Question 1

______ equals sales revenue minus the cost of production.

Accepted Answer

A)  Income 
B)  Profit 
C)  Dividends 
D)  Revenue 
E)  Cost 
A)  Income 
B)  Profit 
C)  Dividends 
D)  Revenue 
E)  Cost

Question 2

Consider a system in which a person earning $10,000 pays $1,000 in taxes, a person earning $25,000 pays $1,000 in taxes, and a person earning $60,000 pays $1,000 in taxes. Identify the correct statement.

Accepted Answer

A)  This is an example of regressive taxation. 
B)  This is an example of proportional taxation. 
C)  This is an example of progressive taxation. 
D)  This is an example of a tax based on the benefits-received principle. 
E)  This is an example of a Pigouvian tax. 
A)  This is an example of regressive taxation. 
B)  This is an example of proportional taxation. 
C)  This is an example of progressive taxation. 
D)  This is an example of a tax based on the benefits-received principle. 
E)  This is an example of a Pigouvian tax.

Question 3

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.

Question 4

Roxanne and Eileen live in an apartment building with a laundry room in the basement. Roxanne does her laundry at home, spending $4 and 5 hours per week. Eileen sends her laundry out, spending $20 and 15 minutes per week transporting the laundry. On the basis of the information given, which one of the following must be true?

Accepted Answer

A)  Roxanne earns more income than Eileen. 
B)  Eileen earns more total income than Roxanne. 
C)  Eileen enjoys doing laundry; Roxanne does not. 
D)  Eileen has less laundry than Roxanne. 
E)  Eileen and Roxanne attach different utilities to time spent doing laundry. 
A)  Roxanne earns more income than Eileen. 
B)  Eileen earns more total income than Roxanne. 
C)  Eileen enjoys doing laundry; Roxanne does not. 
D)  Eileen has less laundry than Roxanne. 
E)  Eileen and Roxanne attach different utilities to time spent doing laundry.

Question 5

Which of the following is an example of a business operated by a consumer cooperative?

Accepted Answer

A)  a grocery store 
B)  an apartment building 
C)  Sunkist, a farm cooperative owned and operated by citrus growers 
D)  a health plan 
E)  an electric-power facility 
A)  a grocery store 
B)  an apartment building 
C)  Sunkist, a farm cooperative owned and operated by citrus growers 
D)  a health plan 
E)  an electric-power facility

Question 6

Public goods are both rival and nonexclusive.

Accepted Answer

A) True 
 B)False

Question 7

Imposing a tax on an activity that generates an external benefit will cause participants in the activity to increase the amount of the activity undertaken.

Accepted Answer

A) True 
 B)False

Question 8

An example of a positive externality is _____

Accepted Answer

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

Question 9

If 1 euro is equal to $1.10, then French wine selling for 10 euros will cost _____ U.S. dollars.

Accepted Answer

A)  10.00 
B)  11.00 
C)  9.09 
D)  0.90 
E)  12.10 
A)  10.00 
B)  11.00 
C)  9.09 
D)  0.90 
E)  12.10

Question 10

Which of the following is not a reason why some production continues in households?

Accepted Answer

A)  Some household production requires many specialized resources. 
B)  The opportunity cost of household production has decreased over time. 
C)  Household production avoids taxes. 
D)  There have been important technological advances in household production. 
E)  Some households prefer the ability to control production. 
A)  Some household production requires many specialized resources. 
B)  The opportunity cost of household production has decreased over time. 
C)  Household production avoids taxes. 
D)  There have been important technological advances in household production. 
E)  Some households prefer the ability to control production.

Question 11

Since 1930, U.S. government spending as a percent of GDP has _____

Accepted Answer

A)  increased. 
B)  decreased by 5 percent every year. 
C)  stayed the same. 
D)  showed no particular trend. 
E)  decreased by 2 percent every year. 
A)  increased. 
B)  decreased by 5 percent every year. 
C)  stayed the same. 
D)  showed no particular trend. 
E)  decreased by 2 percent every year.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

A major disadvantage of the corporate form of business is limited liability.

