Archives: Quiz

Average cost curves have the same shape as a. total cost curves. b. marginal cost curves. c. total fixed cost curves. d. average fixed cost curves. Taxes are either a. regressive, proportional, or degressive. b. regressive, proportional, or progressive. c. […]

If the aggregate supply curve is vertical, then the short-run Phillips curve will a. be horizontal. b. also be vertical. c. slope upward. d. slope downward. Which of the following acts prohibited false advertising? a. Sherman Act b. Clayton Act […]

If the favorable supply shocks of the 1990s were reversed in the future, we should expect a(n) a. increase in inflation and unemployment. b. decrease in inflation and unemployment. c. increase in inflation and a decrease in unemployment. d. decrease […]

The Industrial Revolution refers to the period 1950-1970, which was characterized by rapid manufacturing sector growth in the United States. a. True b. False The appropriate fiscal policy stance depends, at least partly, on the a. stance of trade policy. […]

Jason considers a crystal bowl, a silver dish, and a pewter figurine, each priced $45 at the local gift shop. He chooses the silver dish because, according to economic theory a. his marginal utility per dollar is greatest. b. his […]

One major fault with factor pricing analysis is that marginal productivity theory merely attempts to justify the income distribution that the capitalist system yields. a. True b. False A recessionary gap exists when potential GDP a. falls short of equilibrium […]

The elasticity of a straight-line demand curve is the same as its slope. a. True b. False The marginal revenue curve for a monopolist is the same as its demand curve. a. True b. False Answer: False Table 22-2 Using […]

A tariff is a limitation on the amount of a good that can be imported. a. True b. False When new farmers enter the wheat industry, the equilibrium price of wheat a. always falls. b. falls only if existing firms […]

The demand for reserves depends on income and the price level. a. True b. False The negative slope of a production possibilities frontier is a graphic representation of opportunity cost. a. True b. False Answer: True All of the following […]

At a profit-maximizing output level, a. marginal revenue minus marginal cost equals zero. b. marginal profit equals zero. c. the slope of the total profit curve is zero. d. All of the above are true. Economists generally consider the use […]

Technological change, such as the information technology revolution of the 1990s can shift the aggregate supply curve outward. If, at the same time, the government is decreasing spending, the most likely outcome of these two factors is a(n) a. increase […]

In an open economy, aggregate supply consists of domestic production plus imports. a. True b. False For each of the following, how would they be included in the national income accounts? a. The University of California buys a new computer. […]

The law of diminishing marginal utility is consistent with the consumer behavior that produces a negatively sloped demand curve. a. True b. False Increasing scarcity of a resource causes new supplies to become more and more costly. a. True b. […]

A severe freeze has once again damaged the Florida orange crop. The impact on the market for oranges will be a leftward shift in a. demand as consumers try to economize because of the shortage. b. both the supply and […]

Economists disagree on most economic issues facing an economy. a. True b. False When income rises, total expenditures remain constant. a. True b. False Answer: False In hindsight, mortgage-backed securities implied very limited risk because the underlying mortgages were spread […]

“Rate averaging” is only possible if a. the firm is protected from price competition and new entry. b. the firm is protected from losses resulting from unsuccessful innovation. c. the firm can choose the level of service it wishes to […]

Suppose that a nation has adopted a fixed exchange rate with another country, and has a persistent trade deficit. What is most likely to happen? a. a gradual increase in the value of its currency b. a gradual decrease in […]

An empirical study determines that price exceeds marginal cost at the levels of output of firms in long-run equilibrium in the widget industry. The widget industry may therefore a. be monopolistically competitive. b. have firms whose goal is sales maximization. […]

Mercantilist policy is to do everything it can to promote exports and to discourage imports. a. True b. False To maximize sales revenue, an oligopoly will expand output until the price is zero. a. True b. False Answer: False In […]

The theory of the kinked demand curve is that a. although the firm sells a differentiated product, too many competitors exist to make it worthwhile speculating on responses to the firm’s behavior. b. freedom of entry will reduce profits to […]

The market allocates goods to individuals according to the individuals’ a. desire for the good. b. ability to pay for the good. c. desire and ability to pay for the good. d. political influence. In a perfectly contestable market in […]

The “War on Poverty” was declared by President Ronald Reagan in 1982. a. True b. False Define the following terms and explain their importance to the study of economics. a. minimum wage law b. income and substitution effects c. backward-bending […]

Define the following terms and explain their importance to the study of economics: a. regressive tax b. proportional tax c. progressive tax d. direct tax e. indirect tax When it is cheaper for one firm to produce a particular product, […]

Society definitely benefits by reducing the number of monopolistically competitive firms. a. True b. False In a simple, private economy, suppose that the MPC is .8 and investment rises by $20 million. At the new equilibrium, how much will saving […]

The supply curve for a perfectly competitive industry is obtained by a. making an empirical study of historical data. b. vertically summing the supply curves of firms in the industry. c. horizontally summing the average cost curves of firms in […]

