Economics Multiple Choice

A principal is worried that her agent may not do what she wants. As a solution, she should reconsider: a. Commissions b. Bonuses c. Profit sharing d. All of the above

d

As a capitalist economy, the vast majority of US national income flows to the owners of capital True False

False

"Remittances" occur when: A. immigrants send financial payments back to family in their country of origin. B. migrants return to their home country. C. physical capital flows into a country that has lost labor due to migration. D. two countries send immigrants to each other in approximately equal numbers.

A

Based on what we have learned about income and the demand for health care we would have to conclude that health care: A. is an inferior good. B. is highly elastic with respect to price. C. is a normal good. D. has a price elasticity of 1.

C

Discrimination A. affects the distribution of domestic output and income but not its total size. B. is shown as some point outside of an economy's production possibilities curve. C. places the economy at some point inside of its production possibilities curve. D. affects the total size of domestic output and income but not its distribution.

C

Income mobility: A. contributes to greater wealth inequality in the United States. B. is less in the United States than in most developing nations. C. is the movement of individuals and households from one income quintile to another over time. D. makes lifetime income inequality among income receivers in the United States greater than income inequality in any single year.

C

Which of the following is a public assistance or welfare program as opposed to a social insurance program? A. Food Stamps B. unemployment compensation C. Medicare D. Social Security

A

Ending discrimination against minority groups in educational processes and in employment situations would cause total domestic output to A. rise because of an increase in the productivity of the labor force. B. rise because spending on consumer goods and services would decrease. C. fall because of the increased costs of training and living. D. fall, since trained minority workers would force some present workers out of their jobs.

A

Human capital refers to: A. the accumulated knowledge and skills that allow a person to be productive. B. machinery that requires extensive human interaction to be productive. C. the accumulated financial assets of people. D. all of these things.

A

Suppose you go to a doctor but your health insurance plan reimburses you for only 80 percent of the bill. This is an example of: A. a copayment. B. a deductible. C. monopsony power. D. a deferred benefit plan.

A

Which of the following cases best illustrates economic immigration? A. Julio migrated to Australia to take a job paying three times what he earned at home.. B. Nguyen migrated to the United States to escape religious persecution. C. Sophia migrated to Germany to rejoin her family D. Vladimir migrated to Great Britain to avoid political imprisonment.

A

Which of the following measurement issues make interpretation of U.S. poverty rates difficult? A. Poverty statistics measure income rather than consumption, and some families may be able to consume above the official poverty line. B. The high cost of living in rural areas tends to result in the understatement of poverty. C. Most people below the poverty line have substantial unreported income. D. The poverty rate is adjusted for every urban and rural area, so people's poverty status changes whenever they move.

A

A person will be more likely to migrate the: A. greater the distance they will have to travel from their country of origin. B. greater the wages in their prospective new country relative to wages in their home country. C. fewer the number of "beaten paths" that exist to their prospective new country. D. greater the number of children they have.

B

According to the New York Times article about health insurance, employer-provided private health insurance began in the United States because A. the rising threat of socialism prompted U.S. companies to provide insurance to dampen enthusiasm for socialist reform. B. during World War II, wage and price controls forced employers to use nonwage forms of compensation to attract workers. C. poor health conditions at the beginning of the 20th century prompted the U.S. government to require new companies to offer health insurance to employees. D. the American Medical Association successfully lobbied the U.S. government to provide subsidies to companies offering private health insurance to employees.

B

If an individual is less careful about avoiding accidents or illness because she has health insurance, this is an example of: A. the free-rider problem. B. the moral hazard problem. C. the adverse selection problem. D. the Coase theorem.

B

In the United States, the lifetime distribution of income is more equal than the annual distribution. This statement is A. true because the rich have gotten richer and the poor have gotten poorer. B. true because there is considerable income mobility over time. C. false because people tend to stay in the same income quintile over extended periods of time. D. false because the rich have gotten richer and the poor have gotten poorer.

B

Many economists believe that at the current level of consumption of health care in the United States, the marginal cost of health care for society is A. less than the marginal benefit. B. greater than the marginal benefit. C. equal to the marginal benefit. D. zero.

B

Suppose that Rosa is considering migration to another country. To move, she will have to spend $5,000 on transportation and $4,000 in application and other processing fees. Rosa's stream of future earnings in her home country is $500,000. She expects to earn a stream of future earnings of $800,000 in another country. Based on this information, Rosa's implicit cost of migrating is A. $9,000. B. $500,000. C. $509,000. D. $5,000.

B

The price elasticity of demand for health care is such that an increase in the price of health care will A. decrease total health care expenditures. B. increase total health care expenditures. C. shift the demand for health care rightward. D. shift the demand for health care leftward.

B

The problem of asymmetric information is that: A. neither health care buyers nor providers are well-informed. B. health care providers are well-informed, but buyers are not. C. the outcomes of many complex medical procedures cannot be predicted. D. insurance companies are well-informed but policy purchasers are not.

B

Which of the following cases best illustrates economic immigration? A. Sophia migrated to Germany to rejoin her family. B. Julio migrated to Australia to take a job paying three times what he earned at home. C. Nguyen migrated to the United States to escape religious persecution. D. Vladimir migrated to Great Britain to avoid political imprisonment.

B

Which of the following statements is correct? A. Limited access to the health care system is a major cause of rising health care costs. B. Rising health care costs are a major cause of limited access to the health care system. C. Rising health care costs have forced employers to raise real wages above labor productivity. D. The tax subsidy which government provides for health care causes health care to be underconsumed.

B

Which of the following statements is most accurate about the effects of migration? A. Migration generally benefits the mover, but there is a net efficiency loss to the world. B. Migration generally benefits everyone in both the origin and destination nations. C. Migration generally benefits the mover and creates a net efficiency gain for the world. D. Remittances cause the gains from immigration to be distributed unevenly

B

Which of the following statements is true about the effects of illegal immigration in the United States? A. Illegal immigrant workers displace domestic-born workers on a one-for-one basis. B. Illegal immigration has a negative fiscal impact that falls most heavily on state and local governments. C. Illegal immigration negatively impacts wages and the standard of living for all domestic-born workers. D. All of these are true.

B

Why did the U.S. become dominated by employer-provided health insurance? A. The federal government required during the Great Depression. B. Offering health insurance as a fringe benefit was a way to attract employees during World War II. C. The rise in the number of cases of childhood polio during the 1950s made it necessary to attract workers who had families. D. Doctors and hospitals thought it would be an interesting way to increase business and pitched it to corporations as an idea in the 1960s.

B

The basic argument for income inequality is that A. the very rich establish consumption patterns that are desirable for the rest of society to emulate. B. the rich buy luxury goods that soon become affordable to everyone else because of economies of scale. C. income inequality is essential to maintain incentives to produce. D. inequality undermines incentives and tends to reduce the size of the national income.

C

The basic argument for income inequality is that: A. the very rich establish consumption patterns that are desirable for the rest of society to emulate. B. the rich buy luxury goods that soon become affordable to everyone else because of economies of scale. C. income inequality is essential to maintain incentives to work and produce. D. inequality undermines incentives and tends to reduce the size of the national income.

C

The equality-efficiency tradeoff refers to: A. the conflict between risk averters and risk takers. B. the willingness of Congress to abandon existing welfare programs in favor of a comprehensive plan to increase education and training for low-income persons. C. possible trade-offs between the goals of economic efficiency and greater income equality. D. the difference between the goals of income equality and equality of economic opportunity.

C

The fundamental problem associated with the U.S. health care system is that A. the financing of health care through insurance has resulted in the underallocation of resources to the health care industry. B. frivolous malpractice suits have increased malpractice insurance premiums for doctors. C. at the margin, the value of health care services may be less than the value of alternative goods and services. D. there are too many general practitioners and not enough specialists.

