question
(16-1) Arguing that something ought to be a certain way because of how it actually exists is the logical fallacy called a(n):
a.) philosophical problem
b.) positive problem
c.) is-ought problem
d.) negative problem
a.) philosophical problem
b.) positive problem
c.) is-ought problem
d.) negative problem
answer
c.) is-ought problem
question
(16-2) An economic statement of what should happen or should have happened is called:
a.) negative economics
b.) philosophical economics
c.) positive economics
d.) normative economics
a.) negative economics
b.) philosophical economics
c.) positive economics
d.) normative economics
answer
d.) normative economics
question
(16-3) When costs or benefits accrue to society instead of the buyers and sellers in a market, the result is identified as a(n):
a.) good
b.) externality
c.) competition
d.) regulation
a.) good
b.) externality
c.) competition
d.) regulation
answer
b.) externality
question
(16-4) Regulatory policy can be described as which of the following?
a.) none of the above
b.) rule-making
c.) managing money
d.) taxing & spending
a.) none of the above
b.) rule-making
c.) managing money
d.) taxing & spending
answer
b.) rule-making
question
(16-5) ______ regulation improves health and safety while ______ regulation restricts natural monopolies.
a.) personal; social
b.) social; economic
c.) social; personal
d.) economic; social
a.) personal; social
b.) social; economic
c.) social; personal
d.) economic; social
answer
b.) social; economic
question
(16-6) The idea that those with greater resources (instead of those who receive more benefits) should pay more taxes is called the:
a.) fairness principle
b.) benefits-received tax principle
c.) ability-to-pay tax principle
d.) marginal tax rate principle
a.) fairness principle
b.) benefits-received tax principle
c.) ability-to-pay tax principle
d.) marginal tax rate principle
answer
c.) ability-to-pay tax principle
question
(16-7) The distribution of tax burden among taxpayers is called the:
a.) regressive taxation
b.) tax incidence
c.) proportional taxation
d.) progressive taxation
a.) regressive taxation
b.) tax incidence
c.) proportional taxation
d.) progressive taxation
answer
b.) tax incidence
question
(16-8) The percentage of each additional dollar of income to be paid in tax is called the:
a.) proportional tax rate
b.) average tax rate
c.) effective tax rate
d.) marginal tax rate
a.) proportional tax rate
b.) average tax rate
c.) effective tax rate
d.) marginal tax rate
answer
d.) marginal tax rate
question
(16-9) Utilities that are owned, controlled, or regulated by a government are called:
a.) public utilities
b.) government utilities
c.) private utilities
d.) natural monopolies
a.) public utilities
b.) government utilities
c.) private utilities
d.) natural monopolies
answer
a.) public utilities
question
(16-10) When economies of scale allow only a single firm to efficiently supply a market, the result is a:
a.) natural monopolies
b.) public utilities
c.) private utilities
d.) government utilities
a.) natural monopolies
b.) public utilities
c.) private utilities
d.) government utilities
answer
a.) natural monopolies
question
(17-1) Which of the following is a theoretical framework used to analyze opinions about social welfare?
a.) public choice
b.) social welfare
c.) rational choice
d.) social choice
a.) public choice
b.) social welfare
c.) rational choice
d.) social choice
answer
d.) social choice
question
(17-2) Which of the following applies economic tools to voter, politician, and bureaucrat behaviors?
a.) social welfare
b.) public choice
c.) rational choice
d.) social choice
a.) social welfare
b.) public choice
c.) rational choice
d.) social choice
answer
b.) public choice
question
(17-3) Which of the following groups has an incentive to maximize budget appropriations, resources, and control rights used to govern and regulate behavior?
