Download According to the text , which of the following

Economics Semester Final Exam
Name:_____________________________
Matching:
Number Word
Definition
n
need
01: a good or service that is required for survival
n
want
02: a good or service that is not required for survival
n
economics
03: allocating limited resources to satisfy unlimited wants and needs
n
goods
04: tangible products
n
services
05: intangible products
n
factors of production
06: land, labor, and capital
n
trade-off
07: one of possibly many alternatives that we give up when we choose one course over another
n
opportunity cost
08: the most desirable alternative given up when we choose one course over another
Matching:
Number Word
Definition
n
factor payments
01: rent, wages, and profits
n
traditional economy
02: custom, habit, or ritual
n
market economy
03: individuals make production and consumption decisions
n
centrally planned economy 04: government makes production and consumption decisions
n
mixed economy
05: a combination of traditional, market, and centrally planned
n
market
06: brings buyers and sellers together
n
household
07: a person or group living in the same residence
n
firm
08: an organization that converts the factors of production into usable products
n
invisible hand
09: Adam Smith, self-interest, and the best of all possible worlds
Matching:
Number Word
Definition
n
public disclosure laws
01: honesty in labeling
n
cash transfers
02: money paid directly to the poor
n
in-kind benefits
03: goods and services given directly to the poor
n
public good
04: shared good or service, impractical for individuals to pay, hard to exclude non-payers
n
public sector
05: government
n
private sector
06: individuals and businesses
n
free rider
07: he doesn't want to pay for it, but would benefit if it were a public good or service
n
externality
08: beneficial or harmful effect on an innocent bystander
n
gross domestic product (GDP) 09: goods and services produced by a county in a year
n
business cycle
10: period of expansion followed by a period of contraction
Matching:
Number Word
Definition
n
law of demand
01: consumers purchase less if the price goes up
n
substitution effect
02: consumers replace it with something similar if the price goes up
n
income effect
03: the consumer feels poorer if the price goes up
n
demand schedule
04: table showing amount purchased based on price
n
demand curve
05: graph showing amount purchased based on price
n
ceteris paribus
06: all other things held constant
n
normal good
07: people consume more of it if their incomes rise
n
inferior good
08: people consume less of it if their incomes rise
n
complements
09: consumers buy and use them together
n
substitutes
10: consumers replace one with the other
n
elasticity of demand
11: a measure of the way quantity demanded reacts to a change in price
Matching:
Number Word
Definition
n
law of supply
01: suppliers offer more of a good at a higher price
n
supply schedule
02: a table that shows supply at different prices
n
supply curve
03: a graph that shows supply at different prices
n
elasticity of supply
04: a measure of the way quantity supplied reacts to a change in price
n
marginal product of labor
05: the change in output from hiring one additional unit of labor
n
fixed cost
06: it does not change, no matter how much of a good is produced
n
variable cost
07: it rises or falls depending on how much is produced
n
marginal cost
08: the cost of producing one more unit of a good
n
marginal revenue
09: the additional income from selling one more unit of a good
n
subsidy
10: a government payment that supports a business or market
n
excise tax
11: the government collects it when you produce or sell something
n
regulation
12: government intervention in a market that affects the production of a good
True or False:
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



true
Answer each question by writing an X in the true or false box.
Do not answer using your opinion or prior knowledge.
Answer from the textbook point of view even if you think that the textbook is wrong.
If the textbook does not answer a question, try to deduce the answer from what the textbook says.
If the book does not answer a question and you cannot infer the answer from the text, consider the answer to
be false.
false
statement
Excess demand means that the price is too high.
If the pizza market is at equilibrium, the pizzeria owner never has to throw away a pizza and never has to throw
an extra pizza into the oven.
Price ceilings result in landlords making significant improvements to their buildings.
The minimum wage is designed to guarantee that a worker can support a wife and child.
If the minimum wage exceeds the equilibrium wage, then more workers will be hired.
Before 1996, it was illegal for farm prices to fall below the minimum price.
The Northeast Dairy Compact guarantees a minimum price for milk in some states.
New technology, subsidies, taxes, and cost schedules cause the supply curve to shift to the right.
As the supply curve for CDs shifted to the right, suppliers responded to the surplus by raising prices to pay for the
new technology.
