Question 1

A cottage industry is one that _____

Accepted Answer

A)  produces rural housing. 
B)  takes advantage of division of labor. 
C)  uses highly specialized resources in a complex production process. 
D)  produces cottage cheese. 
E)  carries out production in workers' homes. 
A)  produces rural housing. 
B)  takes advantage of division of labor. 
C)  uses highly specialized resources in a complex production process. 
D)  produces cottage cheese. 
E)  carries out production in workers' homes.

Question 2

Other revenue sources for the federal government include _____

Accepted Answer

A)  defense. 
B)  interest expenditures. 
C)  Social Security. 
D)  college tuition. 
E)  Medicare. 
A)  defense. 
B)  interest expenditures. 
C)  Social Security. 
D)  college tuition. 
E)  Medicare.

Question 3

You own stock worth an estimated $1 million in LPL Corp. In addition, you have personal assets worth another $2 million. Suppose LPL Corp. becomes insolvent, with debts exceeding assets by $15 million. Your personal wealth will decline by:

Accepted Answer

A)  $0. 
B)  $1 million. 
C)  $1.5 million. 
D)  $3 million. 
E)  your proportion of the total outstanding stock shares times $15 million. 
A)  $0. 
B)  $1 million. 
C)  $1.5 million. 
D)  $3 million. 
E)  your proportion of the total outstanding stock shares times $15 million.

Question 4

A good is more likely to be produced at home than in the market if _____.

Accepted Answer

A)  it requires few specialized resources. 
B)  the average cost of household production is high. 
C)  the marginal benefit from the good is higher than the marginal cost of production. 
D)  the marginal benefit from the good is lower than the marginal cost of production. 
E)  the opportunity cost of household production is high. 
A)  it requires few specialized resources. 
B)  the average cost of household production is high. 
C)  the marginal benefit from the good is higher than the marginal cost of production. 
D)  the marginal benefit from the good is lower than the marginal cost of production. 
E)  the opportunity cost of household production is high.

Question 5

Scott and Clark spend $50,000 each to form a law partnership. On the first day, someone trips over a potted plant in their lobby and sues them for $400,000. Which of the following is true?

Accepted Answer

A)  If a $400,000 judgment is passed against the partnership, then each partner will have to pay $50,000. 
B)  If a $400,000 judgment is passed against the partnership, and if Clark cannot afford to pay any of it, then Scott is liable for $400,000. 
C)  Scott's liability is limited to $300,000 if she owns three-quarters of the firm. 
D)  Each individual partner cannot be sued for more than $200,000. 
E)  The partner who put the potted plant in the office is personally responsible for the damages. 
A)  If a $400,000 judgment is passed against the partnership, then each partner will have to pay $50,000. 
B)  If a $400,000 judgment is passed against the partnership, and if Clark cannot afford to pay any of it, then Scott is liable for $400,000. 
C)  Scott's liability is limited to $300,000 if she owns three-quarters of the firm. 
D)  Each individual partner cannot be sued for more than $200,000. 
E)  The partner who put the potted plant in the office is personally responsible for the damages.

Question 6

Households act as demanders when they demand _____

Accepted Answer

A)  that corporate executives and government officials be held accountable for their actions. 
B)  dividends from the stocks they hold. 
C)  interest and capital gains from the bonds they hold. 
D)  goods and services from firms and governments. 
E)  payments for the goods and services they sell to firms and governments. 
A)  that corporate executives and government officials be held accountable for their actions. 
B)  dividends from the stocks they hold. 
C)  interest and capital gains from the bonds they hold. 
D)  goods and services from firms and governments. 
E)  payments for the goods and services they sell to firms and governments.

Question 7

Which of the following comprises less than a third of the for-profit businesses in the United States as measured by the sheer number of firms?

Accepted Answer

A)  small retail businesses 
B)  small service operations 
C)  part-time home-based businesses 
D)  small farms 
E)  multinational corporations 
A)  small retail businesses 
B)  small service operations 
C)  part-time home-based businesses 
D)  small farms 
E)  multinational corporations

Question 8

In the presence of externalities, market prices do not reflect all the social costs or benefits of an activity.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following components of U.S. household spending has grown the most over the past ten years?

