Final Exam Study guide for Microeconomics

208. Negotiations between unions and a firm or firms is called: A. collective bargaining B. cooperative bargaining C. united bargaining D. organized bargaining

A. collective bargaining

96. If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises. A. decreasing returns to scale B. consent returns to scale C. economies of scale D. increasing returns to scale

A. decreasing returns to scale

64. Demand is said to be ___________ when the quantity demanded is very responsive to changes in price. A. elastic B. unit elastic C. inelastic D. independent

A. elastic

249. The major problems caused by imperfect information in insurance markets are: A. moral hazard and adverse selection. B. deceptive applicants and fraudulent claims. C. ability to attract repeat customers and risk groups. D. major additional costs and separating insurance buyers.

A. moral hazard and adverse selection.

131. For a pure monopoly to exist, A. there is a single seller in a particular industry B. there is only one seller, therefore no industry C. there are a few sellers in a given industry D. there are limited sellers in a particular industry

A. there is a single seller in a particular industry

230. One common way of measuring income inequality is to rank all households by income, from lowest to highest, and then: A. to divide all households into quintiles. B. comparing the groups. C. to divide all households by size. D. comparing the share of the population.

A. to divide all households into quintiles.

311. __________ means selling goods below their cost of production. A. Protectionism B. Dumping C. Import quotas D. Non-tariff barriers

B. Dumping

253. During the recent U.S. recession, some large automakers required bailouts from the federal government to avoid being forced into bankruptcy by their: A. shareholders B. bondholders C. Chief Executive Officer D. Board of Directors

B. bondholders

256. A financial gain earned by purchasing stock in a publicly traded company and subsequently selling the investment at higher price is commonly referred to as a: A. dividend B. capital gain C. interest payment D. rate of return

B. capital gain

169. Government policymakers often must decide how to balance the potential benefits of _____________ against the potential benefits of: A. competition; nationalization B. corporate size; competition C. corporate size; predatory pricing D. nationalization; privatization

B. corporate size; competition

106. Economic profit can be derived from calculating total revenues minus all of the firm's costs, A. excluding its opportunity costs. B. including its opportunity costs. C. including its marginal revenue. D. excluding its marginal revenue.

B. including its opportunity costs.

22. Scarcity implies that: A. consumers would be willing to purchase the same quantity of a good at a higher price. B. it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available. C. at the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce. D. consumers are too poor to afford the goods and services available.

B. it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

115. In economic terms, a practical approach to maximizing profits requires an examination of how changes in production affect ____________ and: A. total revenue; total cost B. marginal revenue; marginal cost C. total revenue; marginal cost D. marginal revenue; total cost

B. marginal revenue; marginal cost

10. Macroeconomics primarily examines: A. the behaviour of individual households and firms. B. how prices are determined within individual markets. C. broad issues such as national output, employment and inflation. D. the output levels that maximize the profits of business firms

C. Broad issues such as national output, employment and inflation

245. The government rules on advertising are enforced by the ____________________. A. Federal Advertising Commission B. Federal Broadcasting Commission C. Federal Trade Commission D. Federal Products Commission

C. Federal Trade Commission

262. ______ are a form of _______ bonds that offer relatively high interest rates to compensate for their relatively high chance of default. A. Bonds; government B. High-yield bonds; municipal C. Junk bonds; corporate D. Certificates of deposit; bank

C. Junk bonds; corporate

4. In the ____________, households work and receive payment from firms. A. financial investment market B. financial capital market C. labor market D. savings market

C. Labor Market

164. The term "tie-in sales" is synonymous with A. price maintenance B. exclusive dealing C. bundling D. predatory pricing

C. bundling

29. The law of ____________________________ explains why people and societies rarely make all-or-nothing choices. A. consumption B. marginal analysis C. diminishing marginal utility D. utility

C. diminishing marginal utility

162. An agreement between a manufacturer and a distributor stipulating that a dealer will only distribute that manufacturer's products would be classified as a form of A. predatory pricing. B. tie-in-sales arrangement. C. exclusive dealing. D. price maintenance.

C. exclusive dealing.

225. The food stamp benefit: A. is a state funded program started in 1984. B. does not contribute to the poverty trap from an economic viewpoint. C. has time limits and is not a complete disincentive to work. D. is reduced by $35 for every $100 earned and a and c above.

C. has time limits and is not a complete disincentive to work.

140. The perceived demand curve for a group of competing oligopoly firms will appear kinked as a result of their commitment to A. match price increases, but not price cuts. B. stand at opposite ends of the competition spectrum. C. match price cuts, but not price increases. D. stand at the high point of the competition spectrum.

C. match price cuts, but not price increases.

235. A ________________ exists when the buyer pays an extra amount, and the seller agrees to fix anything that goes wrong for a set time period. A. warranty B. money-backed guarantee C. service contract D. money-back warranty

C. service contract

130. The slope of the demand curve for a monopoly firm is A. horizontal, parallel to the x-axis B. vertical, parallel to the y-axis C. upward sloping D. downward sloping

D. downward sloping

166. The term _____________ refers to a situation where the firms supposedly being regulated end up playing a large role in setting the regulations that they will follow. A. regulatory tie-in B. deregulation C. privatization D. regulatory capture

D. regulatory capture

174. The main challenge for antitrust regulators is A. to figure out how to best benefit consumers. B. to facilitate privatization of government assets. C. to promote the concept of a market-oriented economy. D. to determine when a merger may hinder competition.

D. to determine when a merger may hinder competition.

196. The term "basic research" applies specifically to research pertaining to fundamental scientific breakthroughs that may offer commercial applications in the: A. distant future B. near future C. immediate future D. short run

A. distant future

155. If oligopolistic firms banded together with the intention of acting like a monopoly, it would likely result in their being able to A. divide up the monopoly level of profit amongst themselves. B. hold down output in the short run. C. charge a higher price in the short run. D. both b and c above are correct.

A. divide up the monopoly level of profit amongst themselves.

90. A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production. A. fixed costs; do not change, B. variable costs; are constantly changing, C. fixed costs; are consistently changing, D. variable costs; do not change,

A. fixed costs; do not change

13. The circular flow diagram of economic activity is a model of the: A. flow of goods, services, and payments between households and firms. B. influence of government on business behaviour. C. role of unions and government in the economy. D. interaction among taxes, prices, and profits.

A. flow of goods, services, and payments between households and firms.

233. Lesley is a single mother with 2 children. She can earn $10 per hour and can work up to 1,800 hours per year. However, if she does not earn any income at all, she will receive government benefits totaling $18,000 per year. For every $1 of income she earns, her level of government support is reduced by $1. Lesley: A. has no monetary incentive to work, though she may still choose to work B. has a monetary incentive to work and will maximize her income if she works for 300 hours C. has a monetary incentive to work and will maximize her income if she works for 600 hours D. has a monetary incentive to work and will maximize her income if she works for 900 hours

A. has no monetary incentive to work, though she may still choose to work

308. An import quota or tariff on French wine that raises the prices for wine will probably: A. hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices. B. hurt both domestic wine drinkers and domestic wineries, but this will be more than offset by a reduction in driving fatalities. C. hurt both domestic wine drinkers and domestic wine producers because of a reduction in competition. D. hurt domestic wineries, which will lose business as a result of the higher prices.

A. hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices.

79. When economists attempt to predict the spending patterns of U.S. households, they will typically view the_____________________ as a primary determining factor that influences the individual consumption choices that each will make. A. income level of each household B. national average spending level C. national average savings level D. nation's perennial political debate

A. income level of each household

160. The term __________ refers to the percentage share of a firm's total sales in the market. A. market share B. concentration ratio C. total market ratio D. market cap

A. market share

303. The reasons that nations trade includes the fact that: A. no one country produces all of what citizens within the country want. B. the wants of their citizens exceeds their productive capacity. C. different countries have different levels of greed. D. labor costs are too high in some countries to efficiently produce goods.

A. no one country produces all of what citizens within the country want.

17. Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be. A. normative statement B. budget constraint C. trade-off D. opportunity cost

A. normative statement

296. The underlying reason why trade benefits both sides of a trading arrangement are rooted in the concept of . A. opportunity cost B. specialization C. absolute advantage D. maximum production

A. opportunity cost

299. The theory of comparative advantage shows that the gains from international trade do not just result from the absolute advantage of producing at lower cost, but also from pursuing comparative advantage and producing at a lower . A. opportunity cost B. absolute cost C. relative cost D. comparative cost

A. opportunity cost

141. Perfect competition and monopoly stand at __________ of the spectrum of competition. A. opposite ends B. the high end C. the low end D. the mid-way point

A. opposite ends

129. Following the assumption that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency? A. output will be too small and its price too high. B. output will be too large and its price too high. C. output will be too small and its price too low. D. output will be too large and its price too low.

A. output will be too small and its price too high.

123. Government _____________ regulations specify that inventors will maintain exclusive legal rights to their respective inventions for: A. patent; a limited time B. trademark; an unlimited time C. copyright; a limited time D. trade secret; an unlimited time

A. patent; a limited time

109. If a perfectly competitive firm is a price taker, then A. pressure from competing firms will force acceptance of the prevailing market price. B. it must be a relatively small player compared to its competitors in the overall market. C. it can increase or decrease its output without affecting overall quantity supplied in the market. D. quality differences will be very perceptible and will play a major role in purchasers' decisions.

