Question 1

Global corporations in general are:

Accepted Answer

A)  more difficult to regulate than domestic corporations. 
B)  as difficult to regulate as domestic corporations. 
C)  less difficult to regulate than domestic corporations. 
D)  beyond the scope of government regulation at any level. 
A)  more difficult to regulate than domestic corporations. 
B)  as difficult to regulate as domestic corporations. 
C)  less difficult to regulate than domestic corporations. 
D)  beyond the scope of government regulation at any level. A

Question 2

A primary goal of the World Bank is to:

Accepted Answer

A)  channel low-interest loans to developing countries to foster economic growth. 
B)  work out repayment plans for developing countries with large international debt. 
C)  finance private investment projects around the world. 
D)  negotiate trade agreements between nations. 
A)  channel low-interest loans to developing countries to foster economic growth. 
B)  work out repayment plans for developing countries with large international debt. 
C)  finance private investment projects around the world. 
D)  negotiate trade agreements between nations. A

Question 3

In a feudalist society, in comparison with mercantilism:

Accepted Answer

A)  merchants play a more important political role than serfs. 
B)  tradition plays a more important role than the government. 
C)  government plays a large role in determining the what, how, and for whom decisions. 
D)  markets make the central economic decisions. 
A)  merchants play a more important political role than serfs. 
B)  tradition plays a more important role than the government. 
C)  government plays a large role in determining the what, how, and for whom decisions. 
D)  markets make the central economic decisions. B

Question 4

Households are on the:

Accepted Answer

A)  supply side of factor markets and the demand side of goods markets. 
B)  demand side of factor markets and the supply side of goods markets. 
C)  supply side of both factor markets and goods markets. 
D)  demand side of both factor markets and goods markets. 
A)  supply side of factor markets and the demand side of goods markets. 
B)  demand side of factor markets and the supply side of goods markets. 
C)  supply side of both factor markets and goods markets. 
D)  demand side of both factor markets and goods markets.

Question 5

The difference between an L3C (low profit limited liability company) and other types of businesses is that:

Accepted Answer

A)  L3Cs are chartered by the government and all profits are retained by the government. 
B)  L3Cs do not pursue profit, but instead seek social goals. 
C)  L3Cs explicitly take on a social mission as well as profit-seeking. 
D)  L3Cs cannot accept government funding of any kind. 
A)  L3Cs are chartered by the government and all profits are retained by the government. 
B)  L3Cs do not pursue profit, but instead seek social goals. 
C)  L3Cs explicitly take on a social mission as well as profit-seeking. 
D)  L3Cs cannot accept government funding of any kind.

Question 6

A defining difference in what makes a firm a sole proprietorship, partnerships, or a corporation is the:

Accepted Answer

A)  size of each type of business. 
B)  number of each type of business. 
C)  nature of ownership and accountability for each type of business. 
D)  profitability of each type of business. 
A)  size of each type of business. 
B)  number of each type of business. 
C)  nature of ownership and accountability for each type of business. 
D)  profitability of each type of business.

Question 7

Which of the following statements is correct?

Accepted Answer

A)  Stockholders are legally liable for all the debt of a corporation. 
B)  A corporation is a business that is legally owned by its employees. 
C)  Corporations are legal entities that, in law, are treated as persons. 
D)  Most large companies and many small companies in the United States are not corporations. 
A)  Stockholders are legally liable for all the debt of a corporation. 
B)  A corporation is a business that is legally owned by its employees. 
C)  Corporations are legal entities that, in law, are treated as persons. 
D)  Most large companies and many small companies in the United States are not corporations.

Question 8

Capitalism and socialism have not existed forever. Capitalism came into existence in the:

Accepted Answer

A)  mid-1800s and socialism came into existence in the early 1900s. 
B)  early 1900s and socialism came into existence in the mid-1800s. 
C)  mid-1700s and socialism came into existence in the early 1900s. 
D)  early 1900s and socialism came into existence in the mid-1700s. 
A)  mid-1800s and socialism came into existence in the early 1900s. 
B)  early 1900s and socialism came into existence in the mid-1800s. 
C)  mid-1700s and socialism came into existence in the early 1900s. 
D)  early 1900s and socialism came into existence in the mid-1700s.

Question 9

A company such as Microsoft or Pepsi Co. is a legal hassle to organize, difficult to monitor, and possibly could double tax income. It is an example of a:

Accepted Answer

A)  consumer. 
B)  sole proprietorship. 
C)  partnership. 
D)  corporation. 
A)  consumer. 
B)  sole proprietorship. 
C)  partnership. 
D)  corporation.

Question 10

A socialist economy in theory:

Accepted Answer

A)  requires private ownership of property. 
B)  is coordinated by the invisible hand. 
C)  expects people to be altruistic. 
D)  expects people to be selfish. 
A)  requires private ownership of property. 
B)  is coordinated by the invisible hand. 
C)  expects people to be altruistic. 
D)  expects people to be selfish.

