Question 1

Restricting imports of Brazilian shoes will

Accepted Answer

A) raise the price of both Brazilian and domestically produced shoes 
B) raise the price of Brazilian shoes but lower the price of domestically produced shoes 
C) lower the price of Brazilian shoes but raise the price of domestically produced shoes 
D) lower the price of both Brazilian and domestically produced shoes 
E) benefit the producers of shoes in Brazil 
A) raise the price of both Brazilian and domestically produced shoes 
B) raise the price of Brazilian shoes but lower the price of domestically produced shoes 
C) lower the price of Brazilian shoes but raise the price of domestically produced shoes 
D) lower the price of both Brazilian and domestically produced shoes 
E) benefit the producers of shoes in Brazil

Question 2

Which of the following best defines foreign exchange?

Accepted Answer

A) a trade between two countries 
B) the market where exporting and importing activities take place 
C) the price of a currency relative to another currency 
D) the currency of another country used for trading 
E) the dollars that the United States uses to buy goods from other countries 
A) a trade between two countries 
B) the market where exporting and importing activities take place 
C) the price of a currency relative to another currency 
D) the currency of another country used for trading 
E) the dollars that the United States uses to buy goods from other countries

Question 3

Firms

Accepted Answer

A) are where entrepreneurs combine resources 
B) are economic units formed by profit-seeking entrepreneurs 
C) are assumed to try to maximize profit 
D) reward entrepreneurs with profits, which are sales revenue minus the cost of production 
E) All of the answers are correct. 
A) are where entrepreneurs combine resources 
B) are economic units formed by profit-seeking entrepreneurs 
C) are assumed to try to maximize profit 
D) reward entrepreneurs with profits, which are sales revenue minus the cost of production 
E) All of the answers are correct.

Question 4

In the following situation the tax system is

Accepted Answer

A) progressive through all levels of income 
B) proportional throughout all levels of income 
C) regressive throughout all levels of income 
D) based on the benefits-received principle 
E) there is insufficient information to answer the question 
A) progressive through all levels of income 
B) proportional throughout all levels of income 
C) regressive throughout all levels of income 
D) based on the benefits-received principle 
E) there is insufficient information to answer the question

Question 5

Consider a system in which a person earning $10, 000 pays $1, 000 in taxes, a person earning $25, 000 pays $2, 000, and someone earning $60, 000 pays $4, 000.What type of tax is this?

Accepted Answer

A) progressive 
B) proportional 
C) regressive 
D) property tax 
E) one based on the benefits principle of taxation 
A) progressive 
B) proportional 
C) regressive 
D) property tax 
E) one based on the benefits principle of taxation

Question 6

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

Accepted Answer

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

Question 7

Which of the following is a justification for taxes?

Accepted Answer

A) the ability-to-pay principle 
B) the progressive tax principle 
C) the proportional tax principle 
D) the regressive tax principle 
E) the desire of the government to spend more funds 
A) the ability-to-pay principle 
B) the progressive tax principle 
C) the proportional tax principle 
D) the regressive tax principle 
E) the desire of the government to spend more funds

Question 8

A disadvantage of the corporate form of business organization is that corporate income is taxed twice.

Accepted Answer

A) True 
 B)False

Question 9

Determining the most socially desirable level of income equality or inequality

Accepted Answer

A) is done through markets, rather than by the government 
B) is done directly by firms 
C) involves normative economics 
D) involves evaluation of public goods 
E) involves evaluation of all externalities, both positive and negative 
A) is done through markets, rather than by the government 
B) is done directly by firms 
C) involves normative economics 
D) involves evaluation of public goods 
E) involves evaluation of all externalities, both positive and negative

Question 10

One explanation for the increased participation of married women in the U.S.labor force is that

Accepted Answer

A) fewer women are being trained for household work by the public school system 
B) rapid growth in the service sector has provided additional job opportunities for women 
C) the cost of professional day care has increased 
D) couples are having more children 
E) husbands earn more today than they did previously 
A) fewer women are being trained for household work by the public school system 
B) rapid growth in the service sector has provided additional job opportunities for women 
C) the cost of professional day care has increased 
D) couples are having more children 
E) husbands earn more today than they did previously

Question 11

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

Accepted Answer

A) Production became more reliant on highly specialized equipment. 
B) A more efficient division of labor was promoted. 
C) Workers bore much of the costs of production. 
D) The transaction costs of contracting with individual resource owners were reduced. 
E) Technological development increased the productivity of most workers. 
A) Production became more reliant on highly specialized equipment. 
B) A more efficient division of labor was promoted. 
C) Workers bore much of the costs of production. 
D) The transaction costs of contracting with individual resource owners were reduced. 
E) Technological development increased the productivity of most workers.

Question 12

Which of the following is a result of increased real wages in the United States?

