ECON 2013 Exam 1

Suppose the extra cost for a municipality to enact a "no texting while driving" law is $15000 per year. Then, the municipality should enact the law if it receives a total benefit from all of its traffic laws of $15000 per year. True or False

False

Of the following examples, which would most likely be performed by an economist working for the Federal Reserve Bank of San Francisco? A. analyzing data related to European antitrust laws B. using economic models to analyze crime rates in Central America C. forecasting production trends in the Pacific Northwest D. assessing whether immigration policy has affected population numbers in Massachusetts

Forecasting production trends in the Pacific Northwest

The table above shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Which of the following statements is true? A. George has an absolute advantage in both tasks. B. Jack has an absolute advantage in garden cultivating and George in lawn mowing. C. Jack has an absolute advantage in lawn mowing and George in garden cultivating D. Jack has an absolute advantage in both tasks.

George has an absolute advantage in both tasks.

The table above shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. What is Finland's opportunity cost of producing one board foot of lumber? A. 0.25 cell phones B. 4 cell phones C. 12 cell phones D. 16 cell phones

0.25 cell phones

Many universities and corporations offer a health wellness program that helps their employees improve or maintain their health and get paid​ (a relatively small​ amount) for doing so. The programs​ vary, but typically consist of employees completing a health​ assessment, receiving a healthy living​ program, and monitoring their monthly health activities. Corporations and universities are willing to pay employees to take care of themselves because a healthier workforce A. translates into lower​ costs, in part by reducing​ illness-related absenteeism and premature retirements. B. performs more​ efficiently, thereby improving overall productivity in the workplace. C. is a happier workforce and thus less likely to become confrontational with management. D. all of the above. E. A and B only. The incentive of employees to improve or maintain their health once they obtain health insurance may be ___________ impacted. When an employer offers a wellness program to its​ employees, the health insurance premiums the employer pays on behalf of the employees are likely to ______________.

A and B only negatively decreases

Government policymakers use economic principles to make​ decisions, such as A. whether to raise interest rates to reduce the threat of inflation. B. whether to allocate additional funds to research on cancer or to research on heart disease. C. whether to raise taxes on cigarettes to discourage teenage smoking. D. All of the above.

All of the above

What do economists mean by the word​ "marginal"? A. extra or additional B. small C. unimportant D. first

Extra or additional

A redwood forest is not an example of a factor of production but the harvested and processed redwood is a factor of production. True or False

False

What factors should state governments take into account when deciding how to allocate the scarce funds in their​ budgets? A. Since state​ governments' budgets do not have to be​ balanced, money can be spent on education and health care such that both sectors receive as much money as they need. B. How best to allocate a state​ government's limited resources is a normative issue and depends on how governors and state legislators evaluate the​ trade-offs involved. C. State governments should always allocate enough funds in their budget for prescription drugs so that patients​ won't die from a disease. D. State governments should not have to worry about allocating any money for prescription drugs because this is the​ patient's responsibility.

How best to allocate a state​ government's limited resources is a normative issue and depends on how governors and state legislators evaluate the​ trade-offs involved.

Which of the following is a microeconomic question? A. Why do economies experience periods of recession? B. Why has growth in the economy slowed down over the past decade? C. How will Apple decide on a selling price for the iPad? D. Will government intervention lower the unemployment rate?

How will Apple decide on a selling price for the iPad?

Which of the following are examples of intellectual​ property? ​ A. Ideas for new products or new production techniques B. Software C. Pure air and water D. Books and films E. All​ non-natural resources

Ideas for new products and new production techniques, software, and books and films

Which of the following is a correct statement about a mixed​ economy? A. In a mixed​ economy, all economic decisions are made in markets. B. In a mixed​ economy, the government makes all economic decisions. C. In a mixed​ economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources. D. In a mixed​ economy, most economic decisions are made by the government but markets play a significant role in the allocation of resources.

In a mixed​ economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources.

Which of the following covers the study of topics such as inflation or​ unemployment? A. Macroeconomics B. Microeconomics C. Both microeconomics and macroeconomics give equal emphasis to these problems. D. None of the above.

Macroeconomics

One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls A. the market. B. economics. C. rationality. D. scarcity.

