Question 1

What gets produced in a market economy is determined by _____

Accepted Answer

A)  government. 
B)  households. 
C)  firms. 
D)  technology. 
E)  central planning. 
A)  government. 
B)  households. 
C)  firms. 
D)  technology. 
E)  central planning.

Question 2

A firm with multiple owners who share the profits and bear unlimited liability for the firm's losses and debts is known as a(n) ______

Accepted Answer

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

Question 3

A quota is _____

Accepted Answer

A)  a tax on imports. 
B)  a legal limit on the quantities of goods that can be imported. 
C)  a voluntary limit on the quantities of goods that can be imported. 
D)  a quality restriction on imports. 
E)  a subsidy for exports. 
A)  a tax on imports. 
B)  a legal limit on the quantities of goods that can be imported. 
C)  a voluntary limit on the quantities of goods that can be imported. 
D)  a quality restriction on imports. 
E)  a subsidy for exports.

Question 4

The movement in U.S. population from the farms to urban areas was caused primarily by _____

Accepted Answer

A)  each member of a farm family specializing in a particular set of tasks. 
B)  a sharp increase in farm productivity. 
C)  a decline in the demand for labor in urban areas. 
D)  a sharp decline in the demand for agricultural products. 
E)  increased education among married women. 
A)  each member of a farm family specializing in a particular set of tasks. 
B)  a sharp increase in farm productivity. 
C)  a decline in the demand for labor in urban areas. 
D)  a sharp decline in the demand for agricultural products. 
E)  increased education among married women.

Question 5

Import quotas on sugar entering the United States result in lower sugar prices in the United States.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would indicate that income tax is progressive?

Accepted Answer

A)  High-income earners pay $3,000 in taxes; low-income earners pay $1,000. 
B)  Low-income earners pay $3,000 in taxes; high-income earners pay $1,000. 
C)  Both high-income and low-income earners pay $1,000 each in taxes. 
D)  High-income earners pay 20 percent of their income in taxes; low-income earners pay 10 percent. 
E)  Both high-income and low-income earners pay 10 percent of their income in taxes. 
A)  High-income earners pay $3,000 in taxes; low-income earners pay $1,000. 
B)  Low-income earners pay $3,000 in taxes; high-income earners pay $1,000. 
C)  Both high-income and low-income earners pay $1,000 each in taxes. 
D)  High-income earners pay 20 percent of their income in taxes; low-income earners pay 10 percent. 
E)  Both high-income and low-income earners pay 10 percent of their income in taxes.

Question 7

You are more likely to hire a plumber to repair a leaky drainpipe if _____.

Accepted Answer

A)  the tax rate on your earned income rises. 
B)  you already own the specialized tools required to complete the plumbing repair work. 
C)  the opportunity cost of your time is high. 
D)  you possess knowledge and experience in plumbing repair work. 
E)  the transaction cost of entering into a plumbing contract increases because of government regulations. 
A)  the tax rate on your earned income rises. 
B)  you already own the specialized tools required to complete the plumbing repair work. 
C)  the opportunity cost of your time is high. 
D)  you possess knowledge and experience in plumbing repair work. 
E)  the transaction cost of entering into a plumbing contract increases because of government regulations.

Question 8

Caleb teaches economics at Happy State University and is paid $50,000 per year. He also provides economic forecasts for local businesses for which he charges $100 per hour. Which of the following is true?

Accepted Answer

A)  All of Caleb's income is salary. 
B)  Some of Caleb's income is salary, and some is personal interest. 
C)  All of Caleb's income is proprietor's income. 
D)  Some of Caleb's income is salary, and some is proprietor's income. 
E)  All of Caleb's income is personal interest. 
A)  All of Caleb's income is salary. 
B)  Some of Caleb's income is salary, and some is personal interest. 
C)  All of Caleb's income is proprietor's income. 
D)  Some of Caleb's income is salary, and some is proprietor's income. 
E)  All of Caleb's income is personal interest.

Question 9

Externalities can occur as a result of either production or consumption activities.