C

What is the net effect of illegal immigration on total employment in the United States? A. The net effect is zero, as illegal immigrant workers displace domestic-born workers on a one-for-one basis. B. Total employment decreases. C. Total employment increases, but with some substitution of illegal immigrants for domestic-born workers. D. Total employment increases, with no displacement of or substitution for domestic-born workers.

C

Each of the following contributes to inequalities of income except: A. differences in ability and training. B. differences in job tastes. C. differences in wealth ownership. D. government transfers of wealth.

D

Illegal immigration positively contributes to the U.S. standard of living by reducing: A. the fiscal burdens of state and local governments. B. the average wages of domestic-born workers. C. crime rates. D. prices of goods and services produced with illegal immigrant labor.

D

In the article titled You Are What You Spend, the authors maintain that A. Income inequality is lower than we think if we consider taxes. B. Income inequality data should include income transfers. C. Consumption is more equal among groups than income. D. All of these.

D

Remittances and backflows of experienced workers A. reduce the efficiency gains from migration. B. reverse wage equalization that occurred with the original migration. C. exacerbate the problem of "brain drain" from developing nations. D. redistribute gains toward the original emigrant nation.

D

The "taste for discrimination" model has been shown to be economically A. A good practice because it is more profitable B. A good practice because it reduces absenteeism C. Of no impact D. A bad practice because it raises costs by keeping out talented workers from certain groups.

D

The United States devotes about ______ percent of its domestic output to health care. A. 4 B. 8 C. 13 D. 17

D

Which of these is a factor that would make it more likely a worker would be willing to migrate to another country? A. The destination country is close to the country of origin. B. The worker's age. C. The worker's marital and family situation. D All of these could make more likely a worker would be willing to migrate.

D

After mining 9,273 tons of coal, Blue Sky Mining's managers not that the marginal cost of mining the next ton of coal would be $40 per ton. They also calculate that the user cost of mining that next ton of coal would be $35. If the market price of coal is $72, should Blue Sky mine an additional ton of coal? Yes No

No

Cindy is a baker and runs a large cupcake shop. She has already hired 11 employees and is thinking of hiring a 12th. Cindy estimates that a 12th worker would cost her $100 per day in wages and benefits while increasing her total revenue from $2,600 per day to $2,750 per day. Should. Cindy hire a 12th worker? a. Yes b. No c. You need more information to figure this out

a

FreshLeaf is a commercial salad maker that produces "salad in a bag" that is sold at many local supermarkets. Its consumers like let's but don't care so much what type of lettuce is included in each bag of salad, so you would expect FreshLeaf's demand for iceberg lettuce to be: a. Elastic b. Inelastic c. Unit elastic d. All of the above

a

On average, 50-year-old workers are paid several times more than workers in their teens and twenties. Which of the following options is the most likely explanation for that hire difference in average earnings? a. Older workers have more human capital and higher MRPs. b. Employers engage in widespread discrimination against younger workers. c. Young people lack information about the existence of the high-paying jobs occupied by older workers. d. Older workers receive compensating differences because they do jobs occupied by older workers.

a

Alice runs a shoemaking factory and utilizes both labor and capital to make shoes. Which of the following would shift the factory's demand for capital? You can select one or more answers from the choices shown. a. Many consumers decide to barefoot all the time b. New shoemaking machines are twice as efficient as older machines c. The wages that the factory has to pay its workers rise due to an economy-wide labor shortage

a b c

Good methods for helping to protect natural resources include: a. Establishing property rights and giving them to local users b. Encouraging first-come, first-served property rights c. Teaching people to consider user cost d. Having the government set up and enforce ITQs

a, c, d

The main argument put forth by advocates of the single-tax movement was that: a. Taxing only income would make for a more equal society. b. Taxing only land would be very efficient because taxing land does not decrease its supply. c. Taxing only imports would help to protect local jobs and stimulate local entrepreneurs. d. Having only one tax would be much easier for people to understand and much less costly to administer than our country system with its wide variety of taxes.