To suppliers, a high price is a red light, whereas a low price is a green light.
If supply cannot be increased to meet demand, prices inhibit the move to equilibrium.
A sudden surplus of a good is known as supply shock.
Eggs, soap, and housing were expensive in the Soviet Union, but they were readily available for those citizens
who could afford them.
During World War II in the US, the price system and rationing worked together, were inexpensive to administer,
and guaranteed that all citizens had a minimum standard of living.
During World War II in the US, the black market worked behind the scenes to defeat some of the goals of
rationing.
One disadvantage of the price system is that it does not ensure that resources will adjust to the changing demands
of consumers.
By selling resources to the highest bidder, the market economy conflicts with our 6th Amendment right to
economic equality.
A centrally planned economy would react to a predicted heat wave by putting into effect all economic steps
required to mitigate the disaster.
According to Adam Smith, free markets depended on the charitable nature of most human beings for success.
Spillover costs are externalities that reduce the supply of a good.
True or False:





true
Answer each question by writing an X in the true or false box.
Do not answer using your opinion or prior knowledge.
Answer from the textbook point of view even if you think that the textbook is wrong.
If the textbook does not answer a question, try to deduce the answer from what the textbook says.
If the book does not answer a question and you cannot infer the answer from the text, consider the answer to
be false.
false
statement
For perfect competition, it must be easy for suppliers to enter the market.
An example of a barrier to entry into the sandwich shop business is the price of a refrigerator.
In perfect competition, the price shows how the market values the resources in the product.
In contrast with perfect competition, monopoly sells fewer goods at a higher price.
Senior citizen and student discounts are considered price discrimination when offered by a firm but not when
offered by a public service such as a zoo.
Jeans are an example of perfect competition, whereas sports sweatshirts are an example of monopolistic
competition.
Monopolistically competitive suppliers compete on price rather than by differentiating their products.
If a monopolistic competitor were to raise prices too high, another would advertise a distinction that would attract
customers from the high priced competitor.
While monopolistically competitive firms may not reach maximum economies of scale, they do provide a wide
variety of products for buyers
Government regulations attempt to make oligopolies operate more like monopolies.
Without government regulations, oligopolies would always be able to control prices by price leadership,
collusion, and cartels.
Price leadership is price fixing by setting an example.
Members of cartels have strong incentive to cheat and produce less than their share.
Predatory pricing consists of raising prices to drive competitors out of business.
The Federal Trade Commission guards against unfair competition.
A trust is a grouping of firms that discourage competition.
The Sherman Act gives the government power to prevent new monopolies from forming, but not to break up
existing monopolies.
Some mergers leave the consumer better off.
Government uses antitrust laws and deregulation to increase competition.
After deregulation, savings and loans fell on hard times because they made bad loans.
True or False:





Answer each question by writing an X in the true or false box.
Do not answer using your opinion or prior knowledge.
Answer from the textbook point of view even if you think that the textbook is wrong.
If the textbook does not answer a question, try to deduce the answer from what the textbook says.
If the book does not answer a question and you cannot infer the answer from the text, consider the answer to
be false.
Because of the awesome responsibilities of sole proprietors, there are more partnerships than sole
proprietorships in the USA.
There are three kinds of partnerships in the USA: Standard, general, and limited.
In a limited partnership, the general partner can lose all of his assets, whereas the limited partners can
lose only what they have invested in the business.
To form a partnership, it is necessary to have a document called articles of partnership.
A partnership does not have to pay taxes.
Under the law, a corporation is treated like an individual person.
The general public cannot buy stock in a closely held corporation.
Most corporations in the USA operate without a board of directors.
Investors in a corporation stand only to lose their investment: They are not liable beyond their
investment.
Just as a partnership can take on a limited partner to raise cash, so a corporation can sell shares of stock
for the sole purpose of raising cash.
When a corporation holds surplus cash, it can sell a bond to earn some interest on the surplus.
The profits of a corporation are taxed two times: The company pays a profit tax, and the stockholder
then pays a tax on the dividends that he receives.
Publicly held corporations are corporations owned by the government.
If a firm is afraid of losing a supply needed for production, then it may seek a horizontal merger with
the supplier.