Accepted Answer

A) True 
 B)False

Question 14

The difference between fiscal policy and monetary policy is that _____

Accepted Answer

A)  fiscal policy is a macroeconomic policy, but monetary policy is a microeconomic policy. 
B)  monetary policy is a macroeconomic policy, but fiscal policy is a microeconomic policy. 
C)  fiscal policy involves regulation of natural monopolies, but monetary policy involves the provision of public goods. 
D)  monetary policy involves regulation of the money supply, but fiscal policy involves government spending and taxing. 
E)  fiscal policy involves the promotion of competition, but monetary policy involves collecting money to pay for taxes. 
A)  fiscal policy is a macroeconomic policy, but monetary policy is a microeconomic policy. 
B)  monetary policy is a macroeconomic policy, but fiscal policy is a microeconomic policy. 
C)  fiscal policy involves regulation of natural monopolies, but monetary policy involves the provision of public goods. 
D)  monetary policy involves regulation of the money supply, but fiscal policy involves government spending and taxing. 
E)  fiscal policy involves the promotion of competition, but monetary policy involves collecting money to pay for taxes.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Natural monopolies occur when _____

Accepted Answer

A)  government antitrust laws are too weak or not enforced. 
B)  negative externalities are present in the production process. 
C)  firms collude to set prices and divide the market among themselves. 
D)  one firm can service the market more cheaply than two or more firms can. 
E)  a public good is produced by a private firm. 
A)  government antitrust laws are too weak or not enforced. 
B)  negative externalities are present in the production process. 
C)  firms collude to set prices and divide the market among themselves. 
D)  one firm can service the market more cheaply than two or more firms can. 
E)  a public good is produced by a private firm.

Question 17

Revenue for the state governments in the United States comes primarily from income and sales taxes.

Accepted Answer

A) True 
 B)False

Question 18

Household production still exists because it often requires fewer specialized resources than market production does.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not a function of the government?

Accepted Answer

A)  the promotion of competition 
B)  the stabilization of the economy to achieve macroeconomic goals 
C)  the redistribution of income through taxation and transfer payments 
D)  the production of public goods 
E)  the provision of all private goods in the economy 
A)  the promotion of competition 
B)  the stabilization of the economy to achieve macroeconomic goals 
C)  the redistribution of income through taxation and transfer payments 
D)  the production of public goods 
E)  the provision of all private goods in the economy

Question 20

Tax ____ indicates who actually bears the burden of the tax.

Accepted Answer

A)  benefits 
B)  incidence 
C)  proportion 
D)  margin 
E)  progression 
A)  benefits 
B)  incidence 
C)  proportion 
D)  margin 
E)  progression

______ equals sales revenue minus the cost of production.

Consider a system in which a person earning $10,000 pays $1,000 in taxes, a person earning $25,000 pays $1,000 in taxes, and a person earning $60,000 pays $1,000 in taxes. Identify the correct statement.

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

Which of the following is an example of a business operated by a consumer cooperative?

Public goods are both rival and nonexclusive.

Imposing a tax on an activity that generates an external benefit will cause participants in the activity to increase the amount of the activity undertaken.

An example of a positive externality is _____

If 1 euro is equal to $1.10, then French wine selling for 10 euros will cost _____ U.S. dollars.

Which of the following is not a reason why some production continues in households?

Since 1930, U.S. government spending as a percent of GDP has _____

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

A major disadvantage of the corporate form of business is limited liability.

The difference between fiscal policy and monetary policy is that _____

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

Natural monopolies occur when _____

Revenue for the state governments in the United States comes primarily from income and sales taxes.

Household production still exists because it often requires fewer specialized resources than market production does.

Which of the following is not a function of the government?

Tax ____ indicates who actually bears the burden of the tax.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 3: Economic Decision Makers.

______ equals sales revenue minus the cost of production.

Consider a system in which a person earning $10,000 pays $1,000 in taxes, a person earning $25,000 pays $1,000 in taxes, and a person earning $60,000 pays $1,000 in taxes. Identify the correct statement.

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

Which of the following is an example of a business operated by a consumer cooperative?

Public goods are both rival and nonexclusive.

Imposing a tax on an activity that generates an external benefit will cause participants in the activity to increase the amount of the activity undertaken.

An example of a positive externality is _____

If 1 euro is equal to $1.10, then French wine selling for 10 euros will cost _____ U.S. dollars.

Which of the following is not a reason why some production continues in households?

Since 1930, U.S. government spending as a percent of GDP has _____

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

A major disadvantage of the corporate form of business is limited liability.

The difference between fiscal policy and monetary policy is that _____

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

Natural monopolies occur when _____

Revenue for the state governments in the United States comes primarily from income and sales taxes.

Household production still exists because it often requires fewer specialized resources than market production does.

Which of the following is not a function of the government?

Tax ____ indicates who actually bears the burden of the tax.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters