Question 1

When externalities are present, market prices do not reflect all the social costs or benefits of the activity.

Accepted Answer

A) True 
 B)False

Question 2

If the value of the euro increases relative to the U.S.dollar, then French goods will be less expensive in the U.S.

Accepted Answer

A) True 
 B)False

Question 3

Trade restrictions can take any of the following forms except one.Which is the exception?

Accepted Answer

A) tariffs 
B) free trade agreements 
C) quotas 
D) voluntary trade restrictions 
E) health and safety restrictions 
A) tariffs 
B) free trade agreements 
C) quotas 
D) voluntary trade restrictions 
E) health and safety restrictions

Question 4

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

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 5

The personal income tax is based on the benefits-received principle of taxation.

Accepted Answer

A) True 
 B)False

Question 6

The overall U.S.balance of payments

Accepted Answer

A) shows a deficit 
B) shows a surplus 
C) is the merchandise trade balance 
D) equals exports minus imports 
E) shows how deficits in one account are exactly offset by surpluses in other accounts 
A) shows a deficit 
B) shows a surplus 
C) is the merchandise trade balance 
D) equals exports minus imports 
E) shows how deficits in one account are exactly offset by surpluses in other accounts

Question 7

A positive externality is one in which there is an external benefit bestowed on a third party>

Accepted Answer

A) True 
 B)False

Question 8

In recent years, redistribution has been the fastest growing category of federal government outlays.

Accepted Answer

A) True 
 B)False

Question 9

The Salvation Army is an example of a(n)

Accepted Answer

A) military organization 
B) not-for-profit organization 
C) partnership 
D) S-corporation 
E) U.S.government agency 
A) military organization 
B) not-for-profit organization 
C) partnership 
D) S-corporation 
E) U.S.government agency

Question 10

Which form of business organization is the most common in the United States?

Accepted Answer

A) sole proprietorship 
B) partnership 
C) corporation 
D) nonprofit organization 
E) S-corporation 
A) sole proprietorship 
B) partnership 
C) corporation 
D) nonprofit organization 
E) S-corporation

Question 11

When the government sells something it produces,

Accepted Answer

A) revenue received must be greater than cost to justify government production 
B) revenue received must equal cost because government is a nonprofit organization 
C) the price does not always reflect the cost of producing the good 
D) the price charged is an accurate measure of the benefits generated 
E) it prices the good the same way a natural monopolist would 
A) revenue received must be greater than cost to justify government production 
B) revenue received must equal cost because government is a nonprofit organization 
C) the price does not always reflect the cost of producing the good 
D) the price charged is an accurate measure of the benefits generated 
E) it prices the good the same way a natural monopolist would

Question 12

Which of the four types of economic decision makers is most important?

Accepted Answer

A) firms, because they produce all goods and services in the economy 
B) households, because they demand goods and services and supply resources 
C) government, because it ultimately sets and enforces the "rules of the game" 
D) government, because it steps in when there is market failure 
E) the rest of the world, because there are over 150 countries 
A) firms, because they produce all goods and services in the economy 
B) households, because they demand goods and services and supply resources 
C) government, because it ultimately sets and enforces the "rules of the game" 
D) government, because it steps in when there is market failure 
E) the rest of the world, because there are over 150 countries

Question 13

Roxanne and Eileen live in an apartment building with a laundry room in the basement.Roxanne does her laundry at home, spending $4 and 5 hours per week.Eileen sends her laundry out, spending $20 and 15 minutes per week transporting the laundry.On the basis of the information given, which one of the following must be true?

Accepted Answer

A) Roxanne earns more labor income than Eileen. 
B) Eileen earns more total income than Roxanne. 
C) Roxanne enjoys doing laundry; Eileen does not. 
D) Eileen has less laundry than Roxanne. 
E) Eileen and Roxanne attach different utilities to time spent doing laundry. 
A) Roxanne earns more labor income than Eileen. 
B) Eileen earns more total income than Roxanne. 
C) Roxanne enjoys doing laundry; Eileen does not. 
D) Eileen has less laundry than Roxanne. 
E) Eileen and Roxanne attach different utilities to time spent doing laundry.

