ECO Exam 2

Given that the definition of poverty has not been adjusted to reflect the long-term rise in average incomes, one would expect _____ in the percentage of the population living below the poverty line. a decrease an increase no change It is impossible to determine how the percentage of the population living in poverty might change.

a decrease

Which of the following gifts is most like an income transfer rather than an in-kind transfer? membership in a gym for a year an antique book a custom-tailored suit with the recipient choosing fabric and style a gift card branded through one of the main credit card companies

a gift card branded through one of the main credit card companies

When eligibility for a government program is based on income and sometimes on wealth, the program is classified as _____ program. an income-limited a means-tested a poverty-tested a social insurance

a means-tested

A maximum price legislated by the government is called: a price support. a price floor. a price ceiling. the parity price.

a price ceiling

Because Cornell can type reports faster and more accurately than Alice, Cornell has a(n) _____ in typing reports. comparative advantage absolute advantage opportunity cost specialization

absolute advantage

A regressive tax is a tax where: additional income earned is taxed at lower rates as additional income is earned. additional income earned is taxed at higher rates as additional income is earned. the tax rate remains stable as income rises. the total tax bill remains stable as income rises.

additional income earned is taxed at lower rates as additional income is earned.

Medicare is provided to: all Americans age 65 and older and is means-tested. individuals who fall below the poverty threshold and is means-tested. all Americans age 65 and older and is not means-tested. individuals who fall below the poverty threshold and is not means-tested.

all Americans age 65 and older and is not means-tested.

Food stamps (now called the Supplemental Nutrition Assistance Program) is an example of: a negative income tax. an in-kind transfer. a monetary benefit. unemployment insurance.

an in-kind transfer.

A Korean-made washing machine purchased by a Chinese citizen is an example of a Korean _____, and a Chinese-made washing machine purchased by a Korean citizen is an example of a Korean _____. import; import export; export import; export export; import

export; import

A person is said to have a comparative advantage if they: can produce more of all goods than another person with the same amount of resources. can produce fewer of all goods than another person. have the highest opportunity cost of producing a particular good compared with another person. have the lowest opportunity cost of producing a particular good compared with another person.

have the lowest opportunity cost of producing a particular good compared with another person.

A Japanese-made automobile purchased by a U.S. citizen is an example of a U.S. _____, and a U.S.-made automobile purchased by a Japanese citizen purchasing is an example of a U.S. _____. import; import export; export import; export export; import

import; export

When the definition of poverty focuses on relative poverty, a person is in poverty if the household income is: n the bottom 10% of household incomes in the nation. insufficient to provide basic food, shelter, medical care, and transportation. is less than three times the cost of a basic food plan. below $3.10 per day.

in the bottom 10% of household incomes in the nation.

When a poverty line is based on relative poverty, a household is poor if its income is less than: one-half the median household income in the country. three times the cost of a low-cost food plan for the household. twice the rent on a low-cost two-bedroom apartment. $3 per day per person in the household.

one-half the median household income in the country.

The poverty rate is the: portion of the population who cannot afford to pay rent. percent of people whose family income is below the poverty line. income level below which a household cannot provide itself with necessities. income level based on three times the cost of basic food

percent of people whose family income is below the poverty line.

An income level below which a family is defined to be in poverty is known as the: poverty line. bottom quintile. relative poverty measure. needs-based indicator.

poverty line.

An import is a good or service: purchased from a foreign seller. purchased from a domestic seller. sold to a foreign buyer. sold to a domestic buyer.

purchased from a foreign seller.

If a poverty line is set at a third of the median household income in a country, the poverty line is based on a _____ poverty standard. fixed absolute relative extreme

relative

A binding price ceiling would result in a(n): surplus of the good. shortage of the good. quantity control. equilibrium price.

shortage of the good.

When you are working in the labor market, you are demanding labor. demanding a job. supplying labor. supplying a job.

supplying labor.

In the labor market for computer programmers, the labor demand represents the workers looking for a job as a programmer. the employers looking to hire programmers. all the workers looking for a job. all the employers looking to hire.

the employers looking to hire programmers.

To maximize profit, firms should hire workers up to the point where: the marginal product of labor times the price equals the demand. the quantity of labor supplied equals the quantity of labor demanded. the marginal product of labor times the price equals the worker's wage. the marginal product of labor times the worker's wage equals the price.

the marginal product of labor times the price equals the worker's wage.

The official poverty line depends on _____ and is adjusted every year to reflect changes in the cost of living. only the major wage earner's annual income the size and composition of a family only the size of the family only the composition of the family

the size and composition of a family

Most Americans receive their health insurance through: Medicare. Medicaid. their employer. direct purchase.

their employer.