Scarcity

In an opinion column in the Wall Street Journal​, economist Richard McKenzie of the University of​ California, Irvine​ wrote: ​"If countries import goods that can be made more cheaply abroad than at​ home, and produce goods that can be made more cheaply at home than​ abroad, then all trading nations will end up with more income and wealth than if they tried to produce everything​ themselves." ​Source: Richard B.​ McKenzie, "People​ Aren't Rational, and​ That's Why We Need Free​ Trade," Wall Street Journal​, June​ 15, 2018. Briefly explain his reasoning. When countries specialize in producing goods in which they have an absolute/a comparative advantage and trade for goods in which other countries have an absolute/a comparative ​advantage, the incomes of all countries increase.

a comparative a comparative

What is a market?

a group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade.

indicate whether each of the following is primarily a microeconomic issue or a macroeconomic issue. a. The effect of higher cigarette taxes on the quantity of cigarettes sold. b. The effect of higher income taxes on the total amount of consumer spending. c. The reasons for the economies of East Asian countries growing faster than the economies of​ sub-Saharan African countries. d. The reasons for low rates of profit in the airline industry.

a) Microeconomic issue b) Macroeconomic issue c) Macroeconomic issue d) Microeconomic issue

An outward shift of a nation's production possibilities frontier can occur due to A. an increase in the labor force. B. a natural disaster like a hurricane or bad earthquake C. a reduction in unemployment. D. a change in the amounts of one good desired.

an increase in the labor force

Why are independent courts important for a​ well-functioning economy? Independence is necessary for​ courts: A. to make their decisions free of intimidation by criminal gangs. B. to make their decisions based on the law. C. to make their decisions free of influence from other parts of the government. D. to make their decisions free of influence from people with powerful political connections. E. all of the above.

all of the above

A hypothesis in an economic model is A. usually about a causal relationship. B. a statement that may be either correct or incorrect about an economic variable. C. tested before it can be accepted​ (or not​ rejected). D. all of the above.

all of the above

Which of the following would shift a nation's production possibilities frontier outward? A. a decrease in the unemployment rate B. more restrictive immigration policies C. discovering a more efficient process to desalinate water D. an increase in the minimum wage

discovering a more efficient process to desalinate water

A primary role of ____________ is to describe how choices are made, analyze the results of those choices, and advise on how better decisions can be made. A. a market economy B. marginal analysis C. government policymakers D. economists

economists

What is the outcome of enforcing contracts and property rights in a market​ system? A. an unpredictable but definite effect on economic activity B. no effect on economic activity C. increased economic activity D. decreased economic activity

increased economic activity

When economists develop models designed to explain the choices people​ make, they generally assume that A. people make the best decisions. B. everyone knows everything. C. consumers do not act to achieve their goals. D. consumers do not use all available information. E. people are rational.

people are rational

Firms

sell goods in the product market.

Economists believe that an activity should be continued up to the point where A. the marginal benefit from the activity is less than the marginal cost. B. the marginal benefit from the activity is greater than the marginal cost. C. the marginal benefit from the activity is equal to the marginal cost. D. the marginal benefit from the activity plus the marginal cost equals zero.

the marginal benefit from the activity is equal to the marginal cost

Which two arrows in the diagram depict the following transaction: Lizzie Haxem hires "The Paint Pros," a professional painting company, to paint her home. A. K and G B. J and G C. J and M D. K and M

K and G

If a market system functions​ well, which of the following is necessary for the enforcement of contracts and property​ rights? A. action by government to prevent the exercise of certain property rights B. an independent court system C. powerful political connections D. All of the above.

an independent court system

What role do they play in the working of a market​ system? Private property​ rights: A. encourage a significant number of people to be willing to risk funds by investing them in business. B. encourage firms to spend money on research and development. C. determine what goods and services will be produced. D. are the basis for international trade. E. both a and b.

both a and b

​Suppose, in an effort to prevent the population from​ declining, Italy begins offering new mothers extended periods of paid family leave from work​ and, consequently, the birthrate per woman increases. If​ so, then this could best be characterized as an example of people responding to A. religious beliefs. B. accounting principles. C. economic incentives. D. compassion. E. envy.

economic incentives

The primary purpose of patents and copyrights is to A. protect firms from being taken advantage of by competing firms. B. provide owners with large profit forever. C. encourage the expenditure of funds on research and development to create new products. D. protect domestic firms from foreign competition.

