Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The value of a country's imports cannot exceed the value of its exports.

Accepted Answer

A) True 
 B)False

Question 3

Households supply four basic types of resources.They include all of the following except:

Accepted Answer

A)  natural resources.
B)  goods and services.
C)  capital.
D)  entrepreneurial ability.
E)  labor.F) A) and D)
G) B) and E) B

Question 4

You are more likely to paint your own house than to pay someone to paint your house if:

Accepted Answer

A)  doing it yourself will cost you more.
B)  the tax-free nature of do-it-yourself work favors your doing it yourself.
C)  you have the specialized tools necessary to complete the job quickly.
D)  you possess less knowledge and experience in painting.
E)  the opportunity cost of your time is low.F) A) and B)
G) A) and C) B

Question 5

Identify a correct statement about household production.

Accepted Answer

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

Question 6

Exchange rates will affect the price of:

Accepted Answer

A)  sugar cane grown in the United States.
B)  coffee grown in Brazil.
C)  coffee grown in Brazil and imported to the United States.
D)  wine produced in California and consumed in Florida.
E)  coffee grown in Brazil and consumed in Brazil.F) A) and E)
G) None of the above

Question 7

If the value of the euro increases relative to the U.S.dollar,then French goods will be less expensive in the U.S.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following taxes is based on the ability-to-pay principle?

Accepted Answer

A)  Toll on a bridge
B)  Income taxes
C)  Tax on gasoline
D)  Property taxes
E)  User fees that collect the same amount from each personF) None of the above
G) All of the above

Question 9

A realized capital gain is:

Accepted Answer

A)  the difference between the price of a share of stock and the amount the investor paid for it including the broker's fee.
B)  the difference between the original value of a piece of equipment and its depreciated value.
C)  an increase in the net worth of a sole proprietorship or partnership.
D)  an increase in the market value of a share of stock held by an individual.
E)  the difference between the selling price and the purchase price of a share of stock.F) A) and D)
G) None of the above

Question 10

Mr.Thomson had a before-tax income of $20,000 and paid taxes of $2,000.Ms.Lynch had a before-tax income of $10,000 and paid taxes of $1,500.Based on this information,which of the following is correct?

Accepted Answer

A)  The tax system is progressive for incomes below $10,000.
B)  The tax system is proportional.
C)  The tax system is regressive.
D)  The tax system is based on the benefits-received principle.
E)  The tax system is progressive for incomes above $20,000.F) None of the above
G) A) and B)

Question 11

Personal income in the United States is primarily determined by selling labor services.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Which of the following is not 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 facilityF) None of the above
G) All of the above

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Externalities are defined as:

Accepted Answer

A)  any transaction external to a firm.
B)  costs or benefits that fall on third parties.
C)  policies that firms adopt to sell products outside a country.
D)  managers' dealings with stockholders outside a firm.
E)  costs of maintaining plant and equipment to avoid the scrutiny of external auditors.F) A) and E)
G) C) and D)

Question 16

Chris had a before-tax income of $20,000 and paid taxes of $3,000.Pat had a before-tax income of $10,000 and paid taxes of $1,000.Based on this information,which of the following is correct?

Accepted Answer

A)  The tax system is regressive.
B)  The tax system is proportional.
C)  The tax system is progressive.
D)  The tax system is based on the benefits-received principle.
E)  The marginal tax rate is zero for both Chris and Pat.F) A) and D)
G) A) and C)

Question 17

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

Accepted Answer

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

Question 18

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

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 3: Economic Decision Makers

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

Correct Answer
verified

The value of a country's imports cannot exceed the value of its exports.

Correct Answer
verified

Households supply four basic types of resources.They include all of the following except:

Correct Answer
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B

You are more likely to paint your own house than to pay someone to paint your house if:

Correct Answer
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B

Identify a correct statement about household production.

Correct Answer
verified

Exchange rates will affect the price of:

Correct Answer
verified

If the value of the euro increases relative to the U.S.dollar,then French goods will be less expensive in the U.S.

Correct Answer
verified

Which of the following taxes is based on the ability-to-pay principle?

Correct Answer
verified

A realized capital gain is:

Correct Answer
verified

Mr.Thomson had a before-tax income of $20,000 and paid taxes of $2,000.Ms.Lynch had a before-tax income of $10,000 and paid taxes of $1,500.Based on this information,which of the following is correct?

Correct Answer
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Personal income in the United States is primarily determined by selling labor services.

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

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

Correct Answer
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Externalities are defined as:

Correct Answer
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Chris had a before-tax income of $20,000 and paid taxes of $3,000.Pat had a before-tax income of $10,000 and paid taxes of $1,000.Based on this information,which of the following is correct?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
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C

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

Correct Answer
verified

Correct Answer
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Exam 3: Economic Decision Makers

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

Correct AnswerverifiedShow Answer

The value of a country's imports cannot exceed the value of its exports.

Correct AnswerverifiedShow Answer

Households supply four basic types of resources.They include all of the following except:

Correct AnswerverifiedB

You are more likely to paint your own house than to pay someone to paint your house if:

Correct AnswerverifiedB

Identify a correct statement about household production.

Correct AnswerverifiedShow Answer

Exchange rates will affect the price of:

Correct AnswerverifiedShow Answer

If the value of the euro increases relative to the U.S.dollar,then French goods will be less expensive in the U.S.

Correct AnswerverifiedShow Answer

Which of the following taxes is based on the ability-to-pay principle?

Correct AnswerverifiedShow Answer

A realized capital gain is:

Correct AnswerverifiedShow Answer

Mr.Thomson had a before-tax income of $20,000 and paid taxes of $2,000.Ms.Lynch had a before-tax income of $10,000 and paid taxes of $1,500.Based on this information,which of the following is correct?

Correct AnswerverifiedShow Answer

Personal income in the United States is primarily determined by selling labor services.

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 not an example of a business operated by a consumer cooperative?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Externalities are defined as:

Correct AnswerverifiedShow Answer

Chris had a before-tax income of $20,000 and paid taxes of $3,000.Pat had a before-tax income of $10,000 and paid taxes of $1,000.Based on this information,which of the following is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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B

Correct Answer
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B

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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C

Correct Answer
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Correct Answer
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