The poverty line in the United States is based on an estimate of: the cost of basic food, housing, medical care, and transportation. minimum wage income. three times the value of low-cost food for the household. the income level that separates the bottom and second quintiles of the population.

three times the value of low-cost food for the household.

Ang can mow the lawn in two hours. Bill takes three hours to mow the same lawn. What can you conclude from this information? Ang has a comparative advantage over Bill in mowing the lawn. Bill has a comparative advantage over Ang in mowing the lawn. Ang has an absolute advantage over Bill in mowing the lawn. Bill has an absolute advantage over Ang in mowing the lawn.

Ang has an absolute advantage over Bill in mowing the lawn.

Barlow and Rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. Completing a pedicure takes Barlow 45 minutes and takes Rusia 30 minutes. Who has a comparative advantage in manicures? Barlow because he is faster. Rusia because she is faster. Barlow because he has a lower opportunity cost. Rusia because she has a lower opportunity cost.

Barlow because he has a lower opportunity cost.

Which of the following is an example of an in-kind transfer? Junko receives an old-age pension from her former employer. Tomasi is eligible for an income supplement because he lost his job. Ellen is eligible for income because she had a type of accident that qualifies. Martin receives housing from the government due to his low income.

Martin receives housing from the government due to his low income.

Jordan's Photography Studio pays its workers $60 per day and sells poster-size prints for $10 each. Suppose that, during the holiday season, the price of poster-size prints increases to $12 due to a shift in the demand for the product. What happens? The demand for labor increases. The demand for labor decreases. The quantity demanded of labor increases, but the labor demand curve does not shift. The quantity demanded of labor decreases, but the labor demand curve does not shift.

The demand for labor increases.

If a government program is means-tested, it: provides benefits for everyone. is a poverty program that helps people who have low incomes. provides benefits only to households that earn less than the mean household income in a given year. provides only in-kind benefits.

is a poverty program that helps people who have low incomes.

A binding price ceiling is usually designed to: keep prices below the equilibrium level. increase the quality of the good. prevent surplus. keep prices above the equilibrium level

keep prices below the equilibrium level.

Compared to a situation without trade, international trade leads to _____ domestic production in import-competing industries and _____ domestic production in exporting industries. higher; lower higher; higher lower; higher lower; lower

lower; higher

A person that has the _____ opportunity cost of producing a particular good is said to have _____. lowest; an absolute advantage in the production of that good lowest; a comparative advantage in the production of that good highest; a production possibility frontier highest; increasing opportunity costs in the production of that good

lowest; a comparative advantage in the production of that good

When a welfare program is provided to those whose incomes fall below some minimum level, it is said to be: means-tested. an in-kind benefit. a monetary transfer. a negative income tax.

means-tested.

A _____ program is one for which the recipient qualifies on the basis of _____. social insurance; income means-tested; age means-tested; income social insurance; need

means-tested; income

Social Security is a(n) _____ that is _____. monetary transfer; means-tested monetary transfer; not means-tested in-kind benefit; means-tested in-kind benefit; not means-tested

monetary transfer; not means-tested

Jordan's Photography Studio pays its workers $60 per day and sells poster-size prints for $10 each. If the market wage rises to $70, then the: demand for labor increases. demand for labor decreases. quantity demanded of labor increases, but the labor demand curve does not shift. quantity demanded of labor decreases, but the labor demand curve does not shift.

quantity demanded of labor decreases, but the labor demand curve does not shift.

What will happen in the market for nurses in the United States if capital equipment replaces nurse labor to monitor vital statistics on patients in hospitals? Labor demand will decrease, resulting in lower wages and fewer hours of employment for nurses. Labor demand will increase, resulting in higher wages and more hours of employment for nurses. Labor supply will decrease, resulting in higher wages and fewer hours of employment for nurses. Labor supply will increase, resulting in lower wages and more hours of employment for nurses.

Labor demand will decrease, resulting in lower wages and fewer hours of employment for nurses.

When labor is hired in a competitive market, the value of the marginal revenue product is computed by: P × MPL. P × W . W × MPL . MPL/P .

P × MPL.

Which of the following is a negative result of redistributing income toward equality? Average income rises. The poor have a higher standard of living. Work incentives are reduced. Government expenses fall, and tax revenues rise.

Work incentives are reduced.

A progressive tax system is designed so that: a person pays the same tax rate, regardless of income. as a person progresses from one tax rate to another, the after-tax income falls. as a person's income rises, a lower tax rate is paid on the extra dollars that are earned. as a person's income rises, a higher tax rate is paid on the extra dollars that are earned.

as a person's income rises, a higher tax rate is paid on the extra dollars that are earned.

The poverty line is adjusted each year to reflect: changes in the cost of living. changes in the size of the average family. the long-term rise in the average standard of living. changes in the cost of living and changes in the size of the average family

changes in the cost of living.