Since conglomerates tend to reduce competition, the USA government usually does not allow the
merger of companies that produce unrelated products.
A business franchise pays a fee to the franchiser.
A true coop does not require members to pay fees or to work part time in the coop.
Farmers use producer coops to market their crops.
A labor union is a nonprofit organization.
Your local teachers' union was formed to improve the education of children in the public schools.
True or False:





True
Answer each question by writing an X in the true or false box.
Do not answer using your opinion or prior knowledge.
Answer from the textbook point of view even if you think that the textbook is wrong.
If the textbook does not answer a question, try to deduce the answer from what the textbook says.
If the book does not answer a question and you cannot infer the answer from the text, consider the answer to
be false.
False
Question
The purpose of a labor union is to make a high quality product with minimal use of resources.
The labor union movement faced violent opposition.
During the industrial revolution, workers lost sight, hearing, fingers, and limbs.
The garment workers formed the Knights of Labor.
A craft union organizes members of a craft across all industries, whereas an industrial union organizes
members of an industry across all crafts.
Viewing strikers as a threat to free enterprise, companies hired enforcers to assault union organizers.
A yellow dog contract is an agreement that a worker will not join a union.
Unions used the Sherman Antitrust Act of 1890 to combat the high handed behavior of companies.
Union dues paid for political donations.
Unions used their power to promote more efficient production methods.
Unions fiercely opposed organized crime.
The Taft-Hartley Act allowed states to ban mandatory union membership.
Because of the benefits of strong northern unions, workers have been migrating north since 1958.
Agency shops allow free riders.
Military personnel are not considered to be part of the labor force.
A restaurateur can indefinitely pay $12 per hour to a cook who produces $20 per hour of revenue.
A coal mine operator can pay workers less than the revenue that they produce.
Like the supply curve of other commodities, the supply curve of labor slopes upward to the right.
In past in the USA, laws have forced women into low paying jobs.
Caboose men are an example of featherbedding.
Multiple Choice:
According to the text , which of the following happens to a production possibilities curve when economic growth occurs?
A. The curve shifts to the left.
B. The curve becomes a straight line.
C. The curve shifts to the right,
D. The curve does not change at all.
According to the text, which of the following is a benefit of economic growth?
A. The standard of living improves.
B. Nomadism declines.
C. Economic equity is increased.
D. The economy becomes more predictable.
Which of the following is an accurate definition of competition?
A. the hope of reward that encourages a person to behave in a certain way.
B. the struggle among producers for the dollars of consumers.
C. the financial gain made in a transaction
D. an organization that uses resources to produce a product.
Which of the following is not a reason why Soviet workers lacked incentives?
A. Jobs were guaranteed.
B. Wages were set by the government.
C. There were no production quotas.
D. Entrepreneurial behavior was illegal.
Which of the following is one reason why Poland's transition to a market economy was more successful than Russia's?
A. encouragement of start-up companies.
B. Poland's large size and larger labor force.
C. government subsidization of insolvent firms
D. requiring government licensing and regulation
Which of the following is true of North Korea's economy?
A. Private enterprise produces 95% of its goods.
B. North Korea imports many foreign goods.
C. Black markets do not exist.
D. Its economy is almost completely state controlled.
Which of the following would most likely be regulated by the Occupational Safety and Health Administration (OSHA)?
A. standards for infant seats used in passenger cars
B. required elements in a tobacco warning label
C. the types of safety equipment a worker must use on the job
D. the types of claims that may be made by internet advertisers
Which of the following was not a result of the federal highway accts of 1921 and 1956?
A. Highways in neighboring states were connected.
B. A single highway numbering system was instituted.
C. The League of American Wheelmen was created.
D. Transportation costs declined as commerce accelerated.
Which of the following is plotted on the vertical axis of a demand curve?
A. demand schedule
B. price
C. quantity
D. market demand schedule
Which of the following is not a factor that affects elasticity of demand?
A. availability of substitutes
B. relative importance of a good
C. necessities versus luxuries
D. total revenue
Which of the following shows the relationship of elastic demand to total revenue?