a.) bureaucrats
b.) voters
c.) politicians
d.) non-voters
a.) bureaucrats
b.) voters
c.) politicians
d.) non-voters
answer
a.) bureaucrats
question
(17-4) Seats on a commercial flight or ice cream cones are examples of:
a.) free goods
b.) public goods
c.) private goods
d.) open-access goods
a.) free goods
b.) public goods
c.) private goods
d.) open-access goods
answer
c.) private goods
question
(17-5) Goods that are non-exclusive, non-rivalrous and may be used without incurring any cost are called:
a.) free goods
b.) public goods
c.) common goods
d.) open-access goods
a.) free goods
b.) public goods
c.) common goods
d.) open-access goods
answer
a.) free goods
question
(17-6) Except for free goods, using any goods without paying a cost is called a(n):
a.) free-rider problem
b.) shadow economy
c.) tragedy of the commons
d.) bureau
a.) free-rider problem
b.) shadow economy
c.) tragedy of the commons
d.) bureau
answer
a.) free-rider problem
question
(17-7) When public areas are overused so that benefits are diminished or exhausted, society has experienced a:
a.) underground economy
b.) free-rider problem
c.) shadow economy
d.) tragedy of the commons
a.) underground economy
b.) free-rider problem
c.) shadow economy
d.) tragedy of the commons
answer
d.) tragedy of the commons
question
(17-8) The cost of understanding and voting on some issues may outweigh the benefits of learning about an issue. This is called:
a.) bureau
b.) rational ignorance
c.) politician incentive
d.) median-voter model
a.) bureau
b.) rational ignorance
c.) politician incentive
d.) median-voter model
answer
b.) rational ignorance
question
(17-9) Legislation that confers concentrated benefits on some by imposing concentrated costs on others is called:
a.) competing-interest
b.) pork-barrel
c.) traditional public-goods
d.) special-interest
a.) competing-interest
b.) pork-barrel
c.) traditional public-goods
d.) special-interest
answer
a.) competing interest
question
(17-10) The most efficient outcome should occur when _____ resources are spent on _____:
a.) your; others
b.) others; you
c.) your; you
d.) others; someone else
a.) your; others
b.) others; you
c.) your; you
d.) others; someone else
answer
c.) your; you
question
(18-1) Which of the following is the best example of a natural monopoly?
a.) a firm that produces computers in Austin
b.) a firm that provides electrical service to homes in Seattle
c.) a firm that mines gold in the Colorado Rocky Mountains
d.) a firm that makes films in Hollywood
a.) a firm that produces computers in Austin
b.) a firm that provides electrical service to homes in Seattle
c.) a firm that mines gold in the Colorado Rocky Mountains
d.) a firm that makes films in Hollywood
answer
b.) a firm that provides electrical service to homes in Seattle
question
(18-2) The purpose of antitrust laws is to _____.
a.) increase anticompetitive activities
b.) reduce anticompetitive activities
c.) promote quality products
d.) guarantee worker safety
a.) increase anticompetitive activities
b.) reduce anticompetitive activities
c.) promote quality products
d.) guarantee worker safety
answer
b.) reduce anticompetitive activities
question
(18-3) The first federal antitrust law enacted in the United States was the:
a.) Sherman Act
b.) Robinson-Patman Act
c.) Clayton Act
d.) Federal Trade Commission Act
a.) Sherman Act
b.) Robinson-Patman Act
c.) Clayton Act
d.) Federal Trade Commission Act
answer
a.) Sherman Act
question
(18-4) Which agency was created by Congress in 1914 to investigate and regulate unfair methods of competition?
a.) Interstate Commerce Commission
b.) General Accounting Office
c.) Federal Trade Commission
d.) Department of Justice
a.) Interstate Commerce Commission
b.) General Accounting Office
c.) Federal Trade Commission
d.) Department of Justice
answer
c.) Federal Trade Commission
question
(18-5) A requirement that buyers of one service must also purchase another service from the same seller is called _____.
a.) exclusive dealing
b.) an interlocking merger
c.) a vertical merger
d.) a tying contract
a.) exclusive dealing
b.) an interlocking merger
c.) a vertical merger
d.) a tying contract
answer
d.) a tying contract
question
(18-6) Which of the following best illustrates a vertical merger?
a.) GM merges with Chrysler.
b.) Microsoft merges with Dell.
c.) UPS merges with FedEx.
d.) Nike merges with Kraft Foods.
a.) GM merges with Chrysler.
b.) Microsoft merges with Dell.
c.) UPS merges with FedEx.
d.) Nike merges with Kraft Foods.
answer
b.) Microsoft merges with Dell
question
(18-7) _____ handle antitrust matters in the U.S.
a.) The Department of Justice and the Federal Trade Commission
b.) The Federal Trade Commission and the Securities and Exchange Commission
c.) The Department of Justice and Congress
d.) The Federal Trade Commission and Congress
a.) The Department of Justice and the Federal Trade Commission
b.) The Federal Trade Commission and the Securities and Exchange Commission
c.) The Department of Justice and Congress
d.) The Federal Trade Commission and Congress
answer
a.) The Department of Justice and the Federal Trade Commission
question
(18-8) Which of the following is not a predatory pricing tactic employed by a dominant firm to drive competitors out of business?
