Question 1

If one US dollar costs 0.8 Euros,then 1 Euro must cost _____ US dollars.

Accepted Answer

A)  0.5
B)  0.8
C)  1.0
D)  1.25
E)  1.5F) C) and D)
G) D) and E)

Question 2

Which of the following did not occur during the Industrial Revolution?

Accepted Answer

A)  Worker productivity increased.
B)  Factories became larger.
C)  Direct supervision of labor decreased.
D)  Division of labor increased.
E)  Fewer stages of production were organized in the household.F) All of the above
G) A) and D)

Question 3

​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.F) B) and E)
G) None of the above

Question 4

Household production is more likely to occur when:

Accepted Answer

A)  it requires many specialized resources.
B)  technology makes it more costly than market production.
C)  tax avoidance is undesirable.
D)  less control over the final product is desirable.
E)  the opportunity cost of household work is relatively small.F) B) and E)
G) A) and D)

Question 5

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.F) None of the above
G) C) and E)

Question 6

A common assumption that economists make about the behavior of elected officials is that they try to:

Accepted Answer

A)  maximize the size of their government salaries.
B)  maximize their control over the budget process.
C)  maximize the number of votes they receive in the next election.
D)  minimize the government's expenditures in order to balance the budget.
E)  conform to the wishes of special interest groups so that the government behaves as a single,consistent decision maker.F) A) and B)
G) A) and C)

Question 7

One disadvantage of a sole proprietorship as a form of business organization is that:

Accepted Answer

A)  sole proprietorships cannot lower the transaction costs associated with contracting with resource owners.
B)  sole proprietorships are less efficient than corporations,because they are less specialized in production.
C)  owners of sole proprietorships can lose all their personal assets if the business is sued or fails.
D)  owners of sole proprietorships generally find it difficult to negotiate separation agreements with the other partners in the firm.
E)  owners of sole proprietorships generally have very little control over how they operate their businesses.F) C) and D)
G) A) and E)

Question 8

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)  the avenue by which government influences credit markets.
D)  spending and taxing by governments.
E)  a tool of government that works in the opposite direction of monetary policy.F) A) and B)
G) A) and C)

Question 9

Which of the following is true of public goods?

Accepted Answer

A)  The market mechanism helps to signal the quantity that is demanded by the public.
B)  Payment for consumption is efficiently provided by market prices.
C)  Consumption by one person does not preclude consumption of the same good by another person.
D)  The public sector is guided to produce the correct quantity by market prices.
E)  Voluntary contributions will be sufficient to finance the production of public goods.F) A) and D)
G) None of the above

Question 10

Which of the following is an example of an in-kind transfer?

Accepted Answer

A)  Welfare payments​
B)  Most Social Security benefits
C)  Unemployment compensation payments
D)  Food stamps
E)  Charitable contributionsF) C) and E)
G) A) and B)

Question 11

The term "utility" means:

Accepted Answer

A)  satisfaction.
B)  a low-valued good.
C)  productivity.
D)  adaptability.
E)  efficiency.F) B) and E)
G) A) and B)

Question 12

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

Accepted Answer

A)  High-income people pay $5,000 in taxes; low-income people pay $2,000.
B)  Both 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.F) D) and E)
G) B) and E)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The objective of the household is to:

Accepted Answer

A)  maximize household wealth.
B)  own as much land as possible.
C)  save as much money as possible.
D)  acquire as many goods as possible.
E)  maximize utility.F) A) and D)
G) A) and B)

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

Contracts are enforced by:

Accepted Answer

A)  the firms that make the contracts through buy-out clauses.
B)  law firms that specialize in contract enforcement.
C)  corporations specializing in contract writing and enforcement.
D)  government through the judicial system.
E)  both households and firms through customer relations departments.F) A) and B)
G) A) and C)

Question 17

An external benefit is a benefit from an activity that falls on a third party which is not involved in the activity.

Accepted Answer

A) True 
 B)False

Question 18

Stockholders share in the profits of a corporation:

Accepted Answer

A)  in proportion to their years of stock ownership.
B)  in proportion to their ownership of stock.
C)  equally regardless of number of shares owned.
D)  only if they participate in management decisions.
E)  only if they attend stockholders' meetings.F) A) and B)
G) A) and C)

Question 19

Which of the following is a major advantage of a 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 financingF) A) and B)
G) A) and C)

Question 20

Which of the following is true about a sole proprietorship in the United States?

Accepted Answer

A)  It is the most common form of business organization.
B)  It is responsible for a large portion of the total production of goods and services.
C)  It offers the owner the least personal liability of any form of business organization.
D)  There is no opportunity cost to operating the business.
E)  Only one individual can work in such a firm.F) B) and C)
G) D) and E)

Exam 3: Economic Decision Makers

Which of the following is an example of an in-kind transfer?

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

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One disadvantage of a sole proprietorship as a form of business organization is that:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The term "utility" means:

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The objective of the household is to:

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Which of the following did not occur during the Industrial Revolution?

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If one US dollar costs 0.8 Euros,then 1 Euro must cost _____ US dollars.

Correct AnswerverifiedShow Answer

Household production is more likely to occur when:

Correct AnswerverifiedShow Answer

Which of the following is true of public goods?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is true about a sole proprietorship in the United States?

Correct AnswerverifiedShow Answer

The term fiscal policy refers to:

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A common assumption that economists make about the behavior of elected officials is that they try to:

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An external benefit is a benefit from an activity that falls on a third party which is not involved in the activity.

Correct AnswerverifiedShow Answer

Contracts are enforced by:

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

Correct AnswerverifiedShow Answer

Stockholders share in the profits of a corporation:

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

Correct AnswerverifiedShow Answer

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

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

Correct Answer
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