Question 1

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 2

Define consumer sovereignty.How does consumer sovereignty help determine what businesses produce? How do businesses influence consumer sovereignty?

Accepted Answer

Consumer sovereignty means that the wish

Question 3

Briefly explain why socialist economic systems thwarted market forces.

Accepted Answer

According to the laws of supply and dema

Question 4

Market failures:

Accepted Answer

A) can always be corrected through government action. 
B) can never be corrected through government action. 
C) are sometimes made worse by government failures. 
D) lead to a desired allocation of resources. 
A) can always be corrected through government action. 
B) can never be corrected through government action. 
C) are sometimes made worse by government failures. 
D) lead to a desired allocation of resources.

Question 5

Which of the following is most likely an action that supports competition?

Accepted Answer

A) Requiring professionals, such as architects and engineers, to be licensed 
B) Using tariffs to restrict the ability of foreign firms to sell products in domestic markets 
C) Preventing two dominant firms in the same market from merging 
D) Granting subsidies to farmers based on production levels 
A) Requiring professionals, such as architects and engineers, to be licensed 
B) Using tariffs to restrict the ability of foreign firms to sell products in domestic markets 
C) Preventing two dominant firms in the same market from merging 
D) Granting subsidies to farmers based on production levels

Question 6

The U.S.economy may be thought of as consisting of three large groups.What are they? How does each group interact with the others? How does the factor market differ from the goods market? What major aspect of a modern market economy is omitted from this picture?

Accepted Answer

Three large groups of decision makers ma

Question 7

Markets coordinate economic activity through:

Accepted Answer

A) the price mechanism. 
B) commanding individuals what to do. 
C) asking individuals what to do. 
D) the legal mechanism. 
A) the price mechanism. 
B) commanding individuals what to do. 
C) asking individuals what to do. 
D) the legal mechanism.

Question 8

One advantage of a partnership over a corporation is:

Accepted Answer

A) greater accountability. 
B) limited liability. 
C) increased ability to get funds. 
D) the ability to share the work and risks of business. 
A) greater accountability. 
B) limited liability. 
C) increased ability to get funds. 
D) the ability to share the work and risks of business.

Question 9

Suppose that at the current price, consumers would like to purchase 10 million large-screen televisions and 15 million are available. When the market coordinates the demand and supply for large-screen televisions, the price of large-screen televisions will:

Accepted Answer

A) rise. 
B) fall. 
C) stay the same. 
D) be fixed by the government. 
A) rise. 
B) fall. 
C) stay the same. 
D) be fixed by the government.

Question 10

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 11

If federal, state, and local governments were unable to raise any revenue, then government's role as:

Accepted Answer

A) only a referee would be unaffected. 
B) only an actor would be unaffected. 
C) both an actor and a referee would be eliminated. 
D) both an actor and a referee would be unaffected. 
A) only a referee would be unaffected. 
B) only an actor would be unaffected. 
C) both an actor and a referee would be eliminated. 
D) both an actor and a referee would be unaffected.

Question 12

The L3C (low profit limited liability company)type of corporation, sometimes called a benefit corporation, ignores profit considerations and instead pursues only social goals.

Accepted Answer

A) True 
 B)False

Question 13

Socialism in theory is an economic system in which:

Accepted Answer

A) government sees to it that people work for the common good until they could be relied upon to do that on their own. 
B) the invisible hand insures that individual decisions are made for the common good. 
C) government owns the means of production, but individual self-interest determines how production is organized. 
D) individuals are able to act in the best interest of everyone without direction from government or the invisible hand. 
A) government sees to it that people work for the common good until they could be relied upon to do that on their own. 
B) the invisible hand insures that individual decisions are made for the common good. 
C) government owns the means of production, but individual self-interest determines how production is organized. 
D) individuals are able to act in the best interest of everyone without direction from government or the invisible hand.

Question 14

What is a market economy and why is it essential that government play a role in such an economy?

Accepted Answer

A market economy is an economic system b

Question 15

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.

Question 16

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 17

There are three primary forms of businesses in the United States.List them and provide an example of each form.

Accepted Answer

The three primary forms of business are;

Question 18

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 19

In feudalism, serfdom was maintained primarily through:

Accepted Answer

A) market forces. 
B) tradition. 
C) supply and demand. 
D) economic forces. 
A) market forces. 
B) tradition. 
C) supply and demand. 
D) economic forces.

Question 20

Which of the following is not one of the three principal components of a socialist economy?

Accepted Answer

A) Government ownership of the means of production 
B) Workers directed by a government planning board as to where they will work and how much they will be paid 
C) Entrepreneurs are encouraged by the profit motive, rather than government directive, to satisfy consumer wants in the most efficient manner possible 
D) Distribution is according to need 
A) Government ownership of the means of production 
B) Workers directed by a government planning board as to where they will work and how much they will be paid 
C) Entrepreneurs are encouraged by the profit motive, rather than government directive, to satisfy consumer wants in the most efficient manner possible 
D) Distribution is according to need

Exam 3: Economic Institutions

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

Define consumer sovereignty.How does consumer sovereignty help determine what businesses produce? How do businesses influence consumer sovereignty?

Briefly explain why socialist economic systems thwarted market forces.

Market failures:

Which of the following is most likely an action that supports competition?

The U.S.economy may be thought of as consisting of three large groups.What are they? How does each group interact with the others? How does the factor market differ from the goods market? What major aspect of a modern market economy is omitted from this picture?

Markets coordinate economic activity through:

One advantage of a partnership over a corporation is:

Suppose that at the current price, consumers would like to purchase 10 million large-screen televisions and 15 million are available. When the market coordinates the demand and supply for large-screen televisions, the price of large-screen televisions will:

The difference between mercantilism and feudalism is that under mercantilism:

If federal, state, and local governments were unable to raise any revenue, then government's role as:

The L3C (low profit limited liability company)type of corporation, sometimes called a benefit corporation, ignores profit considerations and instead pursues only social goals.

Socialism in theory is an economic system in which:

What is a market economy and why is it essential that government play a role in such an economy?

In a feudalist society, in comparison with mercantilism:

Businesses do all of the following except:

There are three primary forms of businesses in the United States.List them and provide an example of each form.

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

In feudalism, serfdom was maintained primarily through:

Which of the following is not one of the three principal components of a socialist economy?

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

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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