encourage the expenditure of funds on research and development to create new products

A free market is a market with​ ________ government restrictions on how a good or service can be produced or sold and with​ ________ government restrictions on how a factor of production can be employed.

few; few

Whether carried out by an individual or a​ country, production beyond the production possibilities frontier A. is possible only through trade. B. can occur by acquiring more productive resources. C. happens as a result of forced saving. D. is not physically possible.

is not physically possible

The processes used to produce goods and services describes A. entrepreneurship. B. technology. C. innovation. D. capital.

technology

A freelance​ singer-songwriter is planning the restoration of a recently purchased civil​ war-era farmhouse. While he professes an enjoyment​ of, and talent in the construction​ trades, the theory of comparative advantage implies that A. the income lost while away from music will likely exceed the savings realized by doing the work​ himself, thus, he should hire professionals to do the restoration work. B. the value of what he imports​ (in this​ case, professional contractor​ services) must equal the value of what he exports​ (songs). C. he should concentrate on the restoration work since his​ out-of-pocket costs will be much lower than if he hires professionals. D. he ought to do as much of the work himself as possible since imports​ (in this​ case, professional contractor​ services) should always be restricted to those things that cannot be done internally. E. ​self-sufficiency is​ advantageous, hence he should split his time between music and construction.

the income lost while away from music will likely exceed the savings realized by doing the work​ himself, thus, he should hire professionals to do the restoration work.

What are private property​ rights? Private property rights​ are: A. the rights individuals and firms have to the exclusive use of​ tangible, physical property but not intellectual property. B. the rights individuals and firms have to the exclusive use of intellectual property but not​ tangible, physical property. C. the rights individuals and firms have to the exclusive use of​ tangible, physical property and intellectual property. D. the rights individuals but not firms have to the exclusive use of​ tangible, physical property and intellectual property. E. the rights individuals have to the exclusive use of intellectual property and firms have to the exclusive use of​ tangible, physical property.

the rights individuals and firms have to the exclusive use of​ tangible, physical property and intellectual property.

Two key groups participate in markets. ______________ consists of all the individuals in a home. ___________ are suppliers of goods and services. We can use a simple economic model called the _____________ to see how participants in markets are linked.

A household Firms Circular-flow diagram

Which of the following statements about a hypothesis is​ correct? A. To be called a​ hypothesis, a statement must first be shown to be correct. B. A hypothesis is a statement that could in principle turn out to be incorrect. C. A hypothesis will always incorporate a value judgment. D. A hypothesis is another name for a model.

A hypothesis is a statement that could in principle turn out to be incorrect.

For a person to have a comparative advantage in producing a product, he must be able to produce that product at a higher opportunity cost than his competitors. True or False

False

Which of the following statements about an economic variable is​ correct? A. An economic variable must always be a positive number. B. An economic variable is always measured in dollars. C. An economic variable is something measurable that can have different values. D. An economic variable must either be the price of a good or service or the quantity of a good or service.

An economic variable is something measurable that can have different values.

Which of the following statements is​ correct? A. An invention is the practical application of an innovation. B. The word​ "technology" and the word​ "innovation" have the same meaning. C. The word​ "technology" and the word​ "invention" have the same meaning. D. An innovation is the practical application of an invention.

An innovation is the practical application of an invention.

Harry Fletcher is a market analyst at an automobile firm. He forms a hypothesis that an increase in advertising will increase the demand for the​ firm's cars. Which of the​ following, if​ true, may result in the rejection of his​ hypothesis? A. Car buyers base their purchasing decisions on independent reviews. B. The demand for car accessories has significantly increased in the past few years. C. Automotive franchise establishments are expected to report an annual increase of 4 percent this year. D. The demand for sedans has traditionally been higher than the demand for hatchbacks. E. As air travel picks​ up, demand for car rentals is also expected to increase.

Car buyers base their purchasing decisions on independent reviews.

Choco Dream is a firm that produces both dark chocolates as well as liquor chocolates. During a given​ month, the firm uses its resources to produce both varieties.​ Initially, the firm produced​ 5,000 bars of dark chocolates and​ 4,000 bars of liquor chocolates in a month. In order to increase production of the latter to​ 4,500, they had to reduce production of dark chocolates by 800 bars. When demand for liquor chocolates increased​ further, Choco Dream produced​ 5,000 bars of liquor chocolates and​ 3,200 bars of dark chocolates per month. Which of the following inferences can be drawn from the given​ information? A. Both types of chocolates sold by Choco Dream are equally popular among consumers. B. The company is operating at one end of the PPF. C. Choco​ Dream's production possibilities frontier is linear. D. Choco Dream faces increasing marginal opportunity cost in the production of liquor chocolates. E. Resources are equally productive in the production of both types of chocolates.

Choco Dream faces increasing marginal opportunity cost in the production of liquor chocolates.

What does economics promote as the way to make the best decision?

Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.

The government seeks to protect intellectual property rights by granting

Copyrights and patents

Two​ neighbors, countries A and​ B, produce books and​ blankets, among other goods and services.​ However, Country A produces more of both goods than country B. A student of​ economics, Maya, also notes that in both​ countries, these industries individually employ 30 percent of the population. She concludes that country A has an absolute advantage in the production of books and blankets over country B. Which of the​ following, if​ true, would weaken​ Maya's conclusion? A. Country A is an open economy while country B is a closed economy. B. Country A has a lower opportunity cost of producing books while country B has a lower opportunity cost of producing blankets. C. Country A has a linear production possibilities frontier. D. Country A employs more capital per unit of labor in all industries than country B. E. Country A has more productive resources than country B.

Country A employs more capital per unit of labor in all industries than country B.

An opinion columnist in the Washington Post argues that the Stop Bad Employers by Zeroing Out Subsidies Act is​ "virtually guaranteed to hurt the very​ low-income working families its sponsors want to​ help." ​Source: Catherine​ Rampell, "Tax Bezos. Help Workers. But Not Like​ This." Washington Post​, September​ 6, 2018. What was the main provision of this​ act? A. Firms with 50 or more​ full-time employees must offer health insurance that meets certain requirements or pay a fee to the federal government for every employee who receives a tax credit from the federal government for obtaining health insurance through a health insurance marketplace. B. Every resident of the United States had to have health insurance that met certain basic requirements. Individuals who did not acquire health insurance were subject to a fine. C. Firms with more than 200​ full-time employees must offer health insurance to its employees and must automatically enroll them in the plan. D. Firms whose employees received assistance from government​ benefits, including Medicaid and the Supplemental Nutrition Assistance Program​ (SNAP), would be required to pay a tax equal to cost of the assistance. Why would the columnist argue that the act was more likely to hurt than help​ low-income families? A. Employees who were previously receiving assistance from government benefits would automatically lose those benefits because they had a job. B. Firms that might otherwise have hired a​ low-wage worker may now be reluctant to do so because the firms could be liable for paying the tax. C. In​ effect, the act would lower the cost of employing​ low-income workers who receive government benefits. D. All of the above. If the columnist is​ correct, why did the sponsors of the act in Congress write the act the way that they​ did? A. The sponsors of the legislation may have hoped that firms would lower the wages of​ low-income workers to offset the cost of the tax that they would be responsible for paying. B. The sponsors of the legislation assumed that firms would not pay attention to these changes in costs and therefore​ wouldn't consider them when making hiring decisions. C. The sponsors of the legislation may have hoped that firms would raise the wages of​ low-income workers, which would make it unnecessary for these workers to apply for government benefits. D. The sponsors of the legislation assumed that this tax would be so negligable that it​ wouldn't impact hiring decisions.

D B C

All of the following questions or statements regarding tariffs are positive except A. Economic analysis can show the size of the loss of economic efficiency from the imposition of a tariff. B. Economic models can be used to estimate the dollar amounts gained by the winners from the imposition of a tariff. C. Economic analysis can decide whether a tariff proposal should be enacted. D. Economic models can be used to estimate the dollar amounts lost by the losers from the imposition of a tariff.

Economic analysis can decide whether a tariff proposal should be enacted.

Which of the following statements is​ correct? A. A business is always larger than a firm. B. A company is owned by one​ person, while a firm is owned by more than one person. C. Economists use the terms​ firm, company, and business interchangeably. D. A business has multiple​ locations, while a company has only a single location.

Economists use the terms firm, company, and business interchangeably.