Question 14

Which of the following did not occur during the Industrial Revolution?

Accepted Answer

A) worker productivity increased 
B) factories became larger 
C) direct supervision of labor decreased 
D) division of labor increased 
E) fewer stages of production were organized in the household 
A) worker productivity increased 
B) factories became larger 
C) direct supervision of labor decreased 
D) division of labor increased 
E) fewer stages of production were organized in the household

Question 15

To serve the public interest, government sometimes promotes competition by breaking up natural monopolies.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following would be the best example of a partnership?

Accepted Answer

A) The legal office of Alias, Smith and Jones 
B) A local mom and pop restaurant 
C) Microsoft 
D) A local hospital 
E) A State University 
A) The legal office of Alias, Smith and Jones 
B) A local mom and pop restaurant 
C) Microsoft 
D) A local hospital 
E) A State University

Question 17

Which of the following represents the largest source of income for U.S.households?

Accepted Answer

A) personal interest 
B) proprietor's income 
C) wages and salaries 
D) rental income 
E) transfer payments 
A) personal interest 
B) proprietor's income 
C) wages and salaries 
D) rental income 
E) transfer payments

Question 18

The introduction of telecommuting, whereby people work at home and connect to their employers' offices via the Internet,

Accepted Answer

A) was mandated by the government 
B) was made possible by technological advances 
C) was encouraged by higher fuel costs 
D) was a consequence of corporate downsizing 
E) has been strenuously resisted by most workers 
A) was mandated by the government 
B) was made possible by technological advances 
C) was encouraged by higher fuel costs 
D) was a consequence of corporate downsizing 
E) has been strenuously resisted by most workers

Question 19

Luigi owns and operates a small restaurant.The income he receives from the restaurant is classified as

Accepted Answer

A) saving 
B) proprietor's income 
C) wages and salaries 
D) rental income 
E) dividends 
A) saving 
B) proprietor's income 
C) wages and salaries 
D) rental income 
E) dividends

Question 20

The location of production

Accepted Answer

A) shifted from factories to cottages during the Industrial Revolution 
B) is no different today that during the Industrial Revolution, except that we use better technology today 
C) in the United States shifted from the West Coast to the East Coast as the country was settled 
D) shifted from cottages to factories during the Industrial Revolution, but now may be shifting back to the home 
E) is influenced more by land costs than by technological change 
A) shifted from factories to cottages during the Industrial Revolution 
B) is no different today that during the Industrial Revolution, except that we use better technology today 
C) in the United States shifted from the West Coast to the East Coast as the country was settled 
D) shifted from cottages to factories during the Industrial Revolution, but now may be shifting back to the home 
E) is influenced more by land costs than by technological change

Exam 3: Economic Decision Makers

When externalities are present, market prices do not reflect all the social costs or benefits of the activity.

If the value of the euro increases relative to the U.S.dollar, then French goods will be less expensive in the U.S.

Trade restrictions can take any of the following forms except one.Which is the exception?

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

The personal income tax is based on the benefits-received principle of taxation.

The overall U.S.balance of payments

A positive externality is one in which there is an external benefit bestowed on a third party>

In recent years, redistribution has been the fastest growing category of federal government outlays.

The Salvation Army is an example of a(n)

Which form of business organization is the most common in the United States?

When the government sells something it produces,

Which of the four types of economic decision makers is most important?

Which of the following did not occur during the Industrial Revolution?

To serve the public interest, government sometimes promotes competition by breaking up natural monopolies.

Which of the following would be the best example of a partnership?

Which of the following represents the largest source of income for U.S.households?

The introduction of telecommuting, whereby people work at home and connect to their employers' offices via the Internet,

Luigi owns and operates a small restaurant.The income he receives from the restaurant is classified as

The location of production

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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