Question 1

The term "utility" means

Accepted Answer

A) satisfaction 
B) a low-valued good 
C) productivity 
D) adaptability 
E) efficiency 
A) satisfaction 
B) a low-valued good 
C) productivity 
D) adaptability 
E) efficiency

Question 2

Which of the following is not a function of government?

Accepted Answer

A) promotion of competition 
B) stabilization to achieve the macroeconomic goals 
C) redistribution of income through taxation and transfer payments 
D) production of public goods 
E) providing the economy's private goods 
A) promotion of competition 
B) stabilization to achieve the macroeconomic goals 
C) redistribution of income through taxation and transfer payments 
D) production of public goods 
E) providing the economy's private goods

Question 3

Households act as demanders when they

Accepted Answer

A) vote for President 
B) recieve dividends from the stocks they hold 
C) recieve interest and capital gains from the bonds they hold 
D) buy a car from the local car dealer 
E) recieve payment for resources they provide to a Fortune 500 company 
A) vote for President 
B) recieve dividends from the stocks they hold 
C) recieve interest and capital gains from the bonds they hold 
D) buy a car from the local car dealer 
E) recieve payment for resources they provide to a Fortune 500 company

Question 4

Taxes collected on the basis of the benefits-received principle

Accepted Answer

A) provide the states with their main sources of revenue 
B) tend to redistribute income from rich to poor 
C) collect the same total amount from each individual 
D) connect the revenue side of the budget with the spending side of the budget 
E) make it possible for government to spend money on activities that markets can't provide 
A) provide the states with their main sources of revenue 
B) tend to redistribute income from rich to poor 
C) collect the same total amount from each individual 
D) connect the revenue side of the budget with the spending side of the budget 
E) make it possible for government to spend money on activities that markets can't provide

Question 5

Which of the following is not a reason why some production continues in households?

Accepted Answer

A) Some household production requires many specialized resources 
B) The opportunity cost of household production has decreased over time 
C) Household production avoids taxes 
D) There have been important technological advances in household production 
E) Some households prefer the ability to control production 
A) Some household production requires many specialized resources 
B) The opportunity cost of household production has decreased over time 
C) Household production avoids taxes 
D) There have been important technological advances in household production 
E) Some households prefer the ability to control production

Question 6

Which of the following is the best example of the ownership of the resource called land

Accepted Answer

A) John Smith's ownership of 10 shares of a manufacturer of farm tractors 
B) Pogo O'Reilly's ownership of 10 shares of a natural gas extraction company 
C) Helen Restock's ownership of a $10, 000 savings bond 
D) Abe Hawthorne's college degree in marketing 
E) Ann Stump's creative, risk-taking personality 
A) John Smith's ownership of 10 shares of a manufacturer of farm tractors 
B) Pogo O'Reilly's ownership of 10 shares of a natural gas extraction company 
C) Helen Restock's ownership of a $10, 000 savings bond 
D) Abe Hawthorne's college degree in marketing 
E) Ann Stump's creative, risk-taking personality

Question 7

Which of the following is an example of an in-kind transfer?

Accepted Answer

A) welfare payments 
B) most Social Security benefits 
C) unemployment compensation payments 
D) food stamps 
E) charitable contributions 
A) welfare payments 
B) most Social Security benefits 
C) unemployment compensation payments 
D) food stamps 
E) charitable contributions

Question 8

Externalities can occur as a result of either production or consumption activities.

Accepted Answer

A) True 
 B)False

Question 9

Households supply four basic types of resources.They include all of the following except

Accepted Answer

A) natural resources 
B) final goods and services 
C) capital 
D) entrepreneurial ability 
E) labor 
A) natural resources 
B) final goods and services 
C) capital 
D) entrepreneurial ability 
E) labor

Question 10

Which of the following accounts for the largest source of revenue for the federal government?

Accepted Answer

A) sales tax 
B) federal property tax 
C) personal income tax 
D) corporate income tax 
E) borrowing 
A) sales tax 
B) federal property tax 
C) personal income tax 
D) corporate income tax 
E) borrowing

Question 11

A tax collects $3, 000 per year from a family with an income of $25, 000 and takes $4, 000 per year from a family with an income of $50, 000.This tax plan is

Accepted Answer

A) regressive 
B) proportional 
C) progressive 
D) based on the ability-to-pay principle 
E) impossible to determine with the information provided 
A) regressive 
B) proportional 
C) progressive 
D) based on the ability-to-pay principle 
E) impossible to determine with the information provided

Question 12

You are more likely to do-it-yourself than hire a plumber to repair a leaky drain pipe

Accepted Answer

A) as the tax rate on your earned income dramatically decreases 
B) if the opportunity cost of your time decreases 
C) the less knowledge and experience in plumbing repair work that you possess 
D) if you already own the specialized tools required to complete the repair work 
E) as the transaction cost of the do-it-yourself repair work increases 
A) as the tax rate on your earned income dramatically decreases 
B) if the opportunity cost of your time decreases 
C) the less knowledge and experience in plumbing repair work that you possess 
D) if you already own the specialized tools required to complete the repair work 
E) as the transaction cost of the do-it-yourself repair work increases

Question 13

Household production is more likely to occur when

Accepted Answer

A) it requires many specialized resources 
B) technology makes it more costly than market production 
C) tax avoidance is undesirable 
D) more control over the final product is desirable 
E) all of the above 
A) it requires many specialized resources 
B) technology makes it more costly than market production 
C) tax avoidance is undesirable 
D) more control over the final product is desirable 
E) all of the above

Question 14

The value of a country's imports cannot exceed the value of its exports.