b

The market equilibrium wage is currently $12 per hour among hairdressers. At that wage, 17,323 hairdressers are currently employed in the state. The state legislature then sets a minimum wage of $11.50 per hour for hairdressers. If there are no changes to either the demand or supply for hairdressers when that minimum wage is imposed, the number of hairdressers employed in the state will be: a. Fewer than 17,323 b. Still 17,323 c. More than 17,323 d. This is a bilateral monopsony so you can't tell

b

When economists say that the demand for labor is a derived demand, they mean that is is a. dependent on government expenditures for public goods and services. b. related to the demand for the product or service labor is producing c. based on the desire of the business to exploit labor by paying below equilibrium wage rates

b

Which of the following increases in labor demand is due to a change in the product demand? a. Access to computers increases the productivity of mail order business, this increasing the demand for their workers. b. Tourism increases in popularity, increasing the demand for workers at tourist resorts c. A decrease in the price of trucks decreases the cost of transporting goods, thus increasing the demand for truckers d. A change in work rules increases output per worker in the auto industry, this increasing the demand for auto workers

b

Brenda owns a construction company that employs bricklayers and other skilled tradesmen. Her firm's MRP for bricklayers is $22.25 per hour for each of the first seven bricklayers, $18.50 for an eighth bricklayer, and $17.75 for a ninth bricklayer. Given that she is a price taker when hiring bricklayers, how many bricklayers will she hire if the market equilibrium wage for bricklayers is $18.00 per hour? a. Zero b. Seven c. Eight d. Nine e. More information is required to answer this question

c

Manny owns a local fast-food franchise. Angel, runs it for him. So in this situation, Manny is the ___ and Angel is the ___. a. Free rider; entrepreneur b. Agent; principle c. Principle; agent d. Producer; consumer

c

Which of the following increases in labor demand is due to a change in the price of a related resource? a. software sales rise, thus increasing the demand for software developers b. Snowboarding increases in popularity, this increasing the demand for the workers who make snowboards c. A decrease in the price of wood decreases the cost of furniture, thus increasing the demand for furniture workers d. A technological change increases output per worker in the computer industry, thus increasing the demand for computer workers

c

Angela puts $1,000 in savings account that pays 3 percent per year. What is the future value of her money one year from now? a. $970 b. $1,000 c. $1,003 d. $1,030

d

Because a perfectly competitive employer's MRC curve is ___, it will hire ___ workers that would a monopsony employer with the same MRP curve. a. Upsloping; more b. Upsloping; fewer c. Flat; more d. Flat; fewer e. Downsloping; more f. Downsloping; fewer

d

Entrepreneurs are the residual claimants at their respective firms. This means they: a. Only get paid if there is any money left b. Must bear the financial risks of running their firms c. Receive whatever accounting profits or losses their firms generate d. All of the above

d

It would cost the town of Irondale $50 million to build a gas-powered generator that could produce maximum of 5 megawatts of electricity at 15 cents per hour. Another alternative would be fro Irondale to build a $100 million coal-fired generator the could produce a maximum of 15 megawatts of electricity at 5 cents per hour. Irondale should: a. Build the coal-fired generator because its hourly operating costs are so much lower b. Build the gas-powered generator since it is less expensive to build c. Build the coal-fired generator because, while it would cost twice as much to build, it would produce three times as much electricity d. Obtain more information before deciding what to do

d

The long-run downward trend in commodity prices is consistent with the idea that: a. We are quickly running out of resources b. Resource demands have been increasing faster than resource supplies c. Birthrates will soon increase due to the falling cost of living d. Resource supplies have increased faster than resource demands

d

When using a supply-and-demand model to illustrate how land rents are set, economists typically draw the supply curve as a vertical line because: a. The supply of land is fixed. b. The supply of land is perfectly inelastic. c. The quantity supplied of land does not increase when rents go up. d. All of the above.

d

Which of the following did Joseph Schumpeter believer was a role for an entrepreneur? a. Bringing new products to market b. Bringing new processes to market c. Finding new markets d. All of these

d