Accepted Answer

A)  taxes 
B)  savings 
C)  spending on services 
D)  spending on nondurable goods 
E)  spending on durable goods 
A)  taxes 
B)  savings 
C)  spending on services 
D)  spending on nondurable goods 
E)  spending on durable goods

Question 10

One explanation for the change in the participation rate 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)  the rapid growth in the service sector has increased 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)  the rapid growth in the service sector has increased 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 occurred during the Industrial Revolution?

Accepted Answer

A)  Production became less reliant on highly specialized equipment. 
B)  A less efficient division of labor was promoted. 
C)  The use of machines in factory production increased. 
D)  The transaction costs of contracting with individual resource owners increased. 
E)  Technological development decreased the productivity of most workers. 
A)  Production became less reliant on highly specialized equipment. 
B)  A less efficient division of labor was promoted. 
C)  The use of machines in factory production increased. 
D)  The transaction costs of contracting with individual resource owners increased. 
E)  Technological development decreased the productivity of most workers.

Question 12

Luigi owns and operates a small restaurant. The income he receives from the restaurant is classified as _____

Accepted Answer

A)  savings. 
B)  proprietor's income. 
C)  wages and salaries. 
D)  rental income. 
E)  dividends. 
A)  savings. 
B)  proprietor's income. 
C)  wages and salaries. 
D)  rental income. 
E)  dividends.

Question 13

Which of the following is most likely to be a partnership?

Accepted Answer

A)  Uncle Mort's Red Wrigglers 
B)  The accounting firm of Hope and Williams 
C)  General Motors 
D)  The Boston Symphony Orchestra 
E)  The U.S. Post Office 
A)  Uncle Mort's Red Wrigglers 
B)  The accounting firm of Hope and Williams 
C)  General Motors 
D)  The Boston Symphony Orchestra 
E)  The U.S. Post Office

Question 14

A group of producers who join forces to buy supplies and equipment and to market their output is a(n) ______

Accepted Answer

A)  not-for-profit organization. 
B)  S corporation. 
C)  producer cooperative. 
D)  sole proprietorship. 
E)  cottage industry. 
A)  not-for-profit organization. 
B)  S corporation. 
C)  producer cooperative. 
D)  sole proprietorship. 
E)  cottage industry.

Question 15

Sole proprietorships produce more goods and services than any other form of business organization in the United States.

Accepted Answer

A) True 
 B)False

Question 16

Suppose you own a proprietorship that is in serious financial difficulty. The assets of the company are $100,000, but liabilities are $175,000. You also own stock in General Motors worth $200,000. If you file for bankruptcy, what amount of personal assets do you stand to lose?

Accepted Answer

A)  $100,000 
B)  $75,000 
C)  $200,000 
D)  $275,000 
E)  $375,000 
A)  $100,000 
B)  $75,000 
C)  $200,000 
D)  $275,000 
E)  $375,000

Question 17

The main source of revenue for state governments is _____

Accepted Answer

A)  property taxes. 
B)  income and sales taxes. 
C)  individual income taxes. 
D)  corporate taxes. 
E)  foreign taxes. 
A)  property taxes. 
B)  income and sales taxes. 
C)  individual income taxes. 
D)  corporate taxes. 
E)  foreign taxes.

Question 18

Trade restrictions result in all of the following except one. Which of the following is the exception?

Accepted Answer

A)  higher prices 
B)  fewer choices 
C)  improved quality 
D)  misallocation of resources 
E)  reduced competition 
A)  higher prices 
B)  fewer choices 
C)  improved quality 
D)  misallocation of resources 
E)  reduced competition

Question 19

Which of the following would indicate that a tax is regressive?

