenue
   4. law of demand
3. a measure of how much the quantity demanded of a good responds to a change in price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price
   1. law of demand
   2. price elasticity of supply
   3. cross-price elasticity of demand
   4. price elasticity of demand
4. the maximum amount that a buyer will pay for a good
   1. regressive tax
   2. welfare economics
   3. willingness to pay
   4. progressive tax
5. a good for which, other things equal, an increase in income leads to an increase in demand
   1. normal good
   2. floor
   3. inferior good
   4. shortage

5 True/False Questions

1. surplus → a situation in which quantity demanded is greater than quantity supplied

   True        False

2. marginal tax rate → total taxes paid divided by total income

   True        False

3. average tax rate → the extra taxes paid on an additional dollar of income

   True        False

4. consumer surplus → a buyer's willingness to pay minus the amount the buyer actually pays

   True        False

5. supply side economics → the study of how the allocation of resources affects economic well-being

   True        False