Question 1

Import quotas on sugar result in lower sugar prices in the United States.

Accepted Answer

A) True 
 B)False

Question 2

In the United States since World War II, there has been

Accepted Answer

A) a dramatic increase in the population living in rural areas 
B) a decline in the number of women in the labor force 
C) a decrease in the opportunity cost of working in the home 
D) more specialization of production within households 
E) a dramatic increase in the number of married women in the labor force 
A) a dramatic increase in the population living in rural areas 
B) a decline in the number of women in the labor force 
C) a decrease in the opportunity cost of working in the home 
D) more specialization of production within households 
E) a dramatic increase in the number of married women in the labor force

Question 3

A public good is available to all regardless of who pays for it and who does not.

Accepted Answer

A) True 
 B)False

Question 4

The partnership is the least common form of business organization in the United States.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following lists the three types of firms in the United States from smallest to largest in terms of volume of sales?

Accepted Answer

A) partnerships, sole proprietorships, corporations 
B) sole proprietorships, partnerships, corporations 
C) sole proprietorships, corporations, partnerships 
D) corporations, partnerships, sole proprietorships 
E) partnerships, corporations, sole proprietorships 
A) partnerships, sole proprietorships, corporations 
B) sole proprietorships, partnerships, corporations 
C) sole proprietorships, corporations, partnerships 
D) corporations, partnerships, sole proprietorships 
E) partnerships, corporations, sole proprietorships

Question 6

A public good is one that is supplied to

Accepted Answer

A) only people who pay for it 
B) only people who do not pay for it 
C) all people, regardless of whether they pay or not 
D) the government from private firms 
E) foreign governments from our federal government 
A) only people who pay for it 
B) only people who do not pay for it 
C) all people, regardless of whether they pay or not 
D) the government from private firms 
E) foreign governments from our federal government

Question 7

In recent decades, international trade has been

Accepted Answer

A) a constant percentage of U.S.GDP 
B) a declining fraction of U.S.GDP 
C) an increasing fraction of U.S.GDP 
D) declining as measured by total dollars spent 
E) constant as measured by total dollars spent 
A) a constant percentage of U.S.GDP 
B) a declining fraction of U.S.GDP 
C) an increasing fraction of U.S.GDP 
D) declining as measured by total dollars spent 
E) constant as measured by total dollars spent

Question 8

Household production increases when there is a stronger desire to avoid taxation.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is most likely to be a partnership?

Accepted Answer

A) Uncle Mort's Red Wrigglers 
B) the accounting firm of Hope and Williams 
C) General Motors 
D) the Boston Symphony Orchestra 
E) the U.S.Post Office 
A) Uncle Mort's Red Wrigglers 
B) the accounting firm of Hope and Williams 
C) General Motors 
D) the Boston Symphony Orchestra 
E) the U.S.Post Office

Question 10

Households act as demanders when they demand

Accepted Answer

A) that corporate executives and government officials be held accountable for their actions 
B) dividends from the stocks they hold 
C) interest and capital gains from the bonds they hold 
D) goods and services from firms and the government 
E) payment for the goods and services they sell to firms and governments 
A) that corporate executives and government officials be held accountable for their actions 
B) dividends from the stocks they hold 
C) interest and capital gains from the bonds they hold 
D) goods and services from firms and the government 
E) payment for the goods and services they sell to firms and governments

Question 11

An example of a positive externality is

Accepted Answer

A) pollution because it affects people not directly involved with producing it 
B) a homeowner's maintenance of a beautiful lawn because this creates a benefit for neighbors 
C) creating a monopoly 
D) driving a car that emits pollution 
E) cigarette smoking because this imposes an indirect cost on people around the smoker 
A) pollution because it affects people not directly involved with producing it 
B) a homeowner's maintenance of a beautiful lawn because this creates a benefit for neighbors 
C) creating a monopoly 
D) driving a car that emits pollution 
E) cigarette smoking because this imposes an indirect cost on people around the smoker

Question 12

What is the rationale for government provision of education?

Accepted Answer

A) Not all incomes are equal, but everyone has the right to education regardless of wealth. 
B) Potential students consider only their personal benefits gained from education, but the rest of society benefits, too. 
C) No education would be provided in the absence of government provision because everyone would consume it without paying. 
D) The cost of providing education for the entire public is too large. 
E) The government can provide education at a much lower cost than the private sector. 
A) Not all incomes are equal, but everyone has the right to education regardless of wealth. 
B) Potential students consider only their personal benefits gained from education, but the rest of society benefits, too. 
C) No education would be provided in the absence of government provision because everyone would consume it without paying. 
D) The cost of providing education for the entire public is too large. 
E) The government can provide education at a much lower cost than the private sector.