a.) loss-leadership
b.) conglomerate
c.) flooding
d.) dumping
a.) loss-leadership
b.) conglomerate
c.) flooding
d.) dumping
answer
b.) conglomerate
question
(18-9) Antitrust laws in the United States:
a.) have been enforced in an inconsistent manner
b.) clearly define acceptable behavior
c.) apply only to natural monopolies
d.) involve suing a competitive firm for changing its prices
a.) have been enforced in an inconsistent manner
b.) clearly define acceptable behavior
c.) apply only to natural monopolies
d.) involve suing a competitive firm for changing its prices
answer
a.) have been enforced in an inconsistent manner
question
(18-10) Suppose a person serves on the boards of directors of competing firms. The term used to describe this practice is _____.
a.) exclusive dealing
b.) free riding
c.) interlocking directorate
d.) arbitration
a.) exclusive dealing
b.) free riding
c.) interlocking directorate
d.) arbitration
answer
c.) interlocking directorate
question
(19-1) If resources are not managed well and conservatively, they may always be used up. This suggests that all resources are:
a.) productive
b.) renewable
c.) exhaustible
d.) scarce
a.) productive
b.) renewable
c.) exhaustible
d.) scarce
answer
d.) scarce
question
(19-2) Crude oil and natural gas are common examples of a(n):
a.) productive resources
b.) scarce resources
c.) exhaustible resources
d.) renewable resources
a.) productive resources
b.) scarce resources
c.) exhaustible resources
d.) renewable resources
answer
c.) exhaustible resources
question
(19-3) Resources that can be recreated or regenerated are called:
a.) productive resources
b.) exhaustible resources
c.) renewable resources
d.) scarce resources
a.) productive resources
b.) exhaustible resources
c.) renewable resources
d.) scarce resources
answer
c.) renewable resources
question
(19-4) When unregulated use of an open-access good causes a shortage, the economy experiences a:
a.) mixed-production problem
b.) fixed-production technology
c.) common-pool problem
d.) variable-production technology
a.) mixed-production problem
b.) fixed-production technology
c.) common-pool problem
d.) variable-production technology
answer
c.) common-pool problem
question
(19-5) An externality that arises due to incompatible activities of two or more market participants can be solved if government:
a.) defines property rights more clearly and enforces property rights more forcefully
b.) allows unregulated use of open-access goods until there is a shortage
c.) ends production of that market's goods for all of its participants
d.) all of the above
a.) defines property rights more clearly and enforces property rights more forcefully
b.) allows unregulated use of open-access goods until there is a shortage
c.) ends production of that market's goods for all of its participants
d.) all of the above
answer
a.) defines property rights more clearly and enforces property rights more forcefully
question
(19-6) A pollution externality may be solved efficiently by:
a.) allowing everyone to pollute without limit but forcing them to pay to clean it up
b.) none of the above
c.) assign rights to pollute when polluters can be easily identified and monitored identified
d.) passing laws to prohibit pollution
a.) allowing everyone to pollute without limit but forcing them to pay to clean it up
b.) none of the above
c.) assign rights to pollute when polluters can be easily identified and monitored identified
d.) passing laws to prohibit pollution
answer
c.) assign rights to pollute when polluters can be easily identified and monitored identified
question
(19-7) Allowing a finite amount of pollution permits that may be bought and sold to encourage firms to reduce pollution as cost effectively as possible is an example of:
a.) command-and-control regulation
b.) none of the above
c.) recycling
d.) economic efficiency regulation
a.) command-and-control regulation
b.) none of the above
c.) recycling
d.) economic efficiency regulation
answer
d.) economic efficiency regulation
question
(19-8) Requiring polluters to end or reduce pollution is an example of:
a.) recycling
b.) economic efficiency regulation
c.) command-and-control regulation
d.) none of the above
a.) recycling
b.) economic efficiency regulation
c.) command-and-control regulation
d.) none of the above
answer
c.) command-and-control regulation
question
(19-9) When individuals and firms convert waste or pollution into reusable resources:
a.) recycling
b.) command-and-control regulation
c.) none of the above
d.) economic efficiency regulation
a.) recycling
b.) command-and-control regulation
c.) none of the above
d.) economic efficiency regulation
answer
a.) recycling
question
(19-10) The primary agency established in 1970 and authorized to regulate pollution and the environment in the United States is the:
a.) Federal Reserve Bank
b.) Federal Trade Commission
c.) Environmental Protection Agency
d.) Department of Homeland Security
a.) Federal Reserve Bank
b.) Federal Trade Commission
c.) Environmental Protection Agency
d.) Department of Homeland Security
answer
c.) Environmental Protection Agency
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