When the wage for public school teachers rises by 15% in a state, the number of people seeking jobs as teachers increases. decreases. remains the same. fluctuates up and down quickly.

increases.

A tariff _____ the price received by domestic producers and _____ the price paid by domestic consumers. decreases; increases increases; decreases decreases; decreases increases; increases

increases; increases

Which statement is TRUE? If W < MRPL , the firm should hire less labor. If W > MRPL , the firm should hire less labor. If W = MRPL , the firm should hire less labor. If W > 0, the firm should shut down.

If W > MRPL , the firm should hire less labor.

Which of the following tax systems is progressive? Corinne pays a 10% tax on the first $10,000 she earns plus _____ tax on any additional income. no a 5% a 10% Correct Answer a 25%

a 5%

Which tax is regressive? Arturo pays an 8% tax on the first $9,000 he earns plus _____ tax on any additional income. a 5% an 8% a 10% a 25%

a 5%

Which statement is FALSE? If W < MRPL , the firm should hire less labor. If W > MRPL , the firm should hire less labor. If W = MRPL , the firm has the optimal amount of labor. If the marginal product of labor is rising, then the value of the marginal product of labor is also rising.

If W < MRPL , the firm should hire less labor.

What is a progressive tax system? It is the cash assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution. It is government-provided financial funding to people to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings. It is the government assignment of jobs to individuals based on household need and employee education and skills. It is a system where those with more income pay a higher share of their income in taxes than those with lower incomes.

It is a system where those with more income pay a higher share of their income in taxes than those with lower incomes.

What is social insurance? It is the cash-assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution. It is government-provided financial funding to households to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings. It is the government assignment of jobs to individuals based on household need and employee education and skills. It is a system where those with more income tend to pay a higher share of their income in taxes than those with lower incomes.

It is government-provided financial funding to households to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings.

Salaries for physical therapists rise more than salaries for athletic trainers. What will happen in the labor market for athletic trainers? Labor demand will decrease, resulting in lower wages and fewer hours of employment for the trainers. Labor demand will increase, resulting in higher wages and more hours of employment for the trainers. Labor supply will decrease, resulting in higher wages and fewer hours of employment for the trainers. Labor supply will increase, resulting in lower wages and more hours of employment for the trainers.

Labor supply will decrease, resulting in higher wages and fewer hours of employment for the trainers.

If they spend all night writing computer programs, Laurence can write 10 programs, and Carrie Anne can write five. If they spend all night making sunglasses, Laurence can make six pairs, and Carrie Anne can make four. Given this information and supposing Laurence and Carrie Anne have constant opportunity costs, we know that _____ has an absolute advantage in _____. Laurence; programs but not in sunglasses Laurence; both programs and sunglasses Carrie Anne; programs but not in sunglasses Carrie Anne; both programs and sunglasses

Laurence; both programs and sunglasses

If they spend all night writing poems, Leticia can write 10 poems, and Isabella can write five. If they spend all night making necklaces, Leticia can make six, and Isabella can make four. We know that: Leticia's opportunity cost of writing poems is less than Isabella's. Leticia's opportunity costs of writing poems and of making necklaces are less than Isabella's. Isabella's opportunity costs of writing poems and of making necklaces are less than Leticia's. Isabella's opportunity cost of writing poems is less than Leticia's

Leticia's opportunity cost of writing poems is less than Isabella's.

Barlow and Rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. Completing a pedicure takes Barlow 45 minutes and takes Rusia 30 minutes. Who has a comparative advantage in pedicures? Barlow because he is faster. Rusia because she is faster. Barlow because he has a lower opportunity cost. Rusia because she has a lower opportunity cost

Rusia because she has a lower opportunity cost

What will happen in the labor market if employers increase the amount of paid vacation days each year? There will be a move to a different point on the labor supply curve with a smaller quantity. There will be a move to a different point on the labor supply curve with a larger quantity. There will be a leftward shift of the labor supply curve. There will be a rightward shift of the labor supply curve.

There will be a rightward shift of the labor supply curve.

Which of the following tax systems is progressive? Corinne pays a 10% tax on the first $10,000 she earns plus _____ tax on any additional income. no a 5% a 10% a 25%

a 25%

The poverty line is: a measure that is used to define relative poverty and is based on housing and food costs. an estimate of the minimum income needed to provide a comfortable standard of living. an income level determined by the government, below which a family is defined to be in poverty. an income level set by the poor to identify the income needed to cover their basic needs.

an income level determined by the government, below which a family is defined to be in poverty.

A person is said to have a _____ in the production of a good if it can produce that good _____. comparative advantage; with more resources than another person absolute advantage; at a higher opportunity cost than another person absolute advantage; outside its production possibility frontier comparative advantage; at a lower opportunity cost than another person

comparative advantage; at a lower opportunity cost than another person