Social Economics Chapter Three Review

Services make up about what percentage of the U.S. economy?

85%

All levels of government (federal, state, and local) consume about what percentage of the total output of the United States?

15%

Which of the following is not one type of e-commerce? 1. B2A 2. C2B 3. B2C 4. B2B

B2A

In studies, economists have found that employees who are giving the choice to opt-out of making retirement contributions are more likely than those who are given the choice to opt-in making contributions to

Choose to contribute

which of the following is NOT one of the three principal components of a socialist economy? 1. Government ownership of the means of production 2. Workers directed by a government planning board as to where they will work and how much they will be paid 3. Entrepreneurs are encouraged by the profit motive, rather than government directive, to satisfy consumer wants in the most efficient manner possible 4. Distribution is according to need

Entrepreneurs are encouraged by the profit motive, rather than government directive, to satisfy consumer wants in the most efficient manner possible

What is necessary for businesses to be profitable

Entrepreneurship must be present

True or False: Feudalism and mercantilism relied on markets to solve the three main coordination problems

False

True or False: Limited Liability is a key advantage of partnerships and sole proprietorships over corporations

False

Which of the following is NOT a characteristic of pure capitalism? 1. Government ownership of capital 2. Private ownership of land 3. Freedom of enterprise 4. Worker Freedom

Government ownership of capital

choice architecture is based on the observation that

How choices are presented to people affects the choices people make

which of the following is the best example of a marcroeconomic externality? 1. one person saving less without considering the effect on their retirement needs 2. Many people saving more without considering the effect on unemployment 3. One person starting a business without knowing whether the goods will sell 4. One person spending more in order to help stimulate the economy

Many people saving more without considering the effect on unemployment

Which of the following is a characteristic of a market economy? 1. Private Property 2. Government ownership of the means of production 3. Distribution according to need 4. Tradition determines the what, how, and for whom decisions

Private Property

True or False: Businesses produce goods and services and sell them to households and governments. The market where this interaction takes place is called the goods market.

True

True or False: Households supply factors of production to business and are paid by business for doing so. The market where this interaction takes place is called the factor market.

True

True or False: In a market economy, society relies on the self-interest of individuals to determine what, how and for whom to produce

True

True or False: Private property rights are essential to market economies

True

The market where businesses sell goods and services to households and the government is called the:

a goods market

When Churchill County residents voted whether to continue allowing tow brothels to operate, the government was acting as...

a referee

if federal, state and local governments were unable to raise any revenue, then government's role as:

both an actor and a referee would be eliminated

In practice, distribution under socialism is primarily determined by

central planners within the government

Socialism in theory is based on the principle that individuals should:

cooperate with one another to meet their needs

Some nutritionists consider junk food or eating junk food an example of:

demerit goods or activities.

one advantage of a sole proprietorship over a partnership is

direct control by the owner

the internet allows companies such as Amazon to sell goods online without regard to geographic location. This is known as...

e-commerce

a socialist economy in theory

expects people to be altruistic (selfless)

in socialism

government planning, rather than the market, is relied upon to coordinate economic activity

One advantage of a partnership over a corporation is

greater accountability

Which group has ultimate control over the U.S. economy?

households

E-commerce is expected to increase competition for all of the following reasons except: 1. increases the amount of information available to consumers 2. brings together a larger number of buyers and sellers in one virtual location 3. increases the importance of first-mover advantage in establishing name brand recognition 4. increases the potential marketplace

increases the importance of first-mover advantage in establishing a name brand

Which two sources of revenue comprise most of federal government revenue?

individual income tax and social security taxes and combination

A business is likely a sole proprietorship if:

it has only one owner who has unlimited liability.

Business decisions about what and how much to produce are base on what:

maximizes profits

Healthy food and charitable giving are examples of:

merit goods or activities

Capitalism and socialism have not existed forever. Capitalism came into existence in the:

mid 1700's and socialism came into existence in the early 1900's

Market economies are present in

most economies

a defining difference in what makes a firm a sole proprietorship, partnerships or a corporation is the

nature of ownership and accountability for each type of business

Entrepreneurship is defined as the ability to

organize and get something done

Flu vaccinations of school children have the unintended effect of protecting the vulnerable elderly from contracting the virus. This is an example of

positive externality

When my neighbor benefits from my cleaning up of my yard, they are experiencing a

positive externality

Market economies are base upon

private property and individual planning

Enron executives were charged with numerous counts of corporate fraud and corruption. Among the charges was insider trading, which involves the trading of a corporation's stock by insiders who may have access to information that the public does not. Which role is the government playing when it makes insider trading illegal?

promoting effective and workable competition

McDonald's Corporation lost a battle to keep a Singapore firm, Future Enterprises, from selling goods under the labels MacNoodles, MacTea, and MacChocolate. The court system in Singapore was, in this case, defining....

property rights

which of the following is one of the macroeconomic goals established by the 1946 employment act? 1. preventing large fluctuations in exchange rates 2. maintaining a constant level of consumer expenditure 3. providing an economic environment conducive to growth 4. ensuring that employers pay a workers a minimum wage sufficient to escape poverty

providing an economic environment conducive to growth

Being a monopolists lets a firm

raise the price of their product

Suppose that at the current price producers of CDs offer 5 million CDs for sale but consumers want to buy 6 million. When the market coordinates the demand and supply for CDs, the price of CDs will:

rise

When a government intervenes in an economy in a way that influences the relationship between households and businesses, it is...

serving as an economic referee

Certificates of ownership of a company are called:

stocks

governments do all of the falling except 1.oversee the interaction of households and businesses in the goods and factor market 2. demand labor services from households in the factor market 3. demand goods and services from businesses in the goods market 4. supply labor services to business in the factor market

supply labor services to business in the factor market

Households are on the

supply side of factor markets and the demand side of goods markets.

one advantage of a partnership over a sole proprietorship is

the ability to share the work and risk of business

An example of choice architecture is:

the default option bias

Profit is

what's left over from total revenues after all the appropriate costs have been subtracted

A public good is a good that

when consumed by one individual, can still be consumed by others