Accepted Answer

A) True 
 B)False

Question 10

Household production consists of households producing goods and services, like meals, cleaning, and child care, instead of firms.

Accepted Answer

A) True 
 B)False

Question 11

The corporate form of business organization ______

Accepted Answer

A)  is chosen by more firms than any other form of organization in the United States. 
B)  refers to a structure where owners have limited liability. 
C)  generates less than half of the output in the U.S. economy. 
D)  combines the limited liability of the partnership with the personal control of the sole proprietorship. 
E)  is the least complex form of business organization. 
A)  is chosen by more firms than any other form of organization in the United States. 
B)  refers to a structure where owners have limited liability. 
C)  generates less than half of the output in the U.S. economy. 
D)  combines the limited liability of the partnership with the personal control of the sole proprietorship. 
E)  is the least complex form of business organization.

Question 12

All of the following are advantages of partnerships except one. Which of the following is the exception?

Accepted Answer

A)  They are relatively easy to start. 
B)  Their profits are taxed only once as personal income. 
C)  Their liability is limited by each partner's share of the business. 
D)  They offer a greater opportunity for specialization by the owners. 
E)  They enable continuation of the firm if one partner dies. 
A)  They are relatively easy to start. 
B)  Their profits are taxed only once as personal income. 
C)  Their liability is limited by each partner's share of the business. 
D)  They offer a greater opportunity for specialization by the owners. 
E)  They enable continuation of the firm if one partner dies.

Question 13

Household income is not spent on _____.

Accepted Answer

A)  services 
B)  tax payments 
C)  durable goods 
D)  nondurable goods 
E)  dividends 
A)  services 
B)  tax payments 
C)  durable goods 
D)  nondurable goods 
E)  dividends

Question 14

The term fiscal policy refers to _____

Accepted Answer

A)  the amount of physical output produced by firms. 
B)  the means by which government policy makes firms more productive. 
C)  a tool by which the government influences credit markets. 
D)  spending and taxing by governments. 
E)  a tool of the government that works in the opposite direction of monetary policy. 
A)  the amount of physical output produced by firms. 
B)  the means by which government policy makes firms more productive. 
C)  a tool by which the government influences credit markets. 
D)  spending and taxing by governments. 
E)  a tool of the government that works in the opposite direction of monetary policy.

Question 15

A public good is available to all regardless of who pays for it and who does not.

Accepted Answer

A) True 
 B)False

Question 16

To serve the public interest, government sometimes promotes competition by breaking up natural monopolies.

Accepted Answer

A) True 
 B)False

Question 17

International trade occurs because the opportunity cost of producing specific goods differs across _____

Accepted Answer

A)  firms within a country 
B)  different levels of government 
C)  regions of the United States 
D)  countries 
E)  households 
A)  firms within a country 
B)  different levels of government 
C)  regions of the United States 
D)  countries 
E)  households

Question 18

Which of the following is true of sole proprietorships in the United States?

Accepted Answer

A)  They are the most important form of business organization in terms of their numbers. 
B)  They are responsible for a large portion of the total production of goods and services in the U.S. economy. 
C)  They offer the owners less personal liability than the other forms of business organization. 
D)  There are no opportunity costs involved in operating such firms. 
E)  Such firms employ only one individual. 
A)  They are the most important form of business organization in terms of their numbers. 
B)  They are responsible for a large portion of the total production of goods and services in the U.S. economy. 
C)  They offer the owners less personal liability than the other forms of business organization. 
D)  There are no opportunity costs involved in operating such firms. 
E)  Such firms employ only one individual.

Question 19

Which of the following is a difference between a corporation and a sole proprietorship?

Accepted Answer

A)  The owner of a corporation has unlimited liability, while the owner of a sole proprietorship has limited liability. 
B)  The owner of a corporation faces difficulty in raising startup money, while the owner of a sole proprietorship does not. 
C)  A corporation makes zero economic profit in the long run, while a sole proprietorship makes positive economic profits in the long run. 
D)  Corporate income is taxed twice, while income from a sole proprietorship is taxed only once. 
E)  A corporation faces vulnerability in the case of the death of an owner, while a sole proprietorship does not. 
A)  The owner of a corporation has unlimited liability, while the owner of a sole proprietorship has limited liability. 
B)  The owner of a corporation faces difficulty in raising startup money, while the owner of a sole proprietorship does not. 
C)  A corporation makes zero economic profit in the long run, while a sole proprietorship makes positive economic profits in the long run. 
D)  Corporate income is taxed twice, while income from a sole proprietorship is taxed only once. 
E)  A corporation faces vulnerability in the case of the death of an owner, while a sole proprietorship does not.