Accepted Answer

A) True 
 B)False

Question 15

Economists generally assume that

Accepted Answer

A) firms act to maximize the dividends paid to stockholders 
B) households act to maximize their wealth 
C) households act to maximize utility 
D) firms act to maximize revenue 
E) both households and firms act to minimize expenditures 
A) firms act to maximize the dividends paid to stockholders 
B) households act to maximize their wealth 
C) households act to maximize utility 
D) firms act to maximize revenue 
E) both households and firms act to minimize expenditures

Question 16

The fastest-growing component of U.S.personal consumption is services.

Accepted Answer

A) True 
 B)False

Question 17

The incidence of a tax refers to

Accepted Answer

A) who receives the benefits from the revenue generated by the tax 
B) the changes in the marginal tax rate as income increases 
C) whether the tax is regressive, proportional, or progressive 
D) who bears the burden of the tax 
E) whether the tax is based on the ability-to-pay principle 
A) who receives the benefits from the revenue generated by the tax 
B) the changes in the marginal tax rate as income increases 
C) whether the tax is regressive, proportional, or progressive 
D) who bears the burden of the tax 
E) whether the tax is based on the ability-to-pay principle

Question 18

Katie had a before-tax income of $40, 000 and paid taxes of $6, 000.Rinji had a before-tax income of $35, 000 and paid taxes of $5, 250.Based on this information, the tax system is

Accepted Answer

A) There is insufficient information to answer the question. 
B) progressive 
C) based on the benefits received 
D) regressive 
E) proportional 
A) There is insufficient information to answer the question. 
B) progressive 
C) based on the benefits received 
D) regressive 
E) proportional

Question 19

The funds to pay for police protection are usually raised through taxation because

Accepted Answer

A) police protection would be hard to provide exclusively to those who voluntarily pay for it 
B) people would not voluntarily pay salaries to officials who might arrest them 
C) police protection is a basic necessity 
D) goods financed through taxation can be guaranteed to all who pay for it 
E) the government believes that those who receive the benefits from the service should pay for it 
A) police protection would be hard to provide exclusively to those who voluntarily pay for it 
B) people would not voluntarily pay salaries to officials who might arrest them 
C) police protection is a basic necessity 
D) goods financed through taxation can be guaranteed to all who pay for it 
E) the government believes that those who receive the benefits from the service should pay for it

Question 20

Harold, a delivery man, washes and irons his own shirts.Sarah, his boss, sends her clothes to a laundry.Which is the most plausible economic explanation for this difference?

Accepted Answer

A) Harold must enjoy ironing more than Sarah does. 
B) Harold must be better at ironing than Sarah is. 
C) The opportunity cost of ironing is greater for Harold. 
D) Harold probably has an absolute advantage in ironing. 
E) Sarah has a higher opportunity cost of laundering her clothes than Harold does. 
A) Harold must enjoy ironing more than Sarah does. 
B) Harold must be better at ironing than Sarah is. 
C) The opportunity cost of ironing is greater for Harold. 
D) Harold probably has an absolute advantage in ironing. 
E) Sarah has a higher opportunity cost of laundering her clothes than Harold does.

Exam 3: Economic Decision Makers

The term "utility" means

Which of the following is not a function of government?

Households act as demanders when they

Taxes collected on the basis of the benefits-received principle

Which of the following is not a reason why some production continues in households?

Which of the following is the best example of the ownership of the resource called land

Which of the following is an example of an in-kind transfer?

Externalities can occur as a result of either production or consumption activities.

Households supply four basic types of resources.They include all of the following except

Which of the following accounts for the largest source of revenue for the federal government?

A tax collects $3, 000 per year from a family with an income of $25, 000 and takes $4, 000 per year from a family with an income of $50, 000.This tax plan is

You are more likely to do-it-yourself than hire a plumber to repair a leaky drain pipe

Household production is more likely to occur when

The value of a country's imports cannot exceed the value of its exports.

Economists generally assume that

The fastest-growing component of U.S.personal consumption is services.

The incidence of a tax refers to

Katie had a before-tax income of $40, 000 and paid taxes of $6, 000.Rinji had a before-tax income of $35, 000 and paid taxes of $5, 250.Based on this information, the tax system is

The funds to pay for police protection are usually raised through taxation because

Harold, a delivery man, washes and irons his own shirts.Sarah, his boss, sends her clothes to a laundry.Which is the most plausible economic explanation for this difference?

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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