A. pressure from competing firms will force acceptance of the prevailing market price.

52. The "law of supply" functions in labor markets; that is, a higher ___________ for labor leads to a higher quantity of labor supplied. A. price B. demand C. supply D. quantity

A. price

207. Which of the following represents one of the methods that the government uses to promote technology? A. protection of intellectual property B. provision of a greater number of public goods C. maintenance of stable regulated financial markets D. creation of public colleges and universities

A. protection of intellectual property

278. The theory of ______________ holds that people won't bother incurring the costs of becoming informed and voting, because they know that their vote: A. rational ignorance; won't be decisive in the election B. imperfect competition; has little impact on election outcomes C. inequality of incomes; won't be decisive in the election D. democracy by majority rule; won't impact election outcomes

A. rational ignorance; won't be decisive in the election

202. Government has a variety of policies that allow inventors to ________, such as the granting patents and: A. receive an increased rate of return; subsidization of research and development B. protect their inventions; limited copyrights during the inventor's lifetime C. register their inventions; unlimited copyrights during the inventor's lifetime D. receive a reasonable rate of return; lifetime intellectual property rights.

A. receive an increased rate of return; subsidization of research and development

281. Why are politicians more likely to focus their political actions on individuals with higher incomes and higher levels of education? A. research shows this group has greater informed voter participation B. research shows this group has a higher percentage of conservatives C. research shows this group has a higher percentage of liberals D. research shows members of this group have employment concerns

A. research shows this group has greater informed voter participation

282. Political institutions play a role in allocating the ____________, and economists have played an active role along with other social scientists in analyzing: A. scarce resources of society; how such political institutions work B. single political district spending: the impossibility of the majority deciding what it prefers C. resources to pork barrel projects; the impossibility of deciding on spending limits D. funding to 51 tuition-free colleges and universities; disadvantages of price controls

A. scarce resources of society; how such political institutions work

152. A monopolistically competitive firm may earn abnormally high profits in the: A. short term, but the process of entry will drive those profits to zero in the long run. B. long term, but the process of entry will drive those profits to zero in the short run. C. short run, but after entry occurs, the long-term perceived demand curve shifts to the right. D. long run, but after entry occurs, the short-term perceived demand curve shifts to the right.

A. short term, but the process of entry will drive those profits to zero in the long run.

179. The term ______________________ refers to a market exchange affecting a third party who is external to this exchange. A. social costs B. spillover C. market failure D. private costs

A. social costs

305. Some nations that seek to produce all of their own needs face the problem that: A. some industries are too small to be efficient if restricted to their domestic markets alone. B. they can deplete their natural resources as a result. C. the opportunity cost of producing some of their own goods is lower than that of trading with others for them. D. they will not be able to satisfy the wants of all of their citizens.

A. some industries are too small to be efficient if restricted to their domestic markets alone.

224. Which of the following is a key requirement imposed under the Welfare Reform Act's new antipoverty program? A. states receiving TANF grants must impose work or school attendance requirements B. no one can receive TNAF benefits for more than 3 years while attending school C. no one can receive AFDC benefits for more than 5 years over their lifetime D. states receiving ADFC benefits must impose work or school attendance requirements

A. states receiving TANF grants must impose work or school attendance requirements

59. As the _______________ complement for high-skill labor becomes cheaper, the demand curve for high- skill labor will shift to the right. A. technology B. low-skill labor C. market D. lower wage

A. technology

24. The opportunity cost of attending university is likely to include all except which of the following? A. the cost of haircuts received during the school term B. the income you forgo to attend classes C. tuition fees D. the cost of required textbooks

A. the cost of haircuts received during the school term

226. Medicaid is a federal-state joint program enacted in 1965 that provides medical insurance for A. the near-poor and the low-income elderly. B. all those below the poverty line. C. low-income mothers, but not their spouses. D. the disabled and all of the above.

A. the near-poor and the low-income elderly.

19. As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good. A. the production possibilities frontier B. allocative efficiency C. scarcity D. utility

A. the production possibilities frontier

44. A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of: A. the supply curve. B. the demand curve, as consumers try to economize because of the shortage. C. both the supply and demand curves. D. the supply curve and a rightward shift of the demand curve, resulting in a higher equilibrium price.

A. the supply curve.

205. Market competition may sometimes encourage a firm to innovate out of fear because of the perception that: A. they will inevitably fall behind other competitors seeking out innovations. B. the firm will only have a very temporary edge over its competitors. C. the ability to earn above-normal profits is also available to its competition. D. higher profits can only be earned by finding less expensive ways to produce.

A. they will inevitably fall behind other competitors seeking out innovations.

28. The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern. A. utility B. marginal benefit C. opportunity cost D. sunk costs

A. utility

114. In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice? A. what quantity to produce B. what price to charge C. what quantity of labor is needed D. what quality to produce

A. what quantity to produce

138. ____________ arises when firms act together to reduce output and keep prices high. A. Collusion B. A cartel C. A monopoly D. An oligopoly

B. A cartel

209. _____________ involves active efforts to improve the job opportunities or outcomes of minority groups or women. A. Meritorious action B. Affirmative action C. Anti-discriminative action D. Aligned action

B. Affirmative action

158. ___________ give government the power to block certain mergers, and in some cases, to break up large firms into smaller ones. A. Market regulations B. Antitrust laws C. Nationalization policies D. Restrictive practices

B. Antitrust laws

276._______________ occurs when a group of legislators all agree to vote for a package of otherwise unrelated laws that they individually favor. A. Pork-barrel spending B. Logrolling C. Competitive spending D. Politically conservative spending

B. Logrolling

227. To address a common poverty trap problem for many low-paid Americans whose jobs pay enough that a family could lose its eligibility for ____________, yet those jobs don't offer ________________ either, some states guaranteed that children would not lose their coverage if their parents worked. A. food stamps; retirement benefits B. Medicaid; health insurance benefits C. Medicaid; drug insurance benefits D. food stamps; Medicaid benefits

B. Medicaid; health insurance benefits

295. Suppose that Canada can produce 100,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek, while Germany can produce 90,000 hockey sticks or 10,000 gallons of maple syrup in a typical workweek. From these numbers, we can conclude: A. Canada has a comparative advantage in the production of hockey sticks. B. Germany has a comparative advantage in the production of hockey sticks. C. Canada has an absolute advantage in the production of maple syrup. D. Germany has an absolute advantage in the production of maple syrup.

A. Canada has a comparative advantage in the production of hockey sticks.

293. In India one person can produce 330 pounds of rice or 110 shirts in one year. In China one person can produce 400 pounds of rice or 200 shirts in one year. Which of the following statements is true? A. India has a comparative advantage in the production of rice. B. China has a comparative advantage in the production of rice. C. China has both an absolute and comparative advantage in the production of rice. D. India has an absolute advantage in the production of rice.

A. India has a comparative advantage in the production of rice.

103 ____________ refers to the additional revenue gained from selling one more unit. A. Marginal revenue B. Total revenue C. Economic profit D. Accounting profit

A. Marginal revenue

317. It is sometimes argued that nation should not depend too heavily on other countries for supplies of certain key products. This argument is commonly known as the: A. National Interest Argument B. Import Limitation Argument C. Anti-Dumping Argument D. Buy-American Argument

A. National Interest Argument

181. _______________ describes a situation where a third party, outside the transaction, suffers from a market transaction by others. A. Negative externality B. Positive externality C. A spillover D. A market failure

A. Negative externality

236. _________________ that are issued by government agencies are a form of validation that the holder of the license is knowledgeable in his/ her field. A. Occupational licenses B. Industrial licenses C. Service contract licenses D. Occupational insurance licenses

A. Occupational licenses

270. XYZ Corporation plans to open a manufacturing plant in China, but the company has not retained any of its yearly profits for this purpose. How will XYZ Corporation likely raise the money to finance its offshore expansion? A. Sale of bonds to institutional investors B. Sale of bonds to municipal households C. By issuing Treasury bills

A. Sale of bonds to institutional investors

183. ___________________ include both the private costs incurred by firms and also costs incurred by third parties outside the production process. A. Social costs B. Private costs C. Market costs D. External costs

A. Social costs

97. _____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price. A. Total revenue B. Total profits C. Average profit margin D. Total cost

A. Total revenue

313. A rule that every imported product must be opened by hand and inspected with a magnifying glass, by one of just three government inspectors available at any given time might be referred to as: A. a non-tariff barrier B. a quota C. a government bureaucracy D. an import quota

A. a non-tariff barrier

218. Antipoverty programs that are set up so that the amount of government benefits will decline substantially as poor people earn more income typically create _________________________. A. a poverty trap B. an income inequity C. a poverty line D. a safety net

A. a poverty trap

126. A firm that holds a monopoly position in the marketplace is A. a price maker B. a price taker C. monopolistically competitive D. subject to infinite market forces

A. a price maker

273. Since stock prices will shift in response to unpredictable future news, these prices will tend to follow what mathematicians call: A. a random walk with a trend B. momentum trading C. long-term fundamental value D. unpredictable changes in expectations

A. a random walk with a trend

190. While the traditional approach of U.S. government policies for environmental protection has had some level of success, some economists are proposing a change to: A. a range of more flexible, market-oriented pollution control policies. B. a range of polices stipulating set limits governing pollutant emissions. C. stringent polices balance industry profit goals and environmental quality. D. stringent polices that will return the environment to its former pristine quality.

