1. Excludability matters because it:

a. creates a perceived scarcity that allows the seller to keep the price artificially high.

b. allows consumers to control the price of a good.

c. creates a perceived scarcity that causes buyers to have an inelastic demand for the good.

d. allows owners to set an enforceable price on a good.

2. Any tax on a good can:

a. All of these are true.

b. discourage production of the good.

c. discourage consumption of the good.

d. create a new source of public revenue.

3. The federal debt is ____________ and the federal deficit is ______________.

a. None of these statements is true.

b. the cumulative total of what the federal government owes; the amount the federal government overspent in a given year

c. the total of what is projected to be spent in a given year; the total of what is projected to be earned in revenues in a given year

4. Any cost that is imposed without compensation on someone other than the person who caused it is called:

a. network cost.

b. private cost.

c. external cost.

d. social cost.

5. Correcting a market with an externality through taxation is _________ correcting it through a quota.

a. Any of these statements could be true depending on whether the tax is imposed on the buyer or seller.

b. just as efficient as

c. less efficient than

d. more efficient than

6. Calculate tax revenue:

a. divide total revenues by the tax per unit.

b. multiply the tax per unit by the number of units of the item being taxed.

c. None of these will calculate tax revenue.

d. multiply total revenues by the tax per unit.