Question 13

Which of the following would not be considered a role of the government?

Accepted Answer

A) promoting competition 
B) providing public goods 
C) providing externalities 
D) regulating natural monopolies 
E) safeguarding private property and enforcing contracts 
A) promoting competition 
B) providing public goods 
C) providing externalities 
D) regulating natural monopolies 
E) safeguarding private property and enforcing contracts

Question 14

The excise tax on gasoline is based on the ability-to-pay principle of taxation.

Accepted Answer

A) True 
 B)False

Question 15

The corporate form of business organization

Accepted Answer

A) is chosen by more firms than any other form of organization in the United States 
B) gives firm owners limited liability 
C) generates less than half of the output in the U.S.economy 
D) combines the limited liability of the partnership with the personal control of the sole proprietorship 
E) is the least complex form of business organization 
A) is chosen by more firms than any other form of organization in the United States 
B) gives firm owners limited liability 
C) generates less than half of the output in the U.S.economy 
D) combines the limited liability of the partnership with the personal control of the sole proprietorship 
E) is the least complex form of business organization

Question 16

International trade occurs because the opportunity cost of producing specific goods differs across

Accepted Answer

A) firms 
B) individuals 
C) regions of the U.S. 
D) countries 
E) households 
A) firms 
B) individuals 
C) regions of the U.S. 
D) countries 
E) households

Question 17

Which of the following is not based on the benefits-received principle of taxation?

Accepted Answer

A) charging a fee for use of public golf courses 
B) differences between residential and out-of-state college tuition 
C) the excise tax on gasoline 
D) toll booths on a highway 
E) charging a fee per bag to haul away garbage 
A) charging a fee for use of public golf courses 
B) differences between residential and out-of-state college tuition 
C) the excise tax on gasoline 
D) toll booths on a highway 
E) charging a fee per bag to haul away garbage

Question 18

The term "fiscal policy" refers to

Accepted Answer

A) the amount of physical output produced by firms 
B) the means by which government policy makes firms more productive 
C) the avenue by which government influences credit markets 
D) spending and taxing by governments 
E) a tool of government that works in the opposite direction of monetary policy 
A) the amount of physical output produced by firms 
B) the means by which government policy makes firms more productive 
C) the avenue by which government influences credit markets 
D) spending and taxing by governments 
E) a tool of government that works in the opposite direction of monetary policy

Question 19

During the Industrial Revolution,

Accepted Answer

A) technological changes shifted production from rural cottages to large urban factories 
B) technological changes shifted production from urban factories to individual workers' homes 
C) political changes made it dangerous to organize production in large, centrally-powered factories 
D) the price of land rose, so managers tried to shift production out of factories 
E) the "virtual office" came into vogue 
A) technological changes shifted production from rural cottages to large urban factories 
B) technological changes shifted production from urban factories to individual workers' homes 
C) political changes made it dangerous to organize production in large, centrally-powered factories 
D) the price of land rose, so managers tried to shift production out of factories 
E) the "virtual office" came into vogue

Question 20

Which of the following is true of import tariffs and quotas?

Accepted Answer

A) They benefit domestic producers. 
B) Domestic consumers gain because they purchase the output of domestic firms. 
C) Specialization and comparative advantage are advanced by tariffs and quotas. 
D) They tend to expand the volume of world trade. 
E) Because they increase the output levels of domestic firms, they tend to lower domestic prices. 
A) They benefit domestic producers. 
B) Domestic consumers gain because they purchase the output of domestic firms. 
C) Specialization and comparative advantage are advanced by tariffs and quotas. 
D) They tend to expand the volume of world trade. 
E) Because they increase the output levels of domestic firms, they tend to lower domestic prices.

Exam 3: Economic Decision Makers

Import quotas on sugar result in lower sugar prices in the United States.

In the United States since World War II, there has been

A public good is available to all regardless of who pays for it and who does not.

The partnership is the least common form of business organization in the United States.

Which of the following lists the three types of firms in the United States from smallest to largest in terms of volume of sales?

A public good is one that is supplied to

In recent decades, international trade has been

Household production increases when there is a stronger desire to avoid taxation.

Which of the following is most likely to be a partnership?

Households act as demanders when they demand

An example of a positive externality is

What is the rationale for government provision of education?

Which of the following would not be considered a role of the government?

The excise tax on gasoline is based on the ability-to-pay principle of taxation.

The corporate form of business organization

International trade occurs because the opportunity cost of producing specific goods differs across

Which of the following is not based on the benefits-received principle of taxation?

The term "fiscal policy" refers to

During the Industrial Revolution,

Which of the following is true of import tariffs and quotas?

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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