Question 1

Firms

Accepted Answer

A) are where entrepreneurs combine resources 
B) are economic units formed by profit-seeking entrepreneurs 
C) are assumed to try to maximize profit 
D) reward entrepreneurs with profits,which are sales revenue minus the cost of production 
E) All of the answers are correct. 
A) are where entrepreneurs combine resources 
B) are economic units formed by profit-seeking entrepreneurs 
C) are assumed to try to maximize profit 
D) reward entrepreneurs with profits,which are sales revenue minus the cost of production 
E) All of the answers are correct.

Question 2

Brian is the sole proprietor owner of Long Voyage Software,which generates maps for wilderness trips.He started the business with an initial investment of $80,000.A faulty map caused one customer to get hopelessly lost.After her rescue and recuperation,she sued Long Voyage for $5,000,000.Which of the following is true?

Accepted Answer

A) The customer can be awarded only $80,000--what the firm has available to pay. 
B) The customer can be awarded $5,000,000,but can get only $80,000. 
C) The customer can be awarded $5,000,000,but Brian personally won't have to pay more than $80,000. 
D) If $5,000,000 is awarded,Brian will have to pay none of it. 
E) If $5,000,000 is awarded,Brian is personally responsible for paying all of it. 
A) The customer can be awarded only $80,000--what the firm has available to pay. 
B) The customer can be awarded $5,000,000,but can get only $80,000. 
C) The customer can be awarded $5,000,000,but Brian personally won't have to pay more than $80,000. 
D) If $5,000,000 is awarded,Brian will have to pay none of it. 
E) If $5,000,000 is awarded,Brian is personally responsible for paying all of it.

Question 3

Which of the following is not an example of a business operated by a consumer cooperative?

Accepted Answer

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

Question 4

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

Accepted Answer

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

Question 5

Which of the following is a major advantage of the sole proprietorship?

Accepted Answer

A) separation of ownership and control 
B) limited liability for business debt 
C) transferability of ownership and firm continuity over time 
D) ease of start-up 
E) ease of obtaining financing 
A) separation of ownership and control 
B) limited liability for business debt 
C) transferability of ownership and firm continuity over time 
D) ease of start-up 
E) ease of obtaining financing

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not based on the benefits-received principle of taxation?

Accepted Answer

A) charging a fee for use of public golf courses 
B) differences between residential and out-of-state college tuition 
C) the excise tax on gasoline 
D) toll booths on a highway 
E) charging a fee per bag to haul away garbage 
A) charging a fee for use of public golf courses 
B) differences between residential and out-of-state college tuition 
C) the excise tax on gasoline 
D) toll booths on a highway 
E) charging a fee per bag to haul away garbage

Question 8

Of the three levels of government in the United States,

Accepted Answer

A) only the federal government provides public goods 
B) only the federal government has the power to tax 
C) local governments are primarily responsible for primary and secondary education 
D) the federal government is primarily responsible for higher education 
E) state governments are primarily responsible for economic stability 
A) only the federal government provides public goods 
B) only the federal government has the power to tax 
C) local governments are primarily responsible for primary and secondary education 
D) the federal government is primarily responsible for higher education 
E) state governments are primarily responsible for economic stability

Question 9

Which of the following is a reason why government is a participant in a market-oriented economy?

Accepted Answer

A) to enforce contracts and protect private property 
B) to promote collusion 
C) to promote the growth of natural monopolies 
D) to provide more inequality in the distribution of income 
E) all of the above 
A) to enforce contracts and protect private property 
B) to promote collusion 
C) to promote the growth of natural monopolies 
D) to provide more inequality in the distribution of income 
E) all of the above

Question 10

The primary source of revenue for local governments is the property tax.

Accepted Answer

A) True 
 B)False

Question 11

Owners of corporations are referred to most frequently as

Accepted Answer

A) entrepreneurs 
B) lien holders 
C) limited partners 
D) managers 
E) stockholders 
A) entrepreneurs 
B) lien holders 
C) limited partners 
D) managers 
E) stockholders

Question 12

Which of the following represents the best example of rental income?