A. a range of more flexible, market-oriented pollution control policies.

246. In the labor market, a stipulation that the first three months of employment is a trial period is: A. a standard precaution against hiring a lemon. B. a precondition to certification in labor. C. waived when school transcripts are submitted with a resume. D. a way of classifying potential employees.

A. a standard precaution against hiring a lemon.

94. In order to reduce the harmful effects carbon emissions, the government provided tax incentives for manufacturing firm's to ___________________ that provide alternative, more efficient methods of combining inputs to produce output. A. acquire energy efficient production technologies B. increase the returns to scale C. maintain constant returns to scale D. create perfect competition between firms

A. acquire energy efficient production technologies

31. The choice on a production possibilities frontier that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display: A. allocative efficiency B. the production possibilities frontier C. trade-offs D. scarcity

A. allocative efficiency

170. Antitrust laws were created to give government the power to A. block certain mergers and break up large firms into smaller ones. B. block cartels and break up regulatory capture. C. force the firm to sell off the profitable parts of its operation. D. block certain mergers that are determined to be uncompetitive.

A. block certain mergers and break up large firms into smaller ones.

146. Oligopoly firms acting individually may seek to gain profits: A. by expanding levels of output and cutting prices B. by selling products that are distinctive in some way C. by having a mini monopoly on a particular brand name D. by having a mini-monopoly or through tough competition

A. by expanding levels of output and cutting prices

286. In the U.S. political arena, ___________ may tend to emphasize the virtues of markets and the limitations of government, while ______________ may tend to emphasize the shortcomings of markets and the need for government programs. A. conservatives; liberals B. politicians; economists C. economists; politicians D. liberals; conservatives

A. conservatives; liberals

231. The greater inequality of wages can be viewed as a sign that: A. demand for skilled labor is increasing faster than supply. B. supply for skilled labor is decreasing faster than demand. C. demand for skilled labor is decreasing faster than supply. D. supply for skilled labor is increasing faster than demand.

A. demand for skilled labor is increasing faster than supply.

51. The _______________ is the quantity where the quantity demanded, and quantity supplied are equal at a certain price. A. quantity demanded B. equilibrium quantity C. demand schedule D. supply schedule

B. equilibrium quantity

50. If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as: A. excess supply B. excess demand C. ceteris paribus D. a price ceiling

B. excess demand

88. An inferior good is a product: A. for which demand increases as income increases. B. for which there is no demand. C. for which demand decreases as income increases. D. that has an upward sloping demand curve.

B. for which there is no demand.

87. Even with wage increases, the supply curve of labor is most often inelastic for which of the following? A. part-time workers B. full-time workers C. lawyers D. massage therapists

B. full-time workers

212. There is sufficient evidence showing that union workers in the manufacturing sector generally: A. tend to hold those jobs for less time than non-union workers. B. have higher productivity than non-union workers. C. have fewer years of experience than non-union workers, D. have lower productivity than non-union workers

B. have higher productivity than non-union workers.

229. Measuring economic inequality involves comparing those with: A. high incomes and those below the poverty line B. high incomes and those with low incomes C. high incomes middle incomes, and low incomes D. high incomes and those near the poverty line

B. high incomes and those with low incomes

175. A narrowly defined market will tend to make concentration appear ____________, while a broadly defined market will tend to make it appear: A. concerning; less concerning B. higher; smaller C. less concerning; concerning D. smaller; higher

B. higher; smaller

297. According to international trade theory, a country should: A. import goods in which it has an absolute advantage. B. import goods in which it has a comparative disadvantage. C. export goods in which it has an absolute advantage. D. import goods in which it has an absolute disadvantage.

B. import goods in which it has a comparative disadvantage.

73. The evidence on the supply curve of financial capital is controversial, but at least in the short run, the elasticity of savings with respect to the interest rate appears to be: A. elastic B. inelastic C. perfectly elastic D. negative

B. inelastic

217. A situation of ___________________ arises when one group receives a higher share of total income or wealth than others. A. poverty B. inequality C. poverty entrapment D. quintiles

B. inequality

82. When Marietta chooses to only purchase a combination of goods that lie within her budget line, she: A. is decreasing utility. B. is maximizing utility. C. likely has negative savings. D. must reduce the quantity.

B. is maximizing utility.

192. If a steel manufacturer considers the costs of labor and materials, as well as the broader costs of environmental injuries resulting from its manufacturing processes: A. its supply curve will be based on perceived benefits of maximizing utility. B. it is factoring in the social costs of the pollution it generates. C. its demand curve will be based on production choices relating to marginal costs. D. its costs will be the same as society's costs and all of the above.

B. it is factoring in the social costs of the pollution it generates.

251. State insurance regulators typically attempt to accomplish two things: _______and: A. ensure profitable economic transactions; regulate compulsory insurance B. keep the price of insurance low; make sure that everyone has insurance C. pass laws; ensure individuals cannot be compelled to purchase insurance D. enact a variety of laws; ensure individuals are required to buy insurance

B. keep the price of insurance low; make sure that everyone has insurance

302. Intra-industry trade between similar trading partners allows the gains from ___________ that arise when firms and workers specialize in the production of a certain product. A. comparative advantage B. learning and innovation C. creating the value chain D. relative advantage

B. learning and innovation

125. Which of the following is most likely to be a monopoly? A. local fast-food restaurant B. local electricity distributor C. local bathroom fixtures shop D. local television broadcaster

B. local electricity distributor

74. The term _________________ refers to the additional utility provided by one additional unit of consumption. A. utility B. marginal utility C. added utility D. Giffen utility

B. marginal utility

194. The main categories of market-oriented approaches to pollution control are: A. redefined property rights; pollution permits; marketable charges. B. marketable permits; better-defined property rights; pollution charges. C. pollution charges; extended property rights; marketable permits. D. pollution permits; defined property rights; marketable charges.

B. marketable permits; better-defined property rights; pollution charges.

157. The single most common form of competition in the U.S. is A. perfect competition among firms with differentiated products. B. monopolistic competition among firms with differentiated products. C. oligopolistic competition in a certain market with similar products. D. perfect competition because it displays product and allocative efficiencies.

B. monopolistic competition among firms with differentiated products.

143. As the name monopolistic competition implies, a firm's decisions in this market model will in some ways resemble ___________ and in other ways resemble: A. monopoly; imperfect competition B. monopoly; perfect competition C. imperfect competition; perfect competition D. imperfect competition; oligopoly

B. monopoly; perfect competition

122. Deregulation occurs when a government eliminates or scales back rules relating to all but one of the following. Which one is it? A. prices that can be charged B. natural monopoly C. conditions of entry in a certain industry D. quantities that can be produced

B. natural monopoly

199. A public good is a good that is ____________, and thus is difficult for market producers to sell to individual consumers. A. excludable or rivalrous B. nonexcludable and non-rivalrous C. excludable and rivalrous D. un-excludable or unrivaled

B. nonexcludable and non-rivalrous

289. The slope of the production possibility frontier is determined by the _________ of expanding production of one good, measured by how much of the other good would be lost. A. absolute advantage B. opportunity cost C. relative advantage D. specialization

B. opportunity cost.

111. Firms operating in a market situation that creates ______________________, sell their product in a market with other firms who produce identical or extremely similar products. A. a perfect monopoly B. perfect competition C. an oligopoly D. a free market

B. perfect competition

105. When a business adopts a strategy of reducing and/or discontinuing production in response to a sustained pattern of losses, it is A. considering opportunity costs. B. preparing to exit operations. C. preparing to reach its shutdown point. D. considering capital investments.

B. preparing to exit operations.

84. As a general rule, utility-maximizing choices between consumption goods occur where the: A. rise in income has created the greatest utility. B. price ratio and marginal utilities ratio of two goods is equal. C. higher-income households have the greatest satisfaction. D. constraints on budget expenditures has fallen substantially.

B. price ratio and marginal utilities ratio of two goods is equal.

128. A monopolist is able to maximize its profits by A. setting the price at the level that will maximize its per-unit profit. B. producing output where MR = MC and charging a price along the demand curve. C. setting output at MR = MC and setting price at the demand curve's highest point. D. producing maximum output where price is equal to its marginal cost.

B. producing output where MR = MC and charging a price along the demand curve.

110. Idaho farmers can sell as large a quantity of their potato crop as they wish, A. if they set their own price in the short run, but in the long run, the market sets the price. B. provided each is willing to accept the prevailing market price. C. if they set their own price in the long run, but in the short run, the market sets the price. D. provided quality is perceptible and determines the market price.

B. provided each is willing to accept the prevailing market price.

178. Splitting up a natural monopoly held by a public utility that produces and provides electricity would A. raise the total cost of production for all and force their profits to zero. B. raise the average cost of production and force consumers to pay more. C. evolve the structure of costs and demand to make competition less costly. D. evolve the structure of costs and demand to make competition more likely.