Accepted Answer

A) a decrease in the quantity of services demanded by households 
B) an increase in the opportunity cost of remaining employed in the home 
C) a decrease in the opportunity cost of working outside the home 
D) a decline in the number of households providing labor outside the home 
E) reduced use of labor-saving devices in households 
A) a decrease in the quantity of services demanded by households 
B) an increase in the opportunity cost of remaining employed in the home 
C) a decrease in the opportunity cost of working outside the home 
D) a decline in the number of households providing labor outside the home 
E) reduced use of labor-saving devices in households

Question 13

Owners of corporations are referred to most frequently as

Accepted Answer

A) entrepreneurs 
B) lien holders 
C) limited partners 
D) managers 
E) stockholders 
A) entrepreneurs 
B) lien holders 
C) limited partners 
D) managers 
E) stockholders

Question 14

Which of the following accounts for the largest percentage of spending by households in the United States?

Accepted Answer

A) durable goods 
B) nondurable goods 
C) services 
D) insurance payments 
E) underground activities (e.g., illegal activities) 
A) durable goods 
B) nondurable goods 
C) services 
D) insurance payments 
E) underground activities (e.g., illegal activities)

Question 15

Stockholders share in the profits of a corporation

Accepted Answer

A) in proportion to their years of stock ownership 
B) in proportion to their ownership of stock 
C) equally regardless of number of shares owned 
D) only if they participate in firm management decisions 
E) only if they attend stockholders' meetings 
A) in proportion to their years of stock ownership 
B) in proportion to their ownership of stock 
C) equally regardless of number of shares owned 
D) only if they participate in firm management decisions 
E) only if they attend stockholders' meetings

Question 16

Which of the following would indicate that an income tax is progressive?

Accepted Answer

A) high-income people pay $3, 000; low-income people pay $1, 000 
B) low-income people pay $3, 000; high-income people pay $1, 000 
C) high-income and low-income people all pay $1000 each 
D) high-income people pay 20 percent of their income in taxes; low-income people pay 10 percent 
E) both high-income and low-income people pay 10 percent of their income in taxes 
A) high-income people pay $3, 000; low-income people pay $1, 000 
B) low-income people pay $3, 000; high-income people pay $1, 000 
C) high-income and low-income people all pay $1000 each 
D) high-income people pay 20 percent of their income in taxes; low-income people pay 10 percent 
E) both high-income and low-income people pay 10 percent of their income in taxes

Question 17

When the social cost of production is greater than the private cost, we have a

Accepted Answer

A) positive externality 
B) negative externality 
C) public good 
D) private good 
E) positive spillover 
A) positive externality 
B) negative externality 
C) public good 
D) private good 
E) positive spillover

Question 18

Which of the following represents the best example of wages and salaries?

Accepted Answer

A) the paycheck that Freeda brings home from her job as a computer programer 
B) the interest that Hans earns from the savings account he has with USA Bank 
C) the revenue that Janet has left over after she pays all the expenses associated with running her software development business 
D) the check that Hunter receives each month for leasing his land to the natural gas company that is drilling on his land 
E) the check that Trisha gets each month from the Social Security Administration 
A) the paycheck that Freeda brings home from her job as a computer programer 
B) the interest that Hans earns from the savings account he has with USA Bank 
C) the revenue that Janet has left over after she pays all the expenses associated with running her software development business 
D) the check that Hunter receives each month for leasing his land to the natural gas company that is drilling on his land 
E) the check that Trisha gets each month from the Social Security Administration

Question 19

The fact that some people now work in virtual offices is an example of the

Accepted Answer

A) high cost of office space 
B) Information Revolution 
C) breakdown of society 
D) Industrial Revolution 
E) success of not-for-profit organizations 
A) high cost of office space 
B) Information Revolution 
C) breakdown of society 
D) Industrial Revolution 
E) success of not-for-profit organizations

Question 20

Most economists assume that the goal of elected officials is to promote the public interest.

Accepted Answer

A) True 
 B)False

Exam 3: Economic Decision Makers

Restricting imports of Brazilian shoes will

Which of the following best defines foreign exchange?

Firms

In the following situation the tax system is

Consider a system in which a person earning $10, 000 pays $1, 000 in taxes, a person earning $25, 000 pays $2, 000, and someone earning $60, 000 pays $4, 000.What type of tax is this?

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

Which of the following is a justification for taxes?

A disadvantage of the corporate form of business organization is that corporate income is taxed twice.

Determining the most socially desirable level of income equality or inequality

One explanation for the increased participation of married women in the U.S.labor force is that

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

Which of the following is a result of increased real wages in the United States?

Owners of corporations are referred to most frequently as

Which of the following accounts for the largest percentage of spending by households in the United States?

Stockholders share in the profits of a corporation

Which of the following would indicate that an income tax is progressive?

When the social cost of production is greater than the private cost, we have a

Which of the following represents the best example of wages and salaries?

The fact that some people now work in virtual offices is an example of the

Most economists assume that the goal of elected officials is to promote the public interest.

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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