Question 11

A partnership is a business:

Accepted Answer

A)  with two or more owners, with each owner liable for every other owner's actions. 
B)  that has only one owner. 
C)  legally treated as a person and owned by stockholders who are not liable for the actions of the corporate "person." 
D)  in which each owner is liable only to the extent of his or her own investment. 
A)  with two or more owners, with each owner liable for every other owner's actions. 
B)  that has only one owner. 
C)  legally treated as a person and owned by stockholders who are not liable for the actions of the corporate "person." 
D)  in which each owner is liable only to the extent of his or her own investment.

Question 12

Some nutritionists consider junk food or eating junk food an example of:

Accepted Answer

A)  merit goods or activities. 
B)  demerit goods or activities. 
C)  positive externalities. 
D)  public goods. 
A)  merit goods or activities. 
B)  demerit goods or activities. 
C)  positive externalities. 
D)  public goods.

Question 13

Limited liability is a key advantage of partnerships and sole proprietorships over corporations.

Accepted Answer

A) True 
 B)False

Question 14

The difference between capitalism and mercantilism is that under capitalism:

Accepted Answer

A)  craft guilds rather than merchants own capital. 
B)  the invisible hand is more important than the government. 
C)  industrialists' views are represented by craft guild organizations. 
D)  the state plays a more active role in coordinating economic activity. 
A)  craft guilds rather than merchants own capital. 
B)  the invisible hand is more important than the government. 
C)  industrialists' views are represented by craft guild organizations. 
D)  the state plays a more active role in coordinating economic activity.

Question 15

When I benefit from my neighbors cleaning up their yard, I am experiencing a(n):

Accepted Answer

A)  merit good. 
B)  partnership. 
C)  economic pressure. 
D)  positive externality. 
A)  merit good. 
B)  partnership. 
C)  economic pressure. 
D)  positive externality.

Question 16

In a market economy:

Accepted Answer

A)  government owns the means of production so that it can produce what is in society's best interest. 
B)  businesses design their plans to maximize their profit and the market is relied upon to see that individual self-interest is consistent with society's interest. 
C)  workers are directed by government planning boards to produce what is in society's best interest. 
D)  government sets prices to make necessities affordable because it is in society's best interest to make necessities affordable. 
A)  government owns the means of production so that it can produce what is in society's best interest. 
B)  businesses design their plans to maximize their profit and the market is relied upon to see that individual self-interest is consistent with society's interest. 
C)  workers are directed by government planning boards to produce what is in society's best interest. 
D)  government sets prices to make necessities affordable because it is in society's best interest to make necessities affordable.

Question 17

Feudalism and mercantilism relied on markets to solve the three main coordination problems.

Accepted Answer

A) True 
 B)False

Question 18

The difference between mercantilism and feudalism is that under mercantilism:

Accepted Answer

A)  merchants played a more important political role than kings. 
B)  the invisible hand played a more important role than the government. 
C)  nation-states ruled by kings who coordinated the economic activity emerged. 
D)  economic rather than social and political forces made the central economic decisions. 
A)  merchants played a more important political role than kings. 
B)  the invisible hand played a more important role than the government. 
C)  nation-states ruled by kings who coordinated the economic activity emerged. 
D)  economic rather than social and political forces made the central economic decisions.

Question 19

Entrepreneurship is defined as the ability to:

Accepted Answer

A)  organize and get something done. 
B)  raise investment capital. 
C)  earn above-average profits. 
D)  minimize production costs. 
A)  organize and get something done. 
B)  raise investment capital. 
C)  earn above-average profits. 
D)  minimize production costs.

Question 20

In principle, households ultimately control:

Accepted Answer

A)  businesses. 
B)  the government. 
C)  both businesses and the government. 
D)  neither businesses nor the government. 
A)  businesses. 
B)  the government. 
C)  both businesses and the government. 
D)  neither businesses nor the government.

Exam 3: Economic Institutions

Global corporations in general are:

A primary goal of the World Bank is to:

In a feudalist society, in comparison with mercantilism:

Households are on the:

The difference between an L3C (low profit limited liability company) and other types of businesses is that:

A defining difference in what makes a firm a sole proprietorship, partnerships, or a corporation is the:

Which of the following statements is correct?

Capitalism and socialism have not existed forever. Capitalism came into existence in the:

A company such as Microsoft or Pepsi Co. is a legal hassle to organize, difficult to monitor, and possibly could double tax income. It is an example of a:

A socialist economy in theory:

A partnership is a business:

Some nutritionists consider junk food or eating junk food an example of:

Limited liability is a key advantage of partnerships and sole proprietorships over corporations.

The difference between capitalism and mercantilism is that under capitalism:

When I benefit from my neighbors cleaning up their yard, I am experiencing a(n):

In a market economy:

Feudalism and mercantilism relied on markets to solve the three main coordination problems.

The difference between mercantilism and feudalism is that under mercantilism:

Entrepreneurship is defined as the ability to:

In principle, households ultimately control:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

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