Question 20

Harold, a delivery man, washes and irons his own shirts. Sarah, his boss, sends her clothes to a laundry. Which of the following is the most plausible economic explanation for this difference?

Accepted Answer

A)  Sarah has a comparative advantage in ironing. 
B)  The marginal cost of ironing is greater for Harold than for Sarah. 
C)  The opportunity cost of ironing is higher for Harold. 
D)  The average cost of ironing is greater for Harold. 
E)  Sarah has a higher opportunity cost of ironing than Harold. 
A)  Sarah has a comparative advantage in ironing. 
B)  The marginal cost of ironing is greater for Harold than for Sarah. 
C)  The opportunity cost of ironing is higher for Harold. 
D)  The average cost of ironing is greater for Harold. 
E)  Sarah has a higher opportunity cost of ironing than Harold.

What gets produced in a market economy is determined by _____

A firm with multiple owners who share the profits and bear unlimited liability for the firm's losses and debts is known as a(n) ______

A quota is _____

The movement in U.S. population from the farms to urban areas was caused primarily by _____

Import quotas on sugar entering the United States result in lower sugar prices in the United States.

Which of the following would indicate that income tax is progressive?

You are more likely to hire a plumber to repair a leaky drainpipe if _____.

Caleb teaches economics at Happy State University and is paid $50,000 per year. He also provides economic forecasts for local businesses for which he charges $100 per hour. Which of the following is true?

Externalities can occur as a result of either production or consumption activities.

Household production consists of households producing goods and services, like meals, cleaning, and child care, instead of firms.

The corporate form of business organization ______

All of the following are advantages of partnerships except one. Which of the following is the exception?

Household income is not spent on _____.

The term fiscal policy refers to _____

A public good is available to all regardless of who pays for it and who does not.

To serve the public interest, government sometimes promotes competition by breaking up natural monopolies.

International trade occurs because the opportunity cost of producing specific goods differs across _____

Which of the following is true of sole proprietorships in the United States?

Which of the following is a difference between a corporation and a sole proprietorship?

Harold, a delivery man, washes and irons his own shirts. Sarah, his boss, sends her clothes to a laundry. Which of the following is the most plausible economic explanation for this difference?

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.

What gets produced in a market economy is determined by _____

A firm with multiple owners who share the profits and bear unlimited liability for the firm's losses and debts is known as a(n) ______

A quota is _____

The movement in U.S. population from the farms to urban areas was caused primarily by _____

Import quotas on sugar entering the United States result in lower sugar prices in the United States.

Which of the following would indicate that income tax is progressive?

You are more likely to hire a plumber to repair a leaky drainpipe if _____.

Caleb teaches economics at Happy State University and is paid $50,000 per year. He also provides economic forecasts for local businesses for which he charges $100 per hour. Which of the following is true?

Externalities can occur as a result of either production or consumption activities.

Household production consists of households producing goods and services, like meals, cleaning, and child care, instead of firms.

The corporate form of business organization ______

All of the following are advantages of partnerships except one. Which of the following is the exception?

Household income is not spent on _____.

The term fiscal policy refers to _____

A public good is available to all regardless of who pays for it and who does not.

To serve the public interest, government sometimes promotes competition by breaking up natural monopolies.

International trade occurs because the opportunity cost of producing specific goods differs across _____

Which of the following is true of sole proprietorships in the United States?

Which of the following is a difference between a corporation and a sole proprietorship?

Harold, a delivery man, washes and irons his own shirts. Sarah, his boss, sends her clothes to a laundry. Which of the following is the most plausible economic explanation for this difference?

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