To View answers Go To ----> http://www.studentoffortune.com/question/2215353/ <-----> was coined by: A. Michael Harrington. B. John Kenneth Galbraith. C. Karl Marx. D. Adam Smith. Reset Selection Question 8 of 20 5.0 Points In order to raise our rate of economic growth we would need to: A. increase the level of labor or capital. B. reduce the level of labor. C. spend more on military goods. D. spend more on consumer goods. Reset Selection Question 9 of 20 5.0 Points Human wants are: A. relatively limited. B. relatively unlimited. C. easily satisfied. D. about equal to our productive capacity. Reset Selection Question 10 of 20 5.0 Points Whom of the following is NOT an entrepreneur? A. Henry Ford (Ford Motor Company) B. Tim Berners-Lee (creator of the World Wide Web) C. John David Rockefeller (Standard Oil) D. Bill Gates (Microsoft) Reset Selection Question 11 of 20 5.0 Points Which of the following is an example of capital? A. Money in a Swiss bank account B. A bulldozer C. A CD by Metallica D. A Dracula costume for Halloween Reset Selection Question 12 of 20 5.0 Points Tommy spends most of his monthly budget on $3 video game rentals or $6 packets of Pokemon cards. The opportunity cost to Tommy of an extra packet of Pokemon cards is: A. one video game rental