A. prices rise, demand falls, revenues decrease
B. prices rise, demand rises, revenues decrease
C. prices fall , demand falls, revenues decrease
D. prices fall demand rises, revenues decrease
A market supply schedule shows the relationship between:
A. demand and the total quantity supplied by one company in a market.
B. prices and the total quantity supplied by all firms in a market.
C. prices and the total quantity supplied by one company in a market.
D. demand and the total quantity supplied by all firms in a market.
All of the following are examples of variable costs except
A. rent.
B. electricity.
C. labor.
D. heat.
Which of the following best describes the ideal level of output?
A. Marginal revenue is more than marginal cost.
B. Marginal revenue is more than total cost.
C. Marginal revenue is equal to marginal cost.
D. Marginal revenue is less than total cost.
How would the supply of apples probably be affected if the price of apples was expected to drop in the near future.
A. The supply would not be affected.
B. The supply would decrease just before the price drop as suppliers held on to goods.
C. The supply would increase only if inflation was occurring.
D. The supply would increase just before the price drop as suppliers placed goods on the market.
Which of the following has not been cited as a cost of rent control?
A. bribery being used to allocate scarce apartments
B. poor maintenance in rent-controlled apartment buildings
C. a surplus of apartments
D. rent-controlled apartments in the hands of wealthy individuals
According to the text, which of the following are forms of search costs?
A. long lines at stores
B. limits on the quantities purchased
C. driving to a different town to find a product
D. increasing the cost of a good that is in high demand
According to the text, what is one reason resources are allocated efficiently in a market system?
A. Land, labor, and capital are often used in a wasteful way.
B. Central control manages resource allocation
C. Resources are sold to the lowest bidder.
D. Changing prices ensure that resources are used in ways most highly valued by consumers.
According to the text, which of the following might the government use to encourage firms to research and develop new products?
A. licenses to control specific resources
B. patents for a specific length of time
C. franchises to sell goods
D. restrictions on the number of firms
According to the text why do companies offer targeted discounts?
A. They offer discounts to appeal to all of their customers.
B. They offer discounts to allow all people to enjoy luxuries.
C. They offer discounts to get people to buy products they don't need.
D. They offer discounts to entice people who might not normally purchase their goods or services.
Which of the following best describes prices in a monopolistically competitive market?
A. Prices can be raised as high as in a true monopoly.
B. Prices are higher when output increases.
C. Prices are lower than in a perfectly competitive market.
D. Prices are higher than in a perfectly competitive market.
What happened when rates for all cable services were deregulated in the 1980s?
A. Cable television ceased to exist.
B. Cable rates in some areas of the country skyrocketed although service was poor
C. Fewer channels were offered by cable companies.
D. Cable rates became lower because of increased competition.
Which of the following describes a horizontal merger?
A. The Pluto Motor Company merges with the Acme Tire Company.
B. The Sunshine Rice Cereal Company merges with the New Dawn Oat Cereal Company.
C. Megabux Film Studies merges with Good Earth Organic Food Stores.
D. Futurama Video Games merges with the Lightning Battery Company.
Which of the following best describes why membership in the Girl Scouts declined in the late 1070s?
A. The organization was not meeting the needs of girls from diverse backgrounds.
B. Being nonprofit, the organization was experiencing cash-flow problems.
C. The Girl Scouts organization lacked effective management skills.
D. The organization had given up selling cookies as a method of fund-raising.
Which of the following pieces of legislation outlawed yellow-dog contracts?
A. the Sherman Antitrust Act
B. the Norris-La Guardia Act
C. the National Labor Relations Act
D. the Fair Labor Standards Act
Which of the following is not a reason for the decline in union membership?
A. the decline in manufacturing jobs
B. the rising proportion of women in the labor force
C. the decline in white-collar jobs
D. the relocation of industries to the South
What is the wage rate called at which there is n either excess supply of or demand for workers?
A. occupation wage
B. demand wage
C. union wage
D. equilibrium wage
Which of the following describes one reason women's wages are lower than men's?
A. Woman have been forced to accept menial jobs
B. Women have kept the occupations that are considered "women's work" well supplied.
C. Women were not included in the Equal Pay Act of 1963.
D. Unlike men, women do not have to support families.
Which of the following is not a factor in the rising percentage of women in the labor force?
A. high levels of education
B. need for a second income
C. decreasing levels of human capital
D. rise in divorce rates