B. raise the average cost of production and force consumers to pay more.

244 What do service contracts, occupational licenses, and cosigners all share in common? A. reduced risk of adverse selection B. reduced the risk of imperfect information C. eliminate the risk of adverse selection D. eliminate the risk of imperfect information

B. reduced the risk of imperfect information

288. Which of the following characteristics differentiates the private economy from government? A. public policy with appropriate incentives B. self-correcting mechanism C. spending programs and unwanted results D. moderate future behavior

B. self-correcting mechanism

149. What role can advertising play with respect to differentiated products? A. allows a firm to sell any quantity it wishes B. shapes consumers intangible preferences C. shapes perceived demand for a price taker D. allows a firm to raise the prevailing market price

B. shapes consumers intangible preferences

133. What qualities would ideally suit a monopolistic firm with regard to barriers to entry? A. a few impediments to limit new firms from operating and expanding within the market B. sufficient strength to prevent or discourage potential competitors from entering the market C. government rules on prices, quantities, or conditions of entry in an industry D. government regulations that provide no barriers to entry, exit, or competition

B. sufficient strength to prevent or discourage potential competitors from entering the market

116. For a perfectly competitive firm, the marginal cost curve is identical to the firm's: A. demand curve B. supply curve C. average total cost curve D. average variable cost curve

B. supply curve

151. If the firm is producing at a quantity of output where marginal revenue exceeds marginal cost, then, A. the firm's perceived demand will shift to the left. B. the firm should keep expanding production. C. each marginal unit adds profit by bringing in less revenue than its cost. D. the firm is now earning zero for profit.

B. the firm should keep expanding production.

148. Product differentiation may occur in ___________ because__________ created strong preferences for certain brands. A. shaping intangible preferences; predatory pricing B. the minds of buyers; past habits and advertising C. imperfect competition; the concept of differentiated products D. imperfect competition; advertising and consumer habits

B. the minds of buyers; past habits and advertising

203. Market competition can provide _____________________ for: A. unstained profits; firms with marketable patents B. the needed incentive; discovering new technologies C. time; competitors to catch up with other's inventions D. an opportunity; competitors seeking out innovations

B. the needed incentive; discovering new technologies

200. If large numbers of individuals choose to behave as free riders: A. more of the public good will be available for paying riders. B. the public good may never be provided. C. public goods will quickly be privatized. D. public domain technologies become more difficult to obtain.

B. the public good may never be provided.

163. A manufacturer that only allows a consumer to purchase one product if they also buy another product is using _____________ to increase its profits. A. exclusive dealing B. tie-in sales C. predatory pricing D. bundle dealing

B. tie-in sales

266. Why do business firms need financial capital? A. to lend to other businesses B. to make real physical capital investments C. to provide an alternate source of revenue for households D. to make diversified capital investments

B. to make real physical capital investments

223. In the U.S., government support programs that are focused specifically on the poor include which of the following? A. Medicaid credits B. welfare C. income stamps D. food credits

B. welfare

37. In economics, the demand for a good refers to the amount of the good that people: A. would like to have if the good were free. B. will buy at various prices. C. need to achieve a minimum standard of living. D. will buy at alternative income levels.

B. will buy at various prices.

312. ______________ are ways that a nation can draw up regulations, inspections, and paperwork to make it more costly or difficult to import products. A. Tariffs B. Nontariff barriers C. Quotas D. Import ceilings

B. Nontariff barriers

274. _____________ are numerically small, but well-organized groups that are able to exert a disproportionate effect on political outcomes. A. Bipartisan reform organizations B. Special interest groups C. Social Scientists organizations D. Bipartisan campaign reformers

B. Special interest groups

213. What Act was passed to allow American workers to opt out of the union in their workplace? A. Labor Relations Act of 1947 B. Taft-Hartley Act of 1947 C. National Labor-Management Relations Act of 1935 D. National Workers' Rights Act of 1940

B. Taft-Hartley Act of 1947

315.______________ is theoretically possible, even sensible: give an industry a short-term indirect subsidy through protection, and then reap the long-term economic benefits of having a vibrant healthy industry. A. Protectionism B. The infant industry argument C. Dumping D. Import quotas

B. The infant industry argument

309. Which of the following is the best example of a quota? A. a tax placed on all small cars sold in the domestic market B. a limit imposed on the number of men's suits that can be imported from a foreign country C. a subsidy from the American government to domestic manufacturers of men's suits so they can compete more effectively with foreign producers of men's suits D. a $100-per-car fee imposed on all small cars imported

B. a limit imposed on the number of men's suits that can be imported from a foreign country

12. Which of the following lies primarily within the realm of macroeconomics? A. a study of the demand for gasoline B. a study of how tax cuts stimulate aggregate production C. an analysis of supply and demand conditions in the electricity market D. a study of the impact of "mad cow" disease on the price of beef worldwide

B. a study of how tax cuts stimulate aggregate production

34. Any given demand or supply curve is based on the ceteris paribus assumption that: A. everything is variable. B. all else is held equal C. no one knows which variables will change and which will remain constant. D. what is true for the individual is not necessarily true for the whole.

B. all else is held equal

35. The term "ceteris paribus" means that: A. everything is variable. B. all variables except those specified are constant. C. no one knows which variables will change and which will remain constant. D. what is true for the individual is not necessarily true for the whole.

B. all variables except those specified are constant.

268. Which of the following is not an ironclad rule in the financial markets? A. borrowing from a bank works better for large, well-known corporations B. banks fund small business loans and large firms issue bonds to raise money C. a bank can monitor a large established firm's better than a new small business D. relatively large and well-known firms typically never borrow from banks

B. banks fund small business loans and large firms issue bonds to raise money

60. Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine: A. the equilibrium price will fall, and the equilibrium quantity will fall. B. both the equilibrium price and quantity will rise. C. the equilibrium price will rise, and the equilibrium quantity will decrease. D. the equilibrium price will rise, while the change to equilibrium quantity is indeterminate.

B. both the equilibrium price and quantity will rise.

176. Which of the following may be legal and even common practice in a market economy? A. making the ability to buy one product conditional on also buying another B. bundling several products together and selling them as a package C. deterring new market entrants with short term predatory pricing D. selling product for less than the average variable cost of producing same.

B. bundling several products together and selling them as a package

11. Specialization: A. leads to greater self-sufficiency. B. can lead to an increase in overall production. C. allows workers to develop skills by working on many tasks D. is always the result of an inefficient use of resources

B. can lead to an increase in overall production.

16. Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories. A. financial capital market B. circular flow diagram C. financial investment market D. Specialization Model

B. circular flow diagram

67. When demand is inelastic: A. price elasticity of demand is greater than 1. B. consumers are not very responsive to changes in price. C. the percentage change in quantity demanded resulting from a price change is greater than the percentage change in price. D. demand curves appear to be relatively flat.

B. consumers are not very responsive to changes in price.

310. The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that: A. firms will be protected from subsidized foreign competition. B. domestic producers can attain the economies of scale to allow them to compete in world markets. C. there will be adequate supplies of crucial resources in case they are needed for national defense. D. it will not be subjected to a takeover from a foreign competitor.

B. domestic producers can attain the economies of scale to allow them to compete in world markets.

172. Which of the following government institutions bears the responsibility of enforcing US antitrust laws? A. Federal Trade Commission B. Department of Justice C. Supreme Court D. Congress and Senate

B. Department of Justice

318. The acronym GATT stands for: A. General Association for Trade and Tariffs. B. General Agreement on Tariffs and Trade. C. General Accounting for Tariff and Trade. D. General Association on Technology and Trade.

B. General Agreement on Tariffs and Trade.

193. In the U.S., the command-and-control environmental laws of the early 1970s, together with the ensuing amendments and updates that have been made to them over time: A. were necessary as US industries had zero incentive to control pollution. B. were an inexpensive incentive for industrial polluters to improve performance. C. are given considerable credit for cleaner air and water in recent decades. D. draws distinctions between the needs of firms and costly equipment upgrades.

C. are given considerable credit for cleaner air and water in recent decades.

290. When one nation can produce a product at lower cost relative to another nation, it is said to have a(n)____________in producing that product. A. relative advantage B. absolute advantage C. economy of scale D. production efficiency

B. absolute advantage

263. The term __________ refers to the _________ that a bond is expected to pay at the time of purchase. A. rate of interest; yield rate B. bond yield; rate of return C. rate of interest; rate of return D. yield rate; bond rate

B. bond yield; rate of return

264. In the investment industry, the principle of _______________ supports investing in a wide range of companies to reduce the level of risk. A. subprime loans B. diversification C. fundamentals trading D. buying low and selling high

B. diversification

242. Most buyers face a situation of ___________ when they invest in the stock market. A. adverse information B. imperfect information C. imperfect selection D. adverse selection

B. imperfect information

42. If a firm face _____________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase. A. higher demand B. lower costs of production C. equilibrium D. a shift in demand

B. lower costs of production

27. Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. A. utility B. marginal analysis C. the budget constraint D. consumption

B. marginal analysis

58. Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by: A. the recession B. new technologies C. the rise of global markets D. inflation

B. new technologies

165. Regulations that permit a regulated firm to cover its costs and to make a normal level of profit are commonly referred to as A. cost-plus regulation. B. price cap regulations. C. regulatory capture. D. profit regulation.

A. cost-plus regulation.

255. A ________ is a direct payment from a firm to its shareholders. A. dividend B. bond C. capital gain D. share

A. dividend

241. A ______________ arrangement exists when medical care providers are paid according to the services they provide. A. fee-for-service B. service contract C. coinsurance D. insurance

A. fee-for-service

307. Tariffs are taxes imposed on: A. imported products B. exported products C. hazardous goods D. surplus goods

A. imported products

76. Marginal utility can: A. be positive or negative, but not zero B. decrease, but not become negative C. be positive, negative, or zero D. increase positively, but not negatively

C. be positive, negative, or zero

26. The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good. A. personal preference B. utility level C. budget constraint D. opportunity set

C. budget constraint

185. A pollution charge is a form of tax imposed on: A. the quantity of pollution that a firm emits. B. pollution control technologies. C. every economy in the world. D. low-income market-orientated industries.

