Question 1

Barter is inconvenient because:

Accepted Answer

A)  bargaining power is unequal between rich and poor.
B)  without money, "fair" values cannot be determined.
C)  one individual's wants and supplies may not match another individual's wants and supplies
D)  it leads to imperfect competition.
E)  all of the above.

Question 2

Which of the following is a negative externality?

Accepted Answer

A)  Advertising.
B)  Consumer getting value for their dollar.
C)  Sellers getting profit.
D)  Noise pollution by the airport.
E)  Government policies.

Question 3

Capital goods differ from primary factors in that they are evaluated in terms of money.

Accepted Answer

A) True 
 B)False

Question 4

"Distribution" in economics refers to:

Accepted Answer

A)  retailing, wholesaling, and transportation.
B)  what.
C)  how.
D)  for whom.
E)  none of the above.

Question 5

"Perfect competition" exists only when no single individual can influence the market price.

Accepted Answer

A) True 
 B)False

Question 6

Capital is defined by economists as:

Accepted Answer

A)  money needed to run a business.
B)  the only primary factor in production.
C)  produced goods used for further production.
D)  private property.
E)  the total value of all resources used in production.

Question 7

Firms base their business decisions on a desire to:

Accepted Answer

A)  maximize output.
B)  minimize costs.
C)  maximize profits.
D)  minimize negative externalities.
E)  all of the above.

Question 8

In an affluent modern society, businesses may have to offer workers more fulfilling jobs.

Accepted Answer

A) True 
 B)False

Question 9

An imperfect competitor is anyone who buys or sells enough of a good to affect the price.

Accepted Answer

A) True 
 B)False

Question 10

By the "invisible hand," Smith meant the influence and lobbying of government by various interest groups.

Accepted Answer

A) True 
 B)False

Question 11

The Internet would be considered a negative externality.

Accepted Answer

A) True 
 B)False

Question 12

For whom goods are produced is a question that is largely answered by pricing the factors of production that people own.

Accepted Answer

A) True 
 B)False

Question 13

The economic role of government in mixed economies can include:

Accepted Answer

A)  provision of public goods.
B)  tax collections.
C)  income redistribution.
D)  all of the above.
E)  none of the above.

Question 14

Capital goods differ from other factors in that they are produced-they are outputs of the economic system.

Accepted Answer

A) True 
 B)False

Question 15

Capital is defined as:

Accepted Answer

A)  the vacant lot next to your factory.
B)  the means to pay for your lunch.
C)  the produced and durable input which is itself an output of the economy.
D)  the political seat of a state.

Question 16

The absence of which of the following conditions could lead to the collapse of a competitive market?

Accepted Answer

A)  Many buyers of the same good.
B)  Many sellers of the same good.
C)  The inability of either suppliers or demanders to influence the price of the good.
D)  Free entry of new firms attracted by high profits into the market.
E)  The absence of any of the above could lead to imperfect competition in a competitive market.

Question 17

If price is a signal in a market economy, what signal does it send to producers when the price of oil goes up?

Accepted Answer

A)  suppliers should produce more gasoline.
B)  buyers should purchase even more gasoline.
C)  government should decrease taxes on gasoline.
D)  government should place price controls on the market for gasoline.
E)  suppliers should produce less gasoline.

Question 18

A "mixed economy" may involve both perfect and imperfect competition.

Accepted Answer

A) True 
 B)False

Question 19

"What," "for whom," and "how" are problems that must be solved by prices in a capitalistic economy but which are solved automatically in a socialist economy.

Accepted Answer

A) True 
 B)False

Question 20

Macroeconomic policies for stabilization include:

Accepted Answer

A)  fiscal and monetary policies.
B)  pollution policy.
C)  lending policy.
D)  business demand policy.
E)  none of the above.

Exam 2: The Modern Mixed Economy

"What," "for whom," and "how" are problems that must be solved by prices in a capitalistic economy but which are solved automatically in a socialist economy.

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Barter is inconvenient because:

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The Internet would be considered a negative externality.

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A "mixed economy" may involve both perfect and imperfect competition.

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"Perfect competition" exists only when no single individual can influence the market price.

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Firms base their business decisions on a desire to:

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Capital goods differ from primary factors in that they are evaluated in terms of money.

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The economic role of government in mixed economies can include:

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Macroeconomic policies for stabilization include:

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By the "invisible hand," Smith meant the influence and lobbying of government by various interest groups.

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Which of the following is a negative externality?

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Capital is defined by economists as:

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In an affluent modern society, businesses may have to offer workers more fulfilling jobs.

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An imperfect competitor is anyone who buys or sells enough of a good to affect the price.

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For whom goods are produced is a question that is largely answered by pricing the factors of production that people own.

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If price is a signal in a market economy, what signal does it send to producers when the price of oil goes up?

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Capital goods differ from other factors in that they are produced-they are outputs of the economic system.

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Capital is defined as:

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"Distribution" in economics refers to:

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The absence of which of the following conditions could lead to the collapse of a competitive market?

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