econ ugh

Which of the following is an example of a barter system?

Instead of paying rent, you clean the house for the owner.

How does a supply curve illustrate the law of supply?

It always rises from left to right.

When the selling price of a good goes up, what is the relationship to the quantity supplied?

It becomes practical to produce more goods.

What is one of the most important advantages of a free market?

It encourages growth.

Which of the following correctly defines money as a unit of account?

It provides a means for comparing the values of goods and services.

How would a new excise tax affect the supply curve?

It would probably cause the supply curve to shift to the left.

What shows the quantities of products demanded at each price by all consumers in a market?

a market demand schedule

What kind of market runs most efficiently when one large firm supplies all of the output?

a natural monopoly

What is a fringe benefit?

a payment other than wages or salaries

What are royalties?

a percentage of a franchise's earnings paid to the parent company

What might most consumers buy if the price of a normal good rises?

a substitute good

If Keesha knows that her favorite brand of jeans is going on sale next week, what will she most likely do today?

not buy any jeans

A price support is a type of

price floor.

The opportunity cost of a decision can be examined by using a

production possibilities graph.

What is one kind of monopoly that the U.S. government generally permits?

professional sports leagues

The Board of Governors of the Federal reserve are appointed for staggered fourteen-year terms to

protect board members from political pressures.

What is a mortgage used to purchase?

real estate

Which of the following would probably have inelastic demand for a student? a. ball point pen b. mouse pad c. sneakers d. school bus pass

school bus pass

The purpose of a production possibilities graph is to

show alternative ways to use an economy's resources.

What is a major disadvantage to both sole proprietorships and general partnerships?

the possibility of losing personal property

If the supply of a good is elastic,

the producer will increase the amount he's producing if the price rises.

Suppliers will keep raising prices in a certain market as long as

there is excess demand and quantity demanded exceeds the quantity supplied.

If a bookstore manager prices a book higher than the equilibrium price, then

there will be an excess supply of these books.

On which kinds of goods do governments generally place price ceilings?

those that are essential but too expensive for some consumers

Why did the U.S. government use rationing for some foods and consumer goods during World War II?

to guarantee each civilian a minimum standard of living in wartime

Why does even a free market economy need some government intervention?

to provide for things that the marketplace does not address

What is collective bargaining?

union and company representatives meeting to negotiate a new labor contract

An efficient economy is one that

uses its resources to make the most goods and services.

When is it NOT necessary to build a new market supply schedule?

when there is a change in price of a good

Monopolistically competitive firms may not be able to produce goods at the lowest possible average cost. This statement is describing how monopolistically competitive firms might be

without economies of scale.

If the equilibrium quantity demanded for a new sports watch is 900 truckloads of watches and the equilibrium price is $70 per watch, then a drop in the price of watches to $40

would raise the quantity demanded of these sports watches.

What percentage of businesses are sole proprietorships?

75 percent

Approximately what percentage of U.S. workers belong to labor unions?

9 percent

How would you best compare the difference between closely held corporations and publicly held corporations?

A closely held corporation issues stock to just a few people; a publicly held corporation issues stock to many people.

What is the major difference between a corporation and other kinds of businesses?

A corporation has a separate entity apart from that of the owners and workers.

Why should you consider liquidity, not just return, when making savings and investment decisions?

You should consider whether you will need ready access to your funds.

Which of the following weakens government control in the marketplace?

Deregulation

Why are women less likely to be members of labor unions that men?

Fewer women work in blue-collar unionized industries.

How does the circular flow model of a mixed economy compare with that of a market economy?

Government is added into the circular flow model of a mixed economy.

How is future price related to current demand?

If the price is expected to rise, current demand will rise.

How does the economy of Singapore compare with that of the United States?

Singapore's economy has less government intervention.

How did Microsoft defend its case concerning the company's required installation of Microsoft Internet browsers with all installations of their operating systems?

The browser could not be sold separately.

What happens to job opportunities when wages go up?

The quantity of labor demanded goes down.

The government plans to ease regulations on the amount of mercury allowed into the atmosphere even though mercury is proved to be hazardous to people and wildlife. What might be the government's reasoning?

The regulations are too costly, cutting into companies' profits.

Jan is considering starting a temporary help agency. Why might this be a good business to start?

The trend toward hiring temporary workers is up.

How are royalties and dividends alike?

They are both kinds of payments.

How are partnerships and sole proprietorships alike?

They are easy and inexpensive to start.

What is the effect of import restrictions on prices?

They cause prices to rise.

A firm is losing money. Its fixed cost is $40 an hour. Its variable cost is $32 an hour. Total revenue is $38 an hour. It decides to remain open. Why?

Total revenue is greater than variable cost.

What is a possible result of new safety laws implemented in a workplace?

Wages would decrease because the workplace is safer.

An example of a service business is

a computer repair shop.

What is a negative externality of a cell phone?

a conversation that annoys people nearby

Calculate the total compound interest of a loan for $5,000 with an annual interest rate of 8 percent at the end of a two-year period.

$832

Joan makes and sells her smoothies to sandwich shops and grocery stores. She can make and bottle 8 smoothies an hour. She hires an employee, Jake, and together they can make and bottle 18 smoothies an hour. What is the marginal product of labor?

10

What is the difference between commodity money and representative money?

Commodity money consists of objects that have value in and of themselves, but representative money makes use of objects because the holder can exchange them for something else of value.

Why might some construction workers be paid more than some teachers?

Construction work is more dangerous than teaching.

What happens to a monopolistically competitive firm that begins to charge an excessive price for its product?

Consumers will substitute a rival's product.

What does double taxation mean?

Corporations pay income taxes on their profits, and stockholders pay taxes on their dividends.

One of the six characteristics economists use to judge how well an item serves as currency is divisibility. What does this concept mean?

Money must be easily divided into smaller denominations.

Which of the following is the best example of the law of supply? a. A sandwich shop increases the number of sandwiches they supply every day when the price is increased. b. A milling company builds a new factory to process flour to export. c. A catering company buys a new dishwasher to make their work easier. d. A food producer increases the number of acres of wheat he grows to supply a milling company.

a. A sandwich shop increases the number of sandwiches they supply every day when the price is increased

Which statement is TRUE? a. Corporations generate most of the sales in the U.S., but sole proprietorships make up most of the businesses b. Sole proprietorships make up most of the businesses in the U.S. and generate most of the sales. c. Partnerships make up the least number of businesses in the U.S. but generate most of the sales. d. Sole proprietorships and partnerships together generate about the same amount of sales as corporations.

a. Corporations generate most of the sales in the U.S., but sole proprietorships make up most of the businesses

Which of the following is NOT true of a centrally planned economy? a. The centrally planned economy follows a policy of laissez faire. b. Communism and socialism are examples of centrally planned economies. c. It is difficult for an entrepreneur to function in a centrally planned economy. d. Consumers have little say-so in what products are available.

a. The centrally planned economy follows a policy of laissez faire

Which of the following is an example of a good whose price goes down because of improvements in technology? a. computer printers b. hard-bound books c. running shoes d. typewriters

a. computer printers

If a customer deposits $10,000 into a bank, how much money would the bank be capable of lending to an eligible loan applicant if this bank retains 20 percent of the deposit to cover withdrawals?

about $8,000

Which of the following is an example of using physical capital instead of human capital to get a job done?

an automatic teller machine

Which of the following was a free market philosopher? a. Friedrich Engels b. Adam Smith c. Karl Marx d. Vladimir Lenin

b. Adam Smith

Which of the following is NOT characteristic of a centrally planned economy? a. The central government makes all economic decisions. b. Each collective or factory sets its own goals. c. The central government owns all land and capital. d. Each person is assigned a job.

b. Each collective or factory sets its own goals.

Which of the following best describes the similarities between traditional economies and centrally planned economies? a. They both encourage gender-based roles in the job market. b. They both offer little variety of goods and services. c. They both rely on the government for jobs. d. They both support the development of heavy industry.

b. They both offer little variety of goods and services.

All of the following are reasons why policymakers avoid spikes and slumps in product prices EXCEPT: a. They can damage industries. b. They can inhibit competition among businesses. c. They can put a strain on consumers. d. They can cause market instability.

b. They can inhibit competition among businesses.

Which of the following mixed economies is most like that of the United States? a. Hong Kong b. United Kingdom c. Mexico d. Japan

b. United Kingdom

Which option will best increase the chances of a low-skilled worker finding a good-paying job? a. apply for work at an auto manufacturing plant b. sign up for classes at a college or vocational school c. take a job in a fast-food restaurant d. move from the city to a rural area

b. sign up for classes at a college or vocational school

Why does a demand curve slope downward from left to right?

because demand decreases as price increases

Which of the following is an argument in favor of government regulation? a. It is costly to implement and thereby cuts into profits. b. It stifles competition and results in higher prices for products. c. It protects workers from unsafe working environments d. It results in bigger government, which raises government spending.

c. It protects workers from unsafe working environments

Cartels are difficult to operate for which of the following reasons? a. Firms in a cartel are likely to lose money. b. The products are perfectly competitive. c. They work only if members keep to their agreed output. d. They are illegal worldwide.

c. They work only if members keep to their agreed output.

Which of the following could cause the demand curve for cars in your city to shift to the left? a. hundreds of new people moving into your city b. a sale at the local dealership that ends next week c. a layoff of 500 workers at the city's airport d. a rise in the average wages

c. a layoff of 500 workers at the city's airport

Which two types of economies are at opposite ends of government intervention? a. mixed and traditional b. mixed and market c. centrally planned and market d. traditional and centrally planned

c. centrally planned and market

All of the following could prevent a market from becoming perfectly competitive EXCEPT a. lack of technological know-how. b. problems accessing necessary technology. c. excessive information. d. high start-up costs.

c. excessive information.

Which of the following is a private organization that attempts to influence public officials to act or vote in ways that will benefit the group's members? a. free enterprise group b. market research group c. interest group d. public policy group

c. interest group

Price discrimination a. can only be practiced by firms with very high market power. b. is more likely to be used in an industry that easily resells its products. c. is rare in highly competitive markets.. d. is illegal in most circumstances.

c. is rare in highly competitive markets.

Which of the following is NOT an example of a public good? a. national parks b. highways c. shopping malls d. municipal libraries

c. shopping malls

Which of the following is a reason to join an interest group? a. to discuss the pros and cons of alternative energy sources b. to study whether or not Earth is experiencing global warming c. to persuade the state legislature to support public funding of a sports stadium d. to research the effects of hybrid cars on the nation's fuel consumption

c. to persuade the state legislature to support public funding of a sports stadium

Any resources that are made by humans and used to create other goods and services are called

capital

What are three ways that unions negotiate a new labor contract?

collective bargaining, mediation, and arbitration

Which of the following is an example of imperfect competition? a. Too many firms are selling a product. b. Spillover costs are paid by consumers. c. Buyers and sellers do not have enough information to make informed choices. d. Too few firms are selling a product.

d. Too few firms are selling a product.

The human capital of a lawyer includes all of the following EXCEPT a. her education. b. her advice. c. her winning argument. d. her fee.

d. her fee

Which of the following is NOT an example of macroeconomics? a. constructing a city sewer system b. subsidizing corn farmers c. cutting state income taxes d. tightening the family budget

d. tightening the family budget

Which of the following is a situation that makes the market behave inefficiently? a. when the market is in perfect competition and prices are high b. when both consumers and producers are fully informed about a product c. when producers have the power to find out exactly what to produce d. when consumers do not have enough information to make good choices

d. when consumers do not have enough information to make good choices

What determines how a change in prices will affect total revenue for a company?

elasticity of demand

What are inferior goods?

goods for which the demand falls when income rises

Money serves as a good store of value EXCEPT when an economy experiences a period of

inflation.