A. the quantity of pollution that a firm emits.

68. A 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the quantity of cereal demanded. As a result: A. total revenue will decrease. B. total revenue will increase. C. total revenue will remain constant. D. the elasticity of demand will increase.

A. total revenue will decrease.

86. The typical pattern revealed in a budget constraint model shows that as the quantity consumed rises, A. total utility rises, but marginal utility falls. B. marginal utility increases. C. total utility decreases, but marginal utility rises. D. total utility decreases.

A. total utility rises, but marginal utility falls.

298. When nations increase production in their area of _____ and trade with each other, both sides can benefit. A. relative advantage B. absolute advantage C. comparative advantage D. opportunity cost

C. comparative advantage

159. The four-firm __________ measures the percentage share of the total sales in the industry that is accounted for by the largest four firms. A. coordination ratio B. market share ratio C. concentration ratio D. production ratio

C. concentration ratio

43. When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right. A. prices rise B. equilibrium is achieved C. costs of production fall D. there is a population increase

C. costs of production fall

108. It is said that in a perfectly competitive market, raising the price of a firm's product from the prevailing market price of $179.00 to $199.00: A. will likely cause the firm to reach its shutdown point immediately B. will cause the firm to recover some of its opportunity costs C. could likely result in a notable loss of sales to competitors D. is a sure sign the firm is raising the given price in the market

C. could likely result in a notable loss of sales to competitors

95. The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls. A. diminishing marginal returns B. marginal cost output C. economies of scale D. diseconomies of scale

C. economies of scale

72. Youth smoking seems to be more __________ than adult smoking—that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price. A. unitary elastic B. inelastic C. elastic D. cross-price elastic

C. elastic

184. Market failure describes a situation in which the market itself ______________ in a way that balances social costs and benefits. A. remains outside the transaction B. incurs the costs outside the production process C. fails to allocate resources efficiently D. avoids externalities

C. fails to allocate resources efficiently

156. How can parties who find themselves in a prisoner's dilemma situation avoid the undesired outcome and cooperate with each other? A. one oligopoly can physically beat up another oligopoly B. by seeking alternatives to create pressure for members to keep output up and prices up C. find effective ways to penalize firms who do not cooperate D. sign legally enforceable contracts setting out their mutual agreement to act like a monopoly

C. find effective ways to penalize firms who do not cooperate

243. Automobile manufacturers use warranties as incentives for buyers to purchase their products. Why are warranties on vehicles important to buyers? A. manufacturers pay insurance policy premiums on the buyer's vehicle for a set period of time B. for a fixed time period, buyers can return vehicles for a full refund of the purchase price C. for a specific time period, the manufacturer bears the cost of fixing or replacing the vehicle D. manufacturers bear the cost of fixing the vehicles under unlimited-term service contracts

C. for a specific time period, the manufacturer bears the cost of fixing or replacing the vehicle

139. The branch of mathematics that analyzes situations in which players must make decisions and then receive payoffs most often used by economists is A. oligopoly collusion. B. prisoner's dilemma. C. game theory. D. collusion theory

C. game theory.

285. Economists readily admit that in settings that involve a monopoly or negative externalities, a potential role exists for: A. scare resources B. economically wise programs C. government intervention D. economically wise projects

C. government intervention

136. The demand curve perceived by a perfectly competitive firm A. shows that such a firm is a price-maker B. shows economies of scale over a large range of output C. is horizontal D. all of the above

C. is horizontal

173. A merger will likely lessen competition if A. they are very beneficial to consumers. B. less concentration in the market results. C. it enables the new single firm to raise price. D. both b and c above are correct answers.

C. it enables the new single firm to raise price.

189. Why would a typical U.S. business fail to take the social costs of pollution into consideration during the development of their operating strategies? A. the range of flexible, market-oriented pollution control policies are flawed B. government regulated the limits for how much pollutant can be emitted C. it isn't required to pay any of the cost of cleaning up its pollution D. it is following the principle of voluntary exchange of benefits

C. it isn't required to pay any of the cost of cleaning up its pollution

261. A checking account typically pays __________, but gives easy access to your money, either by writing a check or by using: A. no interest; a credit card B. between 3% and 5% interest, a credit card C. little or no interest; a debit card D. between 2% and 4% interest, a debit card

C. little or no interest; a debit card

284. Which of the following is an oversimplified term that is sometimes used to describe the meaning of democracy? A. voting cycles B. majority opinion C. majority rule D. majority vote

C. majority rule

161. The Herfindahl-Hirschman index is calculated by taking ___________, squaring it, and adding them up to get a total. A. concentration ratio of each firm in the industry B. total revenues of each firm in the industry C. market share of each firm in the industry D. market capitalization of each firm in the industry

C. market share of each firm in the industry

15. _____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines. A. Skill B. Specialization C. Economies of scale D. Division of labor

C. Economies of scale

5. In the ______________, households receive goods and services and pay firms for them. A. labor market B. financial capital market C. goods and services market D. savings market

C. Goods and services market

120. The largest cattle rancher in a given region will be unable to have a ____________ sufficient numbers of smaller cattle ranchers provide sources of competition. A. oligopoly B. patent C. monopoly D. monopolistic competition

C. monopoly

239. When people have insurance against a certain event, the notion that those people are less likely to guard against that event occurring is called a: A. risk B. hazard risk C. moral hazard D. moral risk

C. moral hazard

167. The term _____________ is used to describe circumstances where government takes over ownership of a business. A. privatization B. regulatory capture C. nationalization D. deregulation

C. nationalization

195. The objective of imposing a higher pollution tax is to: A. ensure firms have pollution charge credits for all reduced emissions. B. provide incentive for firms to maintain regulation emission levels. C. provide adequate incentive for firms to reduce their emissions by more. D. ensure firms must pay the pollution charge for all reduced emissions.

C. provide adequate incentive for firms to reduce their emissions by more.

39. When economists talk about supply, they are referring to a relationship between price received for each unit sold and the: A. demand schedule B. market price C. quantity supplied D. demand curve

C. quantity supplied

178. Following the commencement of deregulation of US airline industry in the 1970s, reduced airfares saved consumers billions of dollars a year however, the more recent string of airline mergers has: A. government safety regulators increasing employment opportunities for safety inspectors every year. B. doubled the number of high-paying jobs in the airline industry year after year. C. raised new concerns over how competition in the industry can once again be strengthened. D. encouraged deregulators to push further and consider industries where deregulation needs are not obvious.

C. raised new concerns over how competition in the industry can once again be strengthened.

62. The price elasticity of demand measures the: A. responsiveness of quantity demanded to a change in quantity supplied. B. responsiveness of price to a change in quantity demanded. C. responsiveness of quantity demanded to a change in price. D. responsiveness of quantity demanded to a change in income.

C. responsiveness of quantity demanded to a change in price.

187. Since 1969, when the Cuyahoga River in Ohio was so polluted that it spontaneously burst into flame, the overall quality of water in the U.S. has: A. steadily declined. B. remained unchanged. C. steadily improved. D. remained a non-issue.

C. steadily improved.

134. When a firm pursues a predatory pricing strategy, it does so A. to hire more staff to lower unemployment. B. to increase supply to benefit consumers. C. to maximize profits in the long run. D. to discourage short run competition.

C. to maximize profits in the long run.

99. Whatever the firm's quantity of production, _____________ must exceed total costs if it is to earn a profit. A. marginal costs B. average costs C. total revenue D. variable costs

C. total revenue

283. Australian law may require people to vote, but mandatory voting laws are unlikely to mean that each vote cast in an election: A. will matter less than it does in a free society B. is worth the loss of freedom not to vote C. will be an informed or a thoughtful vote D. was cast by voters who don't care who wins

C. will be an informed or a thoughtful vote

150. If a monopoly or a monopolistic competitor raises their prices, the quantity demanded: A. will expand B. stays the same C. will decline D. will decline in the short run

C. will decline

248. In the U.S., individuals often pay a small portion of their earnings into a state _________________ pooled fund that will compensate them if they are injured on the job. A. Medicare B. Social Security C. workman's compensation insurance D. unemployment insurance

C. workman's compensation insurance

197. The term "applied research" refers to research that is focused on a particular product that promises: A. to offer commercial applications in the short-term. B. to offer commercial applications in the long-term. C. an economic payoff in the short or medium-term. D. an economic payoff in the medium or long-term.

C. an economic payoff in the short or medium-term.

54. Which of the following will not result in a leftward shift of the market demand curve for labor? A. a decrease in labor productivity B. a decrease in demand for the firm's product C. an increase in the wage rate D. a decrease in the firm's product price

C. an increase in the wage rate

247. Individuals who have a small amount deducted from their paychecks to contribute into a pooled fund used to pay benefits for a period of time if they are laid-off have contributed to: A. a pension insurance fund. B. a deposit insurance fund. C. an unemployment insurance fund. D. a healthcare insurance fund.