In the​ 1950s, the economist Bela Balassa compared 28 manufacturing industries in the United States and Britain. In every one of the 28​ industries, Balassa found that the United States had an absolute advantage. In these​ circumstances, would there have been any gain to the United States from importing any of these products from​ Britain? Explain. A. Even with an absolute​ advantage, the United States would have benefited from importing those products that Britain could have produced at lower total cost. B. Since the United States had an absolute advantage in all 28​ industries, it had more bargaining power and would have gained from importing all of these products from Britain. C. Even with an absolute​ advantage, the United States would have benefited from importing those products for which Britain had the same opportunity cost. D. Even with an absolute​ advantage, the United States would have benefited from importing those products for which Britain had a comparative advantage. E. Since the United States had an absolute advantage in all 28​ industries, it also had a comparative advantage in each industry and would not have gained anything from importing any of these products from Britain.

Even with an absolute​ advantage, the United States would have benefited from importing those products for which Britain had a comparative advantage.

Economists assume that the only reason people take the actions they do is in response to economic incentives. True or False

False

A news article described a new prescription drug that costs up to​ "$94,000 for one​ 12-week treatment​ regimen" to treat hepatitis​ C, which is a liver disease that afflicts as many as 3 million people in the United States. It can result in severe liver damage and even death. It is potentially​ curable, but the prescription drugs available to treat it are very expensive. State government Medicaid programs provide medical insurance to poor and disabled people. In​ Louisiana, spending on Medicaid accounts for nearly half of the state​ government's budget. At the​ time, Rebekah Gee was the secretary of the Louisiana Department of Health. She was quoted as saying that it is unacceptable that many Medicaid patients with hepatitis C are not receiving​ treatment, "but​ it's also unacceptable for me to pay over​ $700 million and have to cut primary​ education, gut our payments to universities and decimate the health care delivery system for just one disease​ condition." ​Sources: Alison​ Kodjak, "Louisiana's New Approach to Treating Hepatitis​ C," npr.com, July​ 19, 2018. What​ trade-offs do state governments face when new prescription drugs are introduced with much higher prices than existing​ drugs? A. An increase in spending on prescription drugs will decrease the incentive for firms to invent new drugs. B. Higher prescription drug prices mean that state governments will not be able to balance their budgets. C. Increases in spending on prescription drugs will require reductions in other government programs or services. D. State governments​ won't face any​ trade-offs since prescription drugs are covered by most Medicaid programs.

Increases in spending on prescription drugs will require reductions in other government programs or services.

XYZ​ firm, the leading producer of leather goods in its country is planning to expand its business. Industry experts identify Asia as a potential target market. They report that substitute​ products, particularly in​ India, are highly priced.​ Darren, the operational​ head, feels that exporting their product to India is a good idea. According to​ him, their price advantage alone will ensure good sales.​ However, his​ colleague, Mark, who is also the head of product​ development, feels that Darren is too​ optimistic, and that this venture may not turn out to be as profitable as Darren expects it to be. Which of the​ following, if​ true, will strengthen​ Darren's point of​ view? A. India is an emerging market and some of the foreign brands that have sold electronics in India have been doing extremely well. B. Indian producers do not have access to the technology that XYZ uses for producing leather goods. C. Indian consumers are loyal to their national brands. D. Consumers in India are becoming increasingly critical of manufacturing processes that involve animal cruelty. E. Foreign trade is heavily regulated by the Indian government.

Indian producers do not have access to the technology that XYZ uses for producing leather goods.

​Today, which of the following countries has a centrally planned​ economy? A. Canada B. North Korea C. Germany D. United States

North Korea

In 2018, two members of Congress introduced the Stop Bad Employers by Zeroing Out Subsidies Act, legislation they hoped would increase wages of employees who were receiving government assistance. These members of Congress thought this legislation would give firms a reason to raise employee wages so fewer employees would receive the government assistance. Under the act, firms whose employees received assistance from government programs such as Medicaid and SNAP would be required to A. offer these employees comprehensive health insurance coverage for everyone in their immediate families. B. pay a tax equal to the cost of the assistance. C. pay a minimum wage equal to twice the federal minimum wage. D. all of the above

Pay a tax equal to the cost of the assistance.