The principle of “comparable worth” asserts that people with comparable, if not identical, skills and responsibilities should receive the same pay. If this principle were to become law, it would tend to a. reduce the problem of the “cost disease […]

Fixed exchange rates are determined in free markets by the forces of demand and supply. a. True b. False Figure 18-2 Figure 18-2 shows the widget market before and after an excise tax is imposed. The tax per widget equals […]

Many economists think that, in the long run, the Phillips curve is a. a horizontal line. b. a vertical line. c. the same as the short-run curve. d. a 45-degree line from the origin. The recent experience in Greece, Portugal, […]

Cross-subsidization implies that a loss from one product’s sales will be made up by the profit from another product’s sales. a. True b. False In the second quarter of 1995, the following values were observed: real GDP = 4,359.3 billion; […]

When the Art Institute of Chicago purchases a painting by Mary Cassatt that she produced in Paris in 1885, this would not be included in the U.S. GDP for 2015. a. True b. False The macroeconomic conditions during the mid-1990s […]

Figure 21-1 In Figure 21-1, if the existing antipoverty program were replaced by a negative income tax, most economists believe that it would result in a move like which of the following? a. C to F b. A to B […]

“A producer wanting to employ optimal quantity of inputs should choose the point where diminishing returns sets in.” True or false? “Assuming the long-run average cost curve is U-shaped, a firm will always seek to operate at the lowest point […]

“________ points” are missing products or services or flaws in existing products or services. A) Opportunity B) Opening C) Pleasure D) Pain Janis Reardon is in the process of launching a craft shop. Her biggest supplier, Lothrop’s Craft Supply, agrees […]

Most service firms base their prices on: A) fairly stable pricing policies. B) the cost of the service plus an estimate of the value they add in delivering the service. C) market surveys on their respective industries. D) an hourly […]

While it is an essential quality for a successful family business, this quality is the one that cannot be imposed or forced. If family members refuse to embrace it, they can still be part of the business. A) Shared power […]

The ________ rule says that an offeree’s acceptance must be the mirror image of the offeror’s offer. A) mirror image B) promissory estoppel C) mailbox D) consideration ________ is the money that moves through the business in a continuous cycle. […]

This term denotes the awareness of a company’s management of the social, environmental, political, human, and financial consequences that its actions produce. A) Company policies and procedures B) The corporate culture C) Social responsibility D) Business ethics Transit advertising has […]

The growth of entrepreneurship is being fed by: A) the return to a manufacturing-based economy. B) technological advancements. C) diminished opportunities in overseas markets for larger corporations. D) the vilifying of large corporations in society. The ________ is a document […]

A line of credit means: A) the company has access to unlimited funds. B) a line of credit is the same as long-term loan. C) a line of credit remains active forever. D) None of the above A corporation receives […]

Because private investors are willing to take greater risks than banks, they are more willing to finance deals through private placements than are banks. Spoilage, obsolescence, and pilferage are all part of the set-up costs of inventory. Answer: FALSE The […]

The simple reorder technique assumes that the rate of usage is constant and that lead time is constant. When it comes to debt collection, it is appropriate to seek to motivate the customer to pay and not get into why […]

The quick ratio is the most commonly used measure for a small firm’s short-term solvency. The best way to deal with shoplifting is to take steps to prevent it rather than stress catching the shoplifter in the act. Answer: TRUE […]

The gross profit margin is calculated by dividing net income by net sales revenue. Franchisors are obligated to renew a franchisee’s contract unless there has been malfeasance on the part of the franchise. Answer: FALSE Research has isolated a set […]

When two small businesses in the target nation form an alliance, they have formed a foreign joint venture. In the checkout process, the site should include a progress indicator on each checkout page and provide a link back to the […]

Even though the owner has stepped aside, he/she should always jump back in to fix problems as they occur. Under FOB Factory terms, the customer pays all shipping costs. Answer: TRUE Whenever a business has shared leadership, such as co-presidents, […]

Defining the target market is one of the hardest and most important things the entrepreneur can do in the business plan. Companies do not have an ethical obligation to inform consumers regarding their products. Answer: FALSE A valuable shoplifting reduction […]

Entrepreneurs are people who grow existing businesses by careful management of existing resources. In exchange for the financing they receive from venture capitalists, entrepreneurs must give up a portion of their businesses, sometimes surrendering a majority interest and control of […]

A minor can void a contract at the minor’s option but the adult cannot void a contract simply because it is with a minor. With cooperative advertising, a manufacturing company shares the cost of advertising with a retailer. Answer: TRUE […]

Web-based entrepreneurs often discover that the greatest challenge their businesses face is attracting customers on the Web and not necessarily creating a workable order fulfillment strategy. The balance sheet provides owners with an estimate of the firm’s worth for a […]

Foreign licensing is when a business buys and sells products in many countries, either in its own name, or as an agent for its buyer-seller clients. The best purchase price is the lowest price at which the owner can obtain […]