C. an unemployment insurance fund.

314. Which of the following is the best example of a tariff? A. a tax placed on all small cars sold in the domestic market B. a limit imposed on the number of small cars that can be imported from a foreign country C. a subsidy from the American government to domestic manufacturers of small cars so they can compete more effectively with foreign producers of small cars D. a $1000-per-car fee imposed on all small cars imported

D. a $1000-per-car fee imposed on all small cars imported

306. A tariff differs from a quota in that a tariff is: A. levied on imports, whereas a quota is imposed on exports. B. levied on exports, whereas a quota is imposed on imports. C. a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. D. a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

D. a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

132. If monopolists are able to produce fewer goods and sell them at a higher price than they could under perfect competition, the result will be A. elimination of barriers to entry B. irregularly high unsustainable profits. C. government deregulation. D. abnormally high sustained profits.

D. abnormally high sustained profits.

214. Discriminatory impulses in the labor market can emerge at a number of levels: A. among managers B. among workers C. among customers D. all of the above

D. all of the above

222. Poverty is measured by the number of people who fall below: A. a certain level of income. B. the income needed for a basic standard of living. C. the nation's economic poverty line. D. all the above are correct.

D. all the above are correct.

206. Which of the following would be classified as a positive externality? A. a surcharge for ambulance service is shifted to property taxes B. reselling outdated textbooks to under-funded public schools C. removing government education subsidies for public schools D. converting a derelict empty lot to a public vegetable garden

D. converting a derelict empty lot to a public vegetable garden

260. How has the widespread adoption of debit cards as the preferred method of payment for consumer purchases likely affected bank administration costs? A. the cost of bank administration is unaffected by widespread use of debit cards B. costs increased due to high cost of developing and maintaining debit card technology C. administration costs increased because the cost of electricity means high cost for electronic transactions D. costs are reduced because the cost of purchase is immediately debited from purchaser's checking account

D. costs are reduced because the cost of purchase is immediately debited from purchaser's checking account

234. Suppose that the government implements a new policy that provides free skills training to all low-skilled workers, which makes them more productive and turns them into high-skilled workers. This will _________ the supply of low-skilled workers and_________ the supply of high-skilled workers. A. increase, decrease B. increase, increase C. decrease, decrease D. decrease, increase

D. decrease, increase

121. Which of the following is most unlikely to present a barrier to entry into a market? A. market forces B. patent laws C. technological advantages D. deregulation

D. deregulation

119. In economics, labor demand is synonymous with: A. market demand. B. average demand. C. marginal demand. D. derived demand.

D. derived demand.

237. __________ is something valuable that a lender would have a right to_______ the loan is not repaid. A. Collateral; sue for B. A guarantee; seize and retain C. A guarantee; sell D. Collateral; seize and sell

D. Collateral; seize and sell

49. If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that: A. the price of Good Y will increase. B. Goods X and Y are normal goods. C. Goods X and Y are substitute goods. D. Goods X and Y are complementary goods.

D. Goods X and Y are complementary goods.

83. In terms of microeconomic analysis, what is the function of "utils"? A. a form of budget constraint B. applies to changes in income C. a measurement of utility D. relates to a consumer's original choice

C. a measurement of utility

300. Jethro has a(n) _____________ in all aspects of camping: he is faster at carrying a backpack, gathering firewood, paddling a canoe, setting up tents, making a meal, and washing up. A. relative advantage B. opportunity cost C. absolute advantage D. comparative advantage

C. absolute advantage

56. Which of the following will not result in a rightward shift of the market supply curve for labor? A. a decrease in non-wage income B. an increase in the working-age population C. an increase in labor productivity D. an increase in immigration

C. an increase in labor productivity

259. The _________ of an investment is determined by how easy it is to sell an asset at any given time. A. profitability B. expected profitability C. liquidity D. sustainable outcome

C. liquidity

142. Shopping malls typically lease retail space to a large number of clothing stores. When this group of retailers competes to sell similar but not identical products, they engage in what economists call: A. a cartel B. collusion C. monopolistic competition D. perfect competition

C. monopolistic competition

257 In order to be classified as a _________, a firm must be owned by the people who run it on a day-to-day basis. A. business firm B. public company C. private company D. corporation

C. private company

112. In the ________________, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where: A. long run: increasing production B. short run: fixed costs can be reduced C. short run: losses are smallest D. long run: fixed costs can be eliminated

C. short run: losses are smallest

45. A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the: A. demand curve to the right B. supply curve to the left C. supply curve to the right D. demand curve to the left

C. supply curve to the right

98. If a solar panel manufacturer wants to look at its total costs of production in the short run, which of the following would provide a useful starting point? A. divide total costs into two categories: variable costs that can't be changed in the short run and fixed costs that can be B. divide the total costs of production by the quantity of output C. divide the variable costs of production by the quantity of output D. divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be

D. divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be

81. Which of the following is most likely to cause variation in American household spending patterns? A. differing levels of family income B. geographical location of households C. each household's personal preferences D. each of the above will cause a variation

D. each of the above will cause a variation

70. Supply is said to be ____________ when the quantity supplied is very responsive to changes in price. A. independent B. inelastic C. unit elastic D. elastic

D. elastic

147. In a monopolistic competitive industry, firms can try to differentiate their products by A. creating optimal perceptions of the product. B. choosing optimal locations from which the product is sold. C. enhancing the intangible aspects of the product. D. enhancing product's physical aspects and all of the above.

D. enhancing product's physical aspects and all of the above.

41. The demand schedule for a good: A. indicates the quantity that people will buy at the prevailing price. B. indicates the quantities that suppliers will sell at various market prices. C. is determined primarily by the cost of producing the good. D. indicates the quantities that will be purchased at alternative market prices.

D. indicates the quantities that will be purchased at alternative market prices.

25. The opportunity cost of an action: A. can be determined by considering both the benefits that flow from as well as the monetary costs incurred because of the action. B. can be determined by adding up the bills incurred as a result of the action. C. can be objectively determined only by economists. D. is a subjective valuation that can be determined only by the individual who chooses the action.

D. is a subjective valuation that can be determined only by the individual who chooses the action.

221. With respect to market forces and/or labor markets that determine peoples' wages, which of the following is a true statement? A. labor markets consider how much a family needs for health care B. market forces consider what happens to families in their business decisions C. labor markets consider how much a family needs for necessities D. labor markets create considerable inequalities relating to income

D. labor markets create considerable inequalities relating to income

177. Which of the following poses a difficult challenge for U.S. competition policy? A. monopoly B. monopolistic competition C. perfect competition D. natural monopoly

D. natural monopoly

118. What happens in a perfectly competitive industry when economic profit is greater than zero? A. existing firms may expand their operations B. firms may move along their LRAC curves to new outputs C. there may be pressure on the market price to fall D. new firms may enter the industry and all of the above

D. new firms may enter the industry and all of the above

198. When it is costly or impossible to exclude someone who hasn't paid to use a particular good from using it, then that good is classified as being a: A. un-excludable B. free rider C. public good D. nonexcludable

D. nonexcludable

271. The ownership in a company is represented by ________________ and those who are legally recognized as having ownership in a company are called: A. ownership of the shares with voting rights; shareholders B. shares with voting rights; stockholders C. ownership of stock; stockholders D. ownership of shares in the company's stock; shareholders

D. ownership of shares in the company's stock; shareholders

254. Which of the following will provide an investor with a legally valid claim of partial ownership of a firm? A. entitlement to bond interest B. ownership of a treasury bond C. entitlement to dividends D. ownership of stock

D. ownership of stock

69. The elasticity of supply is defined as the ________ change in quantity supplied divided by the _______ change in price. A. total; percentage B. percentage; marginal C. marginal; percentage D. percentage; percentage

D. percentage; percentage

216. When reference is made to the _______________, it means the specific amount of income needed for a basic standard of living. A. poverty trap B. income line C. income gap D. poverty line

D. poverty line

219. In circumstances dealing with poverty, the term ________________ means taking income from those with higher incomes and providing income to those with lower incomes. A. safety net B. estate tax C. minimum wage D. redistribution

D. redistribution

204. A highly innovative firm operating in a competitive market will usually have: A. a permanent edge over its competitors. B. a lack of ability to earn reasonable profits. C. vast numbers of competitors catching up to its innovations. D. sometime before competitors catch up to its innovations.

D. sometime before competitors catch up to its innovations.

191. Which of the following is viewed as a fundamental building block of the U.S. economic way of thinking? A. the principle of setting high toxic emission limits to preserve a healthy environment B. the belief that industry must be allowed to prevail over the environment C. the needs of both parties to a voluntary exchange must be completely satisfied D. the principle that a system of voluntary exchange benefits both parties

D. the principle that a system of voluntary exchange benefits both parties

287. A practical approach to microeconomic policy will need to take a realistic view of the specific strengths and weaknesses of markets and: A. rational ignorance that encourages a preference for uninformed voting B. the difficulties that arise when electors have three or more ballet choices. C. lobbying efforts that encourage pork-barrel spending D. the specific strengths and weaknesses of government

D. the specific strengths and weaknesses of government

232. If a society decides to reduce the level of economic inequality, which of the following sets of tools can it use? A. a tax imposed on the value of inheritances B. redistribution from those with high incomes to those with low incomes C. trying to assure that a ladder of opportunity is widely available D. the three mains sets of tools it can use include all of the above

D. the three mains sets of tools it can use include all of the above

144. If monopolistic competitors must expect a process of entry and exit like perfectly competitive firms, A. they will be unable to earn higher-than-normal profits in the short run. B. they will wish to cooperate to make decisions about what price to charge. C. they will wish to cooperate to make decisions about what quantity to produce. D. they will be unable to earn higher-than-normal profits in the long run.