Accepted Answer

A) the paycheck that Freeda brings home from her job as a computer programer 
B) the interest that Hans earns from the savings account he has with USA Bank 
C) the revenue that Janet has left over after she pays all the expenses associated with running her software development business 
D) the check that Hunter receives each month for leasing his land to the natural gas company that is drilling on his land 
E) the check that Trisha gets each month from the Social Security Administration 
A) the paycheck that Freeda brings home from her job as a computer programer 
B) the interest that Hans earns from the savings account he has with USA Bank 
C) the revenue that Janet has left over after she pays all the expenses associated with running her software development business 
D) the check that Hunter receives each month for leasing his land to the natural gas company that is drilling on his land 
E) the check that Trisha gets each month from the Social Security Administration

Question 13

As a result of technological changes,

Accepted Answer

A) it now seems possible that work,as we know it,will disappear 
B) capital is replacing labor everywhere 
C) some production has shifted away from large,centralized workplaces 
D) unemployment has been rising and will continue to rise 
E) agricultural production is becoming increasingly urbanized 
A) it now seems possible that work,as we know it,will disappear 
B) capital is replacing labor everywhere 
C) some production has shifted away from large,centralized workplaces 
D) unemployment has been rising and will continue to rise 
E) agricultural production is becoming increasingly urbanized

Question 14

In terms of the numbers of firms in the U.S.economy,the most common type of firm is the

Accepted Answer

A) corporation 
B) partnership 
C) sole proprietorship 
D) nonprofit organization 
E) limited partnership corporation 
A) corporation 
B) partnership 
C) sole proprietorship 
D) nonprofit organization 
E) limited partnership corporation

Question 15

A major advantage of the corporate form of business organization is the limited personal liability of the owners.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is the best example of the ownership of the resource called land

Accepted Answer

A) John Smith's ownership of 10 shares of a manufacturer of farm tractors 
B) Pogo O'Reilly's ownership of 10 shares of a natural gas extraction company 
C) Helen Restock's ownership of a $10,000 savings bond 
D) Abe Hawthorne's college degree in marketing 
E) Ann Stump's creative,risk-taking personality 
A) John Smith's ownership of 10 shares of a manufacturer of farm tractors 
B) Pogo O'Reilly's ownership of 10 shares of a natural gas extraction company 
C) Helen Restock's ownership of a $10,000 savings bond 
D) Abe Hawthorne's college degree in marketing 
E) Ann Stump's creative,risk-taking personality

Question 17

During the Industrial Revolution,

Accepted Answer

A) technological changes shifted production from rural cottages to large urban factories 
B) technological changes shifted production from urban factories to individual workers' homes 
C) political changes made it dangerous to organize production in large,centrally-powered factories 
D) the price of land rose,so managers tried to shift production out of factories 
E) the "virtual office" came into vogue 
A) technological changes shifted production from rural cottages to large urban factories 
B) technological changes shifted production from urban factories to individual workers' homes 
C) political changes made it dangerous to organize production in large,centrally-powered factories 
D) the price of land rose,so managers tried to shift production out of factories 
E) the "virtual office" came into vogue

Question 18

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

Question 19

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

Accepted Answer

A) high-income people pay $3,000; low-income people pay $1,000 
B) low-income people pay $3,000; high-income people pay $1,000 
C) high-income and low-income people all pay $1000 each 
D) high-income people pay 20 percent of their income in taxes; low-income people pay 10 percent 
E) both high-income and low-income people pay 10 percent of their income in taxes 
A) high-income people pay $3,000; low-income people pay $1,000 
B) low-income people pay $3,000; high-income people pay $1,000 
C) high-income and low-income people all pay $1000 each 
D) high-income people pay 20 percent of their income in taxes; low-income people pay 10 percent 
E) both high-income and low-income people pay 10 percent of their income in taxes

Question 20

A disadvantage of the corporate form of business organization is that corporate income is taxed twice.

Accepted Answer

A) True 
 B)False

Exam 3: Economic Decision Makers

Firms

Which of the following is not an example of a business operated by a consumer cooperative?

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

Which of the following is a major advantage of the sole proprietorship?

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

Which of the following is not based on the benefits-received principle of taxation?

Of the three levels of government in the United States,

Which of the following is a reason why government is a participant in a market-oriented economy?

The primary source of revenue for local governments is the property tax.

Owners of corporations are referred to most frequently as

Which of the following represents the best example of rental income?

As a result of technological changes,

In terms of the numbers of firms in the U.S.economy,the most common type of firm is the

A major advantage of the corporate form of business organization is the limited personal liability of the owners.

Which of the following is the best example of the ownership of the resource called land

During the Industrial Revolution,

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

A disadvantage of the corporate form of business organization is that corporate income is taxed twice.

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and 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

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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