Question content area Part 1 According to an article in the Economist​ magazine: ​"In all rich​ countries, property rights are secure...Legally recognizing land ownership has boosted​ farmers' income and productivity in Latin America and Asia...More than​ two-thirds of​ Africa's land is still under customary​ tenure, with rights to land rooted in communities and typically neither written down nor legally​ recognized." ​Source: "Title to​ Come: Property Rights Are Still Wretchedly Insecure in​ Africa," Economist​, July​ 16, 2016. Which of the following statements regarding secure property rights is​ true? A. It is solely the responsibility of the individuals who own the property to ensure that their rights are protected. B. Property rights provide incentives for people to maintain and increase the value of the property they own. C. Property rights—which include only physical property​ (not intellectual rights to new products or the processes used to produce goods and ​services)—refer to the rights of firms and individuals to have exclusive use of their property. D. All of the above. Which of the following statements is​ true? A. It is easy for a country to become rich even without having secure property rights. B. By protecting private property​ rights, governments make it more likely that investments will be made in businesses that provide jobs and income for workers. C. Protecting property rights has no impact on a​ country's standard of living. D. Only rich countries have recognized governments that would even be capable of securing property rights. What problems might African farmers have because they lack secure property​ rights? A. Without secure property​ rights, farmers are not able to obtain funds by selling some of their land. B. Without secure property​ rights, it is harder for farmers to borrow because they cannot use their land as collateral. C. Without secure property​ rights, farmers in Africa may be reluctant to make the investments in their farms that would raise the​ farms' productivity. D. All of the above.

Property rights provide incentives for people to maintain and increase the value of the property they own. By protecting private property​ rights, governments make it more likely that investments will be made in businesses that provide jobs and income for workers. all of the above

___________ exists because unlimited wants exceed the limited resources available to fulfill those wants.

Scarcity

The principle of increasing marginal opportunity cost states that the more resources devoted to any​ activity, the​ __________ the payoff to devoting additional resources to that activity. A. more proportional B. smaller C. greater D. more instant

Smaller

Xylo​ Inc., a manufacturer of domestic​ appliances, lowered the prices of its​ products, expecting an increase in demand and sales by at least 20 percent.​ However, it was observed that sales increased by only 8 percent. Which of the​ following, if​ true, can explain this​ outcome? A. The government increased personal income tax rates earlier this year. B. Xylo launched a new range of air conditioners this year. C. Most consumers feel​ that, on​ average, Xylo's products have better features than what rival firms offer. D. Almost 30 percent of​ Xylo's output is exported. E. Xylo sells its products online through multiple web sites to lower its operating costs.

The government increased personal income tax rates earlier this year

Suppose the president is attempting to decide whether the federal government should spend more on research to find a cure for heart disease. What is the opportunity cost of spending more money to find a cure for heart​ disease? A. The total explicit cost of the research to cure heart disease. B. The reduction in future​ health-related costs of heart disease. C. The reduction in funding for research to cure other diseases. D. The cost of the​ Medicare/Medicaid program. E. The monetary value of a human life. How should policymakers determine the amount of money that should be allocated for research curing heart​ disease? They should base their decision on A. the value of the total benefit of research on curing other diseases. B. the number of people who die from heart disease compared to the number of people who die from other diseases. C. the number of people who have heart disease compared to the number of people who have other diseases. D. whether the last dollar devoted to research on heart disease results in more benefit than the last dollar spent on research for curing other diseases. E. the value of the total benefit of the research on heart disease.

The reduction in funding for research to cure other diseases Whether the last dollar devoted to research on heart disease results in more benefit than the last dollar spent on research for curing other diseases.

Warren Buffet is the Chief Executive Officer of the investment firm Berkshire Hathaway and one of the wealthiest people in the world. In an editorial in the Wall Street Journal​, Buffet argued that economic policies in the United States should be designed so that people who are willing to work receive enough income to live a​ "decent lifestyle." He argued that an expansion of the Earned Income Tax Credit​ (EITC) would be superior to an increase in the minimum wage as a means to reach this goal. The EITC is a program under which the federal government makes payments to​ low-income workers. ​Source: Warren​ Buffet, "Better Than Raising the Minimum​ Wage," Wall Street Journal​, May​ 21, 2015. Part 2 Is Buffet correct that it is the role of the federal government to make sure people who work will have enough income to live a​ "decent lifestyle"? A. This is a normative economic​ question, so the answer is a matter of the norms or values of the person answering. B. He is correct because only the government can make sure people who work will have enough income to live a​ "decent lifestyle." C. This is a positive economic​ question, so the answer is a matter of the norms or values of the person answering. D. He is incorrect because if the government​ provides, people will not have an incentive to support themselves.