D. they will be unable to earn higher-than-normal profits in the long run.

145. In the highly competitive setting in which oligopoly firms operate, which of the following are considered to be typical temptations each may face? A. to cooperate to generate and then divide up monopoly-like profits B. to cooperate to mutually decide what price to charge C. to cooperate to make decisions about what quantity to produce D. to cooperate to act as a single monopoly and all of the above

D. to cooperate to act as a single monopoly and all of the above

113. Why would a profit-seeking firm need to tailor its decisions about the quantity of labor inputs that it purchases? A. to produce the highest profitable quantity of output at the lowest possible marginal cost B. deciding what quantity to produce is one of the major choices a profit-seeking firm makes C. the quantity of labor is the only variable cost choice a profit-seeking firm can make D. to produce the profit-maximizing quantity of output at the lowest possible average cost

D. to produce the profit-maximizing quantity of output at the lowest possible average cost

280. In the United States, which of the following would be most likely to participate in an election by informing themselves and casting their vote? A. single people B. newcomers C. the employed D. the socially isolated

C. the employed

267. What do stocks, bonds, securitized mortgage assets and other financial investments all have in common? A. they are all forms of investments bought by demanders of capital B. they all guarantee rates of return C. they can only be purchased in financial markets D. their values are tracked by the Dow Jones Industrial Average

C. they can only be purchased in financial markets

291. Colombia produces coffee with less labor and land than any other country; it therefore necessarily has: A. a comparative advantage in coffee production. B. both a comparative and absolute advantage in coffee production. C. an absolute advantage and comparative disadvantage in coffee production. D. an absolute advantage in coffee production

D. an absolute advantage in coffee production

55. Which of the following results in a rightward shift of the market demand curve for labor? A. a decrease in labor productivity B. a decrease in the firm's product price C. an increase in the wage rate D. an increase in demand for the firm's product

D. an increase in demand for the firm's product

92. In order to determine ____________, the firm's total costs must be divided by the quantity of its output. A. diminishing marginal returns B. fixed costs C. variable cost D. average cost

D. average cost

154. A successful advertising campaign may allow competing monopolists to A. sell a greater quantity. B. charge a higher price. C. increase its profits. D. do all of the above.

D. do all of the above.

93. The term _____________ is used to describe the additional cost of producing one more unit. A. average cost B. fixed cost C. variable cost D. marginal cost

D. marginal Cost

292. The idea behind comparative advantage reflects the possibility that one party: A. may be able to produce everything relatively more efficiently than another party. B. may be able to produce something at a lower dollar cost than another party. C. with an absolute advantage in producing two different may export goods both of those goods to the other party. D. may be able to produce something at a lower opportunity cost than another party.

D. may be able to produce something at a lower opportunity cost than another party.

186. Property rights are the legal rights of ownership on which others are: A. allowed to infringe by paying the property owner's pollution tax. B. able to enforce use of pollution-control technologies. C. able to specify allowable quantities of pollution. D. not allowed to infringe without paying compensation.

D. not allowed to infringe without paying compensation.

78. Economists are able to determine total utility by: A. multiplying the marginal utility of the first unit consumed by the number of units consumed. B. multiplying the marginal utility of the last unit consumed by the number of units consumed. C. multiplying the marginal utility of the last unit consumed by the unit price. D. summing up the marginal utilities of each unit consumed.

D. summing up the marginal utilities of each unit consumed.

63. Price elasticity of demand is defined as: A. the slope of the demand curve. B. the slope of the demand curve divided by the price. C. the percentage change in price divided by the percentage change in quantity demanded. D. the percentage change in quantity demanded divided by the percentage change in price.

D. the percentage change in quantity demanded divided by the percentage change in price.

21. Scarcity exists because of: A. the market mechanism. B. specialization and division of labor. C. the allocation of goods by prices D. unlimited wants and limited resources.

D. unlimited wants and limited resources.

48. Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect: A. Andy's demand for pizza to increase. B. Andy's demand for pizza to decrease. C. Andy's quantity of pizza demanded to decrease. D. Andy's demand for beer to increase.

D. Andy's demand for beer to increase.

275. ________________ is a particular type of spending that mainly benefits a single political district. A. Logrolling B. Special interest spending C. Pork-barrel spending D. An appropriate spending programs

C. Pork-barrel spending

258. A _____________ is a firm that has sold its stock by making it available to be bought and sold by outside investors. A. business entity B. private company C. public company D. public proprietorship

C. public company

135. ____________ law implies ownership over an idea or concept or image A. Intellectual property B. Copyright C. Patent D. Trademark

A. Intellectual property

180. Using the term "spillover" is an informal formal means of describing: A. an externality. B. social costs. C. private costs. D. market failure.

A. an externality.

117. If the price that a firm charge is lower than its __________ of production, the firm will suffer losses. A. average cost B. marginal cost C. fixed cost D. variable cost

A. average cost

127. Occasionally, __________ may lead to pure monopoly; in other market conditions, they may limit competition: A. barriers to entry; to a few oligopolist firms B. barriers to entry; to a natural monopoly C. deregulation; requiring new patent law D. deregulation; requiring new copyright law

A. barriers to entry; to a few oligopolist firms

142. If a perfectly competitive market involves many firms selling identical products, then, in the face of such competition, A. each of these firms must act as a price-maker. B. each of these firms must act as a price-taker. C. collusion amongst them will most often result. D. demand curves can become kinked in appearance.

B. each of these firms must act as a price-taker.

301. The concept of ____________ means that as the measure of output goes up, average costs of production decline—at least up to a point. A. relative advantage B. economies of scale C. absolute advantage D. comparative advantage

B. economies of scale

168. In competitive settings, profits will lead firms to _______ and losses will lead firms ____________, so the incentives for producing at low cost and coming up with new ways of pleasing customers are strong. A. privatize; nationalize B. enter the market; to exit C. monopolize; to lower costs D. reduce output; increase price

B. enter the market; to exit

220. _________________ allows the government to collect wealth for redistribution based on the amount of stored wealth that is being passed on in the form of an inheritance. A. An inheritance tax B. A redistribution tax C. An estate tax D. A death tax

C. An estate tax

137. ___________ occurs when circumstances have allowed several large firms to have all or most of the sales in an industry. A. Collusion B. A monopoly C. An oligopoly D. A cartel

C. An oligopoly

272. The old proverb: "Don't put all your eggs in one basket" is synonymous with which of the following? A. An average rate of return B. Predicting value of tangible assets C. Diversified investments D. A flexible rate of return

C. Diversified investments

171. What was created by the U.S. government in 1914 to specifically define what types of competition were legally unfair? A. Department of Justice B. Antitrust Act C. Federal Trade Commission D. Supreme Court

C. Federal Trade Commission

182. A positive externality arises in a situation where a third party, outside the transaction: A. fails to allocate resources efficiently. B. suffers from a market transaction by others. C. benefits from a market transaction by others. D. pays a pollution tax to balance social costs.

C. benefits from a market transaction by others.

250. How do insurance companies reduce the risk of moral hazard? A. deny claims with high damages B. only allow claims with low damages C. investigation and monitoring D. classifying people based on credit history

C. investigation and monitoring

215. The costs that immigrants impose on governments arise mainly in terms of________, which are primarily the responsibilities of the_____________ government(s). A. administration, state and local B. administration, federal C. public schools and healthcare, state and local D. public schools and healthcare, federal

C. public schools and healthcare, state and local

294. Which of the following is true? A. A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage. B. A nation can have a comparative advantage in the production of every good, but not an absolute advantage. C. A nation cannot have an absolute advantage in the production of every good. D. A nation cannot have a comparative advantage in the production of every good.

D. A nation cannot have a comparative advantage in the production of every good.

107. The fact that a consumer is not required to buy the goods that a given firm produces, as well as the fact that the consumer might want the goods a firm produces, but may choose to buy from other firms instead A. will reduce the revenue a firm receives, and it should shut down. B. means the firm has reached it shutdown point and should exit. C. is part of the process to a sustained pattern of profits. D. are two stark realities any business firm must recognize.

D. are two stark realities any business firm must recognize.

153. The long-term result of entry and exit in a perfectly competitive market is that all firms end up selling at the price level determined by the lowest point on the A. total cost curve. B. average variable cost curve. C. total marginal cost curve D. average cost curve.

D. average cost curve.

210. The existence of labor unions forces employers to deal with workers: A. individually, rather than as a collective: B. cooperatively, rather than uncooperatively C. equitably, rather than inequitably D. collectively, rather than as individuals

D. collectively, rather than as individuals

304. What matters most in determining the efficient distribution of production over the world is: A. absolute advantage. B. efficiency. C. the allocation of resources. D. comparative advantage.

D. comparative advantage.

277. The absence of which of the following best explains why government agencies are slower to correct mistakes than private firms. A. imperfect information B. discrimination in wealth distribution C. monopoly over the economy D. competition or a threat of new entry

D. competition or a threat of new entry

238. Payments made to an insurance company in return for a policy of insurance are called: A. risk expenses B. premiums C. risk expenditures D. deductibles

D. deductibles

188. In addition to the current levels of air and water pollution, a list of important environmental issues would most likely include: A. emissions of greenhouse gases B. safe disposal of hazardous waste materials C. destruction of wetlands and other habitats D. extinction of species and all of the above

D. extinction of species and all of the above

211. From a competitive firms' point of view, the key question regarding the higher wages paid to union workers is whether the higher wage level: A. is matched by non-union producers. B. can be passed on to its customers. C. leads to workers with more experience. D. is matched with higher productivity.

