2.5-2.7 economics

Two cost-benefit criteria must be present.

1.)The benefit to each individual is less than the cost that each would have to pay if it were provided privately. 2.)The total benefits to society are greater than the total cost.

How do patents act as an incentive to technological innovation? A. by protecting a patent holder's right to profit from his or her creativity B. by protecting the government's right to patent creative works C. by protecting a business's right to profit from someone else's creativity D. by protecting unpatented creative works

A. by protecting a patent holder's right to profit from his or her creativity

Market failure occurs whenever A. free markets fail to distribute resources efficiently. B. goods fail to arrive at a market in a timely fashion. C. government builds infrastructure. D. voluntary exchange in a market fails to result in a sale.

A. free markets fail to distribute resources efficiently.

The due process clauses of the Constitution A. protect Americans' private property rights. B. ensure all Americans the opportunity to compete. C. eliminate barriers to women in the workplace. D. give Congress the right to set direct taxes on incomes.

A. protect Americans' private property rights.

Why would a federal government decision to increase spending be a matter of macroeconomic policy? A. Macroeconomics concerns the overall performance of the government. B. Macroeconomics concerns the overall performance of the economy. C. Macroeconomics concerns the performance of households. D. Macroeconomics concerns the performance of small businesses.

B. Macroeconomics concerns the overall performance of the economy.

Which of the following BEST illustrates the involvement of the U.S. government in the marketplace today? A. The government takes over an industry in order to control production. B. The government requires manufacturers to issue warnings that come with new microwave ovens. C. The government hires new workers to help deliver government services to the public. D. The government encourages formation of consumer and business interest groups.

B. The government requires manufacturers to issue warnings that come with new microwave ovens.

An entrepreneur can BEST be characterized as someone who A. tries to persuade officials to pass favorable laws. B. takes risks in order to acquire profits. C. signals businesses what and how much to produce. D. seeks to engage in a voluntary exchange.

B. takes risks in order to acquire profits.

What is critical in determining whether something is produced as a public good? A. whether the market has the resources to provide it B. whether the benefits to society are greater than the total cost C. whether the government needs to use tax money to provide it D. whether the benefits are limited to the poor

B. whether the benefits to society are greater than the total cost

How is gross domestic product used to monitor the business cycle? A. GDP indicates whether a business is expanding or contracting. B. GDP indicates whether a city's economy is expanding or contracting. C. GDP indicates whether the nation's economy is expanding or contracting. D. GDP indicates whether the world's economy is expanding or contracting.

C. GDP indicates whether the nation's economy is expanding or contracting.

If the economy were in the contracting phase of the business cycle, how might that affect your ability to find work? A. It might be easier to find work because businesses would be more likely to hire new employees. B. It might be easier to find work because businesses would have fewer workers to choose from. C. It might be more difficult to find work because businesses would be less likely to hire new employees. D. It would have no effect on finding work.

C. It might be more difficult to find work because businesses would be less likely to hire new employees.

Which of the following explains why a city fireworks display on the Fourth of July is provided as a public good? A. Fireworks displays usually take place in a public area. B. Fireworks are a scarce resource. C. Nonpayers cannot be prevented from seeing the fireworks. D. Each consumer pays a fee to see the fireworks.

C. Nonpayers cannot be prevented from seeing the fireworks.

If a student volunteers at a food pantry on Fridays after school, which of the following might be a negative externality? A. The student might learn a new skill. B. The student might make some new friends. C. The student's parents have to drive him or her to the food pantry. D. The student might decide to volunteer two days a week.

C. The student's parents have to drive him or her to the food pantry.

The profit motive drives business owners to A. protect the private property rights of those who consume their goods. B. see that the principle of open opportunity applies to all Americans. C. make sure their firm is operating at its highest level of efficiency. D. develop incentives for their employees to work fewer hours each week.

C. make sure their firm is operating at its highest level of efficiency.

Suppose Congress passed a bill funding research into alternative sources of energy. What best describes this government action? A. seeking gains in knowledge about the national economy B. monitoring and regulating banks and other financial institutions C. promoting innovation and invention to help maintain technological advantage D. seeking to prevent sudden, drastic shifts in prices

C. promoting innovation and invention to help maintain technological advantage

What is the main economic benefit of public disclosure laws? A. They guarantee that businesses can make legally binding contracts. B. They protect employees from potential dangers in the workplace. C. They cut into the profits of highly regulated industries. D. They ensure that consumers can make informed buying decisions.

D. They ensure that consumers can make informed buying decisions.

What might be the economic benefit of the government providing a public good rather than the private sector? A. decreased prices for the good B. decreased cost for the good C. increased taxes needed to provide the good D. greater efficiency in providing the good

D. greater efficiency in providing the good

Public goods are examples of market failure, because producing these goods in the free market

does not allow for the efficient distribution of resources.

The goal of government welfare programs is to

raise the standard of living of certain less-fortunate members of society