This is a normative economic​ question, so the answer is a matter of the norms or values of the person answering.

The basis for trade is comparative​ advantage, not absolute advantage. True or False

True

Which of the following is a positive economic statement? A. States should be able to enact their own marijuana legalization laws B. The inflation rate in the United States is too high. C. The government should defund Obamacare. D. Unemployment insurance payments increase when the unemployment rate rises

Unemployment insurance payments increase when the unemployment rate rises.

of the following is a macroeconomic question? A. How is the production quantity of digital cameras determined? B. What factors determine the price of iPhones? C. What determines the unemployment rate? D. What determines the wages and benefits of flight attendants?

What determines the unemployment rate?

How are economic resources allocated in a market​ economy? A. by the government B. by the decisions of households and firms interacting in markets C. by consumers acting alone D. by firms acting alone

by the decisions of households and firms interacting in markets

The British historian Thomas Macaulay once remarked that copyrights are​ "a tax on​ readers." Copyrights are a​ 'tax' on readers in the sense that A. securing a new copyright requires the payment of a fee to the government by the artist. B. the government explicitly adds a sales tax on creative works to cover the copyright. C. copyrights limit of the supply of related creative work which results in higher prices. D. the government collects the tax progressively to promote fairness in the tax code. If copyrights are a​ 'tax' on​ readers, governments provide a legal framework to enforce them because A. copyrights provide needed protection for authors and creators of movies or other artistic works. B. the government collects a large amount of revenue from the tax. C. the government likes to tax the people any chance it gets. D. the government needs to solve its debt problem by enacting new taxes.

copyrights limit of the supply of related creative work which results in higher prices. copyrights provide needed protection for authors and creators of movies or other artistic works.

The chapter mentions that in​ 1965, married women and men combined spent significantly more time on housework than they did in 2018. Does the decrease in the total number of hours of housework during that period mean that families are willing to live in messier homes today than they were in​ 1965? A. ​Yes, because homes are larger now and would require more hours of housework to keep a home clean. B. ​No, because women have just decided to let men do more work. C. ​Yes, because families are too busy now to worry about a clean house. D. ​No, because there are more labor saving devices so less time is required.

​No, because there are more labor saving devices so less time is required.

XYZ​ firm, the leading producer of leather goods in its country is planning to expand its business. Industry experts identify Asia as a potential target market. They report that substitute​ products, particularly in​ India, are highly priced.​ Darren, the operational​ head, feels that exporting their product to India is a good idea. According to​ him, their price advantage alone will ensure good sales.​ However, his​ colleague, Mark, who is also the head of product​ development, feels that Darren is too​ optimistic, and that this venture may not turn out to be as profitable as Darren expects it to be. ​Darren's view is based on which of the following​ assumptions? A. Imports in India usually exceed exports from the country. B. India has high import tariffs. C. The quality of the domestically produced substitutes is not as good as​ XYZ's product. D. Consumers in India are extremely loyal to national brands. E. ​XYZ's product is a close substitute for the locally available goods.

​XYZ's product is a close substitute for the locally available goods.

Suppose you were building an economic model to forecast the number of people employed in U.S. manufacturing in 2026. Should your model take into account the possibility of changes in economic policy enacted by the president and​ Congress? A. ​Yes, the model should account for economic policy because it could affect employment in manufacturing. B. ​No, the model should not account for economic policy because its effects cannot be tested. C. ​Yes, the model should account for economic policy because it is unrelated to employment in manufacturing. D. ​No, the model should not account for economic policy because its effect on employment in manufacturing is uncertain.

​Yes, the model should account for economic policy because it could affect employment in manufacturing.

With respect to​ consumption, individuals and countries A. ​can, through​ trade, consume beyond their production possibilities frontiers. B. ​can, by choosing not to save for the​ future, consume beyond their production possibilities frontiers. C. can consume beyond their production possibilities frontiers only during periods of economic prosperity. D. are contrained to consume on or inside their production possibilities frontiers.

​can, through​ trade, consume beyond their production possibilities frontiers.