D. is matched with higher productivity.

104. In economics, the term "shutdown point" refers to the point were the A. marginal cost curve crosses the total revenue curve. B. average variable cost curve crosses the total revenue curve. C. average variable cost curve crosses the marginal cost curve. D. marginal cost curve crosses the average variable cost curve.

D. marginal cost curve crosses the average variable cost curve.

279. Which of the following is not one of the proposals that have been offered to encourage greater voter turnout? A. making it easier to register to vote B. keeping the polls open for more hours C. moving election day to a weekend D. tax incentives for active voters

D. tax incentives for active voters

201. The difference between playing a board game and a playing a video game is the: A. elimination of free riders B. involvement of fewer rivals C. involvement of free riders D. technology of the video game

D. technology of the video game

237. Another person or firm who legally pledges to repay some or all of the money loaned if the original borrower fails to do so is called a: A. warrantor B. co-signer C. guaranty D. co-debtor

b. co-signer

3. In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into several tasks that are performed by different workers. A. division of labor B. interconnected economy C. task economy D. modern economy

A. Division of Labor

1. In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made. A. government B. market C. firm D. business sector

A. Government

102. The economies-of-scale curve is a long-run average cost curve, because A. it allows all factors of production to change. B. fixed costs cannot be changed. C. only variable costs are allowed to change. D. only marginal costs are allowed to change

A. it allows all factors of production to change.

38. The demand curve for a typical good has a(n): A. negative slope because some consumers switch to other goods as the price rises. B. negative slope because consumer incomes fall as the price of the good rises. C. negative slope because the good has less "snob appeal" as its price falls. D. inverse slope because as the price goes up, the good has more profitability.

A. negative slope because some consumers switch to other goods as the price rises.

61. Are markets always in equilibrium? A. No, they never "settle down" into a stable price and quantity. B. No, but if there is no outside interference, they tend to move toward equilibrium. C. Yes, because very few things tend to alter supply and demand. D. Yes, they are always at the equilibrium point, or very close to it.

B. No, but if there is no outside interference, they tend to move toward equilibrium.

47. Which of the following would reduce the supply of microcomputers? A. a technological improvement that lowers the cost of producing the computers B. higher wage rates for the workers that assemble the computers C. a reduction in the price of computer chips used to produce the computers D. a reduction in the price of computers.

B. higher wage rates for the workers that assemble the computers

65. Demand is said to be _____________ when the quantity demanded is not very responsive to changes in price. A. independent B. inelastic C. unit elastic D. elastic

B. inelastic

36. _____________ refers to the total number of units that are purchased at that price. A. quantity B. quantity demanded C. supply D. market quantity

B. quantity demanded

100. Fixed costs are important because, at least in the ___________, the firm: A. long run; cannot alter them B. short run; cannot alter them C. long run; can alter them D. short run; can alter them

B. short run; cannot alter them

75. The ________________ arises when a price changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price. A. income effect B. substitution effect C. backward-bending supply curve D. preferences effect

B. substitution effect

101. Which of the following should typically be ignored because spending has already been made and cannot be changed? A. variable costs B. sunk costs C. marginal costs D. average marginal costs

B. sunk costs

66. Demand is said to be __________ when the quantity demanded changes at the same proportion as the price. A. elastic B. unit elastic C. inelastic D. independent

B. unit elastic

40. But nearly all supply curves share a basic similarity: they slope: A. down from left to right B. up from left to right C. up from right to left D. down from right to left

B. up from left to right

53. Improvements in the productivity of labor will tend to: A. decrease wages. B. decrease the supply of labor. C. increase wages. D. increase the supply of labor.

C. increase wages.

85. The key assumption that accompanies the use of numbers for measuring utility is that: A. utility cannot be measured by an outside party. B. utility can be perfectly measured. C. individuals choose based on their preferences. D. people make consumption decisions.

C. individuals choose based on their preferences.

71. Taxes on goods with __________ demand curves will tend to raise more tax revenue for the government than taxes on goods with __________ demand curves. A. elastic; unit elastic B. elastic; inelastic C. inelastic; elastic D. unit elastic; inelastic

C. inelastic; elastic

30. As a person receives more of a good, the _______________ from each additional unit of the good declines. A. utility B. sunk costs C. marginal utility D. budget constraint

C. marginal utility

18. Attending college is a case where the ________________ exceeds the monetary cost. A. budget constraint B. marginal analysis C. opportunity cost D. marginal utility

C. opportunity cost

7. Which of the following best describes a fiscal policy tool? A. government spending B. bank lending C. financial capital markets D. household spending

A. Government Spending

6. Which of the following best describes a monetary policy tool? A. interest rates B. taxes C. household savings D. government spending

A. Interest Rates

14. Which of the following best characterizes the circular flow of income? A. Businesses buy resources from the government, and households buy goods and services from businesses. B. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses. C. The government purchases resources from businesses and households and then sells goods and services to businesses and households. D. Households buy factors of production from businesses, and businesses buy goods and services from households.

B. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

2. Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization? A. division of labour B. international trade C. economies of scale D. command economy

B. International Trade

91. ______________ include all of the costs of production that increase with the quantity produced. A. Fixed costs B. Variable costs C. Average costs D. Average variable costs

B. Variable costs

46. A change in price of a good or service typically causes ________________ for that specific good or service. A. a new equilibrium price B. a change along the supply curve C. the supply curve to shift D. a decreased demand

B. a change along the supply curve

89. In economics, a firm that faces no competitors is referred to as: A. an oligopoly B. a monopoly C. a perfect competitor D. monopolistic competition

B. a monopoly

20. Why is there scarcity? A. Because the opportunity set determines this. B. Because theory dictates it. C. Because our unlimited wants exceed our limited resources D. Because human wants are limited.

C. Because our unlimited wants exceed our limited resources

80. How does the U.S. Bureau of Labor Statistics gather information with regard to the typical consumption choices of Americans? A. Consumer Spending Survey B. Consumer Income Budget Survey C. Consumer Expenditure Survey D. Consumer Income Survey

C. Consumer Expenditure Survey

9. Which of the following is most likely a topic of discussion in macroeconomics? A. an increase in the price of a hamburger B. a decrease in the production of DVD players by a consumer electronics company C. an increase in the wage rate paid to automobile workers D. a decrease in the unemployment rate

D. a decrease in the unemployment rate

33. The nature of demand indicates that as the price of a good increases: A. suppliers wish to sell less of it. B. more of it is produced. C. more of it is desired. D. buyers desire to purchase less of it.

D. buyers desire to purchase less of it.

265. Bill and Cathy built a new home in 1985 at a cost of $90,000.00. They paid 20% of the cost to build the home themselves and financed the remainder by way of a mortgage. They paid the mortgage off in 15 years. They used $35,000 from Bill's inheritance to upgrade the home in 2004. When they sold the home for $335,000.00 in 2006, what was the value of their equity? A. $35,000 B. $245,000 C. $210,000 D. $335,000

B. $245,000

240. _________ requires an insurance policyholder to pay a percentage of a loss, and the insurance company pays the remaining lost. A. Insurance B. Coinsurance C. An insurance policy D. Government regulation

B. Coinsurance

269. The City of Washington needs to upgrade its levies and its water drainage systems. The cost will exceed the amount of tax revenue the city expects to receive over the next 10 years. How will the City be able to raise the funds needed to finance this upgrade? A. Issue Treasury Bonds B. Issue municipal bonds C. Borrow from Banks D. Borrow from large corporations

B. Issue municipal bonds

252. Treasury bonds are issued by the federal government through the: A. Federal Reserve B. Central Bank C. U.S. Department of the Treasury D. U.S. Office of the Comptroller of Currency

C. U.S. Department of the Treasury

316. The race to the bottom scenario of global environmental degradation is explained roughly like this: A. Companies seek to reduce their costs of operations on plant and equipment design and this results in higher levels of pollution. B. Companies seek the lowest market prices on products in order to gain market share, resulting in inferior goods and increased waste and pollution. C. Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits. D. Companies seek to influence environmental legislation standards are set to the lowest possible standards in the USA in order to maximize profits.

C. Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits.

124. The use of sharp, temporary price cuts as a form of ________ would enable traditional US automakers to discourage new competition from smaller electric car manufacturers. A. natural monopoly B. monopolistic competition C. predatory pricing D. oligopolistic competition

C. predatory pricing

57. In contrast to goods and services markets, ______________ are rare in labor markets, because rules that prevent people from earning income are not politically popular. A. minimum wages B. price floors C. price ceilings D. living wage laws

C. price ceilings

32. The downward slope of the demand curve again illustrates the pattern that as _____________ rises, ______________ decreases. A. quantity demanded, price B. quantity supplied; quantity demanded C. price, quantity demanded D. price, quantity supplied

C. price, quantity demanded

23. "If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is: A. $0 B. $4 C. $40 D. $44

D. $44

228. Which of the following is a safety net that could provide a decent standard of living and/or incentives to work? A. government-subsidized school lunches and breakfasts B. Low Income Home Energy Assistance Program C. the Special Supplemental Food Program for WIC D. Supplemental Security Income and the above

D. Supplemental Security Income and the above