Accepted Answer

A)  High-income earners pay $5,000 in taxes; low-income earners pay $2,000 in taxes. 
B)  Both high-income and low-income earners pay $200 each in taxes. 
C)  High-income earners pay 20 percent of their income in taxes; low-income earners pay 10 percent of their income in taxes. 
D)  Both high-income and low-income earners pay 10 percent of their income in taxes. 
E)  Low-income earners are exempt from taxes. 
A)  High-income earners pay $5,000 in taxes; low-income earners pay $2,000 in taxes. 
B)  Both high-income and low-income earners pay $200 each in taxes. 
C)  High-income earners pay 20 percent of their income in taxes; low-income earners pay 10 percent of their income in taxes. 
D)  Both high-income and low-income earners pay 10 percent of their income in taxes. 
E)  Low-income earners are exempt from taxes.

Question 20

A legal entity owned by stockholders whose liability is limited to the value of their stock ownership is known as a(n) ______

Accepted Answer

A)  sole proprietorship. 
B)  partnership. 
C)  corporation. 
D)  nonprofit organization. 
E)  producer cooperative. 
A)  sole proprietorship. 
B)  partnership. 
C)  corporation. 
D)  nonprofit organization. 
E)  producer cooperative.

A cottage industry is one that _____

Other revenue sources for the federal government include _____

You own stock worth an estimated $1 million in LPL Corp. In addition, you have personal assets worth another $2 million. Suppose LPL Corp. becomes insolvent, with debts exceeding assets by $15 million. Your personal wealth will decline by:

A good is more likely to be produced at home than in the market if _____.

Scott and Clark spend $50,000 each to form a law partnership. On the first day, someone trips over a potted plant in their lobby and sues them for $400,000. Which of the following is true?

Households act as demanders when they demand _____

Which of the following comprises less than a third of the for-profit businesses in the United States as measured by the sheer number of firms?

In the presence of externalities, market prices do not reflect all the social costs or benefits of an activity.

Which of the following components of U.S. household spending has grown the most over the past ten years?

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

Which of the following occurred during the Industrial Revolution?

Luigi owns and operates a small restaurant. The income he receives from the restaurant is classified as _____

Which of the following is most likely to be a partnership?

A group of producers who join forces to buy supplies and equipment and to market their output is a(n) ______

Sole proprietorships produce more goods and services than any other form of business organization in the United States.

Suppose you own a proprietorship that is in serious financial difficulty. The assets of the company are $100,000, but liabilities are $175,000. You also own stock in General Motors worth $200,000. If you file for bankruptcy, what amount of personal assets do you stand to lose?

The main source of revenue for state governments is _____

Trade restrictions result in all of the following except one. Which of the following is the exception?

Which of the following would indicate that a tax is regressive?

A legal entity owned by stockholders whose liability is limited to the value of their stock ownership is known as a(n) ______

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.

A cottage industry is one that _____

Other revenue sources for the federal government include _____

You own stock worth an estimated $1 million in LPL Corp. In addition, you have personal assets worth another $2 million. Suppose LPL Corp. becomes insolvent, with debts exceeding assets by $15 million. Your personal wealth will decline by:

A good is more likely to be produced at home than in the market if _____.

Scott and Clark spend $50,000 each to form a law partnership. On the first day, someone trips over a potted plant in their lobby and sues them for $400,000. Which of the following is true?

Households act as demanders when they demand _____

Which of the following comprises less than a third of the for-profit businesses in the United States as measured by the sheer number of firms?

In the presence of externalities, market prices do not reflect all the social costs or benefits of an activity.

Which of the following components of U.S. household spending has grown the most over the past ten years?

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

Which of the following occurred during the Industrial Revolution?

Luigi owns and operates a small restaurant. The income he receives from the restaurant is classified as _____

Which of the following is most likely to be a partnership?

A group of producers who join forces to buy supplies and equipment and to market their output is a(n) ______

Sole proprietorships produce more goods and services than any other form of business organization in the United States.

Suppose you own a proprietorship that is in serious financial difficulty. The assets of the company are $100,000, but liabilities are $175,000. You also own stock in General Motors worth $200,000. If you file for bankruptcy, what amount of personal assets do you stand to lose?

The main source of revenue for state governments is _____

Trade restrictions result in all of the following except one. Which of the following is the exception?

Which of the following would indicate that a tax is regressive?

A legal entity owned by stockholders whose liability is limited to the value of their stock ownership is known as a(n) ______

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