Unit 1 Questions

Which of the following statements is correct?

Corporations are legal entities that, in law, are treated as persons

an economist who is studying the relationship between the money supply, interest rates, and the rate of inflation is engaged in:

Macroeconomic research

Suppose in Slovakia one unit of labor can produce either 16 tons of wheat or 32 tons of soy and in Poland one unit of labor can either produce either 4 tons of wheat or 2 tons of soy. Given the information, which of the following statements is true?

Poland has a comparative advantage in producing wheat but not soy

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 conditions

State and local governments do not receive revenue directly from which source?

Social Security taxes

*The principle of increasing marginal opportunity cost holds in which of the following cases?

Some inputs are better for producing particular goods

which of the following is not one of the three central coordination problems of the economy given in the book

Whether (How, For Whom, What)

which of the following organizations works with developing countries to secure low-interest loans that foster economic growth?

World Bank

Dorm rooms usually are not allocated by markets. Allocating dorm rooms is

an economic problem

In the former USSR, state planners decided what was to be produced. They passed orders down to factories, allocating raw materials, workers, and other factors of production to them. this is an example of a:

command economy

Socialism in theory is based on the principle that individuals should

cooperate with one another to meet their needs

A company such as Microsoft or Pepsi Co is a legal hassle to organize, difficult to monitor, and possibly could double tax income. it is an example of a:

corporation

Businesses do all the following except-

demand goods and services from households in the goods market

Normative economics seeks to:

determine the most appropriate economic goals for a society

Suppose New Zealand uses one unit of labor to produce Kiwi and two units of labor to produce an apple. Suppose Australia uses two units of labor to produce a kiwi and one unit of labor to produce an apple. In case, New Zealand:

has a comparative advantage in producing kiwis

In the factor market:

households supply factors of production to business and are paid by business for doing so

According to the text, what is the largest source of income for state and local governments?

income tax

the federal government gets most of its income from?

income taxes

If you move from a point inside the production possibility curve to a point on the production possibility curve, it follows that efficiency is:

increased because the economy is now on the production possibility curve

Brooke and Sandy both attend the same college and have the same expenses for tuition, books, and supplies. However, Brooke is a famous actress who could earn $2 million per year if she were not attending college whereas Sandy could earn $10,000 a year serving hamburgers if he were not attending college. It follows that the opportunity cost of attending college:

is greater for Brooke than Sandy

The principle of increasing marginal opportunity cost states that the initial opportunity costs are

low but increase the more you concentrate on the activity

To engage in economic reasoning, one must compare:

marginal cost and marginal benefit

A basic difference between microeconomics and macroeconomics is that:

microeconomics examines the choices made by individual participants in an economy, whereas macroeconomics considers the economy's overall performance

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

Scarcity exists because

new wants continue to develop and willingness to meet them is limited

"Government should not use price controls" is an example of

normative economics

Positive economics seeks to

objectively explain how the economy functions

"Price controls in competitive markets cause shortages" is an example of:

positive economics

The economist Steven Landsburg claims that with a death penalty, each execution deters about eight murders, resulting in a benefit of society to approximately $56 million. He argues that computer hackers do far more damage to society with their worms and viruses. He argues that computer hackers should be executed as well. From a purely economic perspective, the death penalty for computer hackers is-

reasonable based on cost/benefit analysis, but society must also take into account social, political and religious factors.

Households are on the:

supply side of the factor of the factor market and demand side of the goods market

One advantage of a partnership over a sole proprietorship is:

the ability to share the work and risks of the business

the art of economics is:

the application of knowledge gained by positive economics to the goals set in normative economics

In election campaigns, presidents often promise more of everything (more guns and butter). what would help those elected president fulfill that promise?

the economy becomes more efficient

Your opportunity cost of taking AP Macro is:

the net benefit of the activity you have chosen if you had not taken the course

Market and socialist economies can be contrasted in all the following ways except that:

under a market economy the distribution of income is to each according to his ability, effort, and inheritance; under ideal socialism the distribution of income is to each according to his need

A primary goal of the International Monetary Fund is to

work out repayments plans for developing countries with large international debts