Question 1

The best example of a merit good or activity is:

Accepted Answer

A)  excessive consumption of pork. 
B)  providing free beer to teenagers. 
C)  teaching baseball to boys and girls in the community. 
D)  exercising too much. 
A)  excessive consumption of pork. 
B)  providing free beer to teenagers. 
C)  teaching baseball to boys and girls in the community. 
D)  exercising too much.

Question 2

During the Industrial Revolution:

Accepted Answer

A)  feudal lords lost their power to artisans. 
B)  mercantilists lost their power to capitalists. 
C)  artisans lost their power to mercantilists. 
D)  capitalists lost their power to mercantilists. 
A)  feudal lords lost their power to artisans. 
B)  mercantilists lost their power to capitalists. 
C)  artisans lost their power to mercantilists. 
D)  capitalists lost their power to mercantilists.

Question 3

For a market to exist:

Accepted Answer

A)  private property rights must be allocated and defended by government. 
B)  government must guarantee equal treatment for all. 
C)  individuals must be concerned with the social good. 
D)  everyone must have identical wants and desires. 
A)  private property rights must be allocated and defended by government. 
B)  government must guarantee equal treatment for all. 
C)  individuals must be concerned with the social good. 
D)  everyone must have identical wants and desires.

Question 4

Businesses 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

Businesses do all of the following except:

Accepted Answer

A)  pay taxes to the government. 
B)  demand labor services from households in the factor market. 
C)  demand goods and services from households in the goods market. 
D)  supply goods and services to the government in the goods market. 
A)  pay taxes to the government. 
B)  demand labor services from households in the factor market. 
C)  demand goods and services from households in the goods market. 
D)  supply goods and services to the government in the goods market.

Question 6

Capitalism:

Accepted Answer

A)  is based on private property and the market. 
B)  does not have a rationing mechanism. 
C)  gives private property rights to government. 
D)  relies on market forces to establish initial property rights. 
A)  is based on private property and the market. 
B)  does not have a rationing mechanism. 
C)  gives private property rights to government. 
D)  relies on market forces to establish initial property rights.

Question 7

The most important difference between domestic governments and international organizations is that:

Accepted Answer

A)  international organizations are more effective since membership is voluntary. 
B)  domestic governments are more effective since national self-interest is not constrained by international obligations. 
C)  international organizations are less effective since they have no means of forcing members to comply. 
D)  domestic governments are less effective because they are more concerned about international public opinion. 
A)  international organizations are more effective since membership is voluntary. 
B)  domestic governments are more effective since national self-interest is not constrained by international obligations. 
C)  international organizations are less effective since they have no means of forcing members to comply. 
D)  domestic governments are less effective because they are more concerned about international public opinion.

Question 8

Private property rights are essential to market economies.

Accepted Answer

A) True 
 B)False

Question 9

The Marxist critique of capitalism was based on the notion that:

Accepted Answer

A)  a capitalist system ignored traditional class roles. 
B)  efficient allocation of resources was not a worthwhile goal. 
C)  the proletariat class exploited the capitalist class, which created all the value inherent in goods. 
D)  the capitalist class exploited the proletariat class, which created all the value inherent in goods. 
A)  a capitalist system ignored traditional class roles. 
B)  efficient allocation of resources was not a worthwhile goal. 
C)  the proletariat class exploited the capitalist class, which created all the value inherent in goods. 
D)  the capitalist class exploited the proletariat class, which created all the value inherent in goods.

Question 10

In principle, socialism is:

Accepted Answer

A)  less concerned about fairness than capitalism. 
B)  just as concerned about fairness as capitalism. 
C)  more concerned about fairness than capitalism. 
D)  not concerned about fairness at all. 
A)  less concerned about fairness than capitalism. 
B)  just as concerned about fairness as capitalism. 
C)  more concerned about fairness than capitalism. 
D)  not concerned about fairness at all.

Question 11

Which of the following is a good example of government's attempt to correct for macroeconomic externalities?

Accepted Answer

A)  Preventing excessive amounts of pollution 
B)  Providing public goods 
C)  Maintaining full employment 
D)  Providing for smoke-free public spaces 
A)  Preventing excessive amounts of pollution 
B)  Providing public goods 
C)  Maintaining full employment 
D)  Providing for smoke-free public spaces

Question 12

Some argue that Sweden's generous welfare benefits, which pay people who lose their jobs as much as 80 percent of previous incomes for three years, has resulted in too-high unemployment. This can be seen as an example of:

Accepted Answer

A)  market failure due to unfair conditions produced by the labor market. 
B)  government not correcting externalities produced by the market. 
C)  government failure in fostering a competitive market environment. 
D)  globalization causing hardworking youth to emigrate. 
A)  market failure due to unfair conditions produced by the labor market. 
B)  government not correcting externalities produced by the market. 
C)  government failure in fostering a competitive market environment. 
D)  globalization causing hardworking youth to emigrate.

Question 13

Which of the following is one of the macroeconomic goals established by the 1946 Employment Act?

Accepted Answer

A)  Preventing large fluctuations in exchange rates 
B)  Maintaining a constant level of consumer expenditure 
C)  Providing an economic environment conducive to growth 
D)  Ensuring that employers pay workers a minimum wage sufficient to escape poverty 
A)  Preventing large fluctuations in exchange rates 
B)  Maintaining a constant level of consumer expenditure 
C)  Providing an economic environment conducive to growth 
D)  Ensuring that employers pay workers a minimum wage sufficient to escape poverty

Question 14

Socialists saw state socialism as:

Accepted Answer

A)  the final stage of socialism. 
B)  a preliminary state leading to capitalism. 
C)  a transition stage to pure socialism. 
D)  a state following pure socialism. 
A)  the final stage of socialism. 
B)  a preliminary state leading to capitalism. 
C)  a transition stage to pure socialism. 
D)  a state following pure socialism.

Question 15

International market failures:

Accepted Answer

A)  are more likely to be solved in the presence of a world government. 
B)  are less likely to be solved in the presence of a world government. 
C)  are equally likely to be solved in the presence or absence of a world government. 
D)  do not occur in the presence or absence of a world government. 
A)  are more likely to be solved in the presence of a world government. 
B)  are less likely to be solved in the presence of a world government. 
C)  are equally likely to be solved in the presence or absence of a world government. 
D)  do not occur in the presence or absence of a world government.

Question 16

If a firm's total revenue is $10,000 and its total costs are $9,000, then its profits are:

Accepted Answer

A)  −$1,000. 
B)  $1,000. 
C)  $10,000. 
D)  $19,000. 
A)  −$1,000. 
B)  $1,000. 
C)  $10,000. 
D)  $19,000.

Question 17

In contrast to the capitalism of the early Industrial Revolution, both feudalism and mercantilism:

Accepted Answer

A)  had stronger central government intervention in economic life. 
B)  expected tradition to answer the central coordination problems. 
C)  relied less on the invisible hand to coordinate economic decisions. 
D)  relied less on state intervention to promote economic growth. 
A)  had stronger central government intervention in economic life. 
B)  expected tradition to answer the central coordination problems. 
C)  relied less on the invisible hand to coordinate economic decisions. 
D)  relied less on state intervention to promote economic growth.

Question 18

Households do all of the following except:

Accepted Answer

A)  receive income that is redistributed by the government. 
B)  demand labor services from businesses in the factor market. 
C)  demand goods and services from businesses in the goods market. 
D)  supply labor services to the government in the factor market. 
A)  receive income that is redistributed by the government. 
B)  demand labor services from businesses in the factor market. 
C)  demand goods and services from businesses in the goods market. 
D)  supply labor services to the government in the factor market.

Question 19

A business is most likely to be characterized as a corporation if:

Accepted Answer

A)  it has two or more owners, with each owner liable for every other owner's actions. 
B)  it has only one owner. 
C)  it is legally treated as a person and owned by stockholders who are liable for the actions of the corporate "person" regardless of their investment. 
D)  each owner is liable only to the extent of his or her own investment. 
A)  it has two or more owners, with each owner liable for every other owner's actions. 
B)  it has only one owner. 
C)  it is legally treated as a person and owned by stockholders who are liable for the actions of the corporate "person" regardless of their investment. 
D)  each owner is liable only to the extent of his or her own investment.

Question 20

Socialism in theory is based on the principle that individuals should:

Accepted Answer

A)  look out for their own interests and let the government look out for the public interest. 
B)  rely on the government to meet their needs. 
C)  cooperate with one another to meet their needs. 
D)  compete with one another to meet their needs. 
A)  look out for their own interests and let the government look out for the public interest. 
B)  rely on the government to meet their needs. 
C)  cooperate with one another to meet their needs. 
D)  compete with one another to meet their needs.

Exam 3: Economic Institutions

The best example of a merit good or activity is:

During the Industrial Revolution:

For a market to exist:

Businesses are on the:

Businesses do all of the following except:

Capitalism:

The most important difference between domestic governments and international organizations is that:

Private property rights are essential to market economies.

The Marxist critique of capitalism was based on the notion that:

In principle, socialism is:

Which of the following is a good example of government's attempt to correct for macroeconomic externalities?

Some argue that Sweden's generous welfare benefits, which pay people who lose their jobs as much as 80 percent of previous incomes for three years, has resulted in too-high unemployment. This can be seen as an example of:

Which of the following is one of the macroeconomic goals established by the 1946 Employment Act?

Socialists saw state socialism as:

International market failures:

If a firm's total revenue is $10,000 and its total costs are $9,000, then its profits are:

In contrast to the capitalism of the early Industrial Revolution, both feudalism and mercantilism:

Households do all of the following except:

A business is most likely to be characterized as a corporation if:

Socialism in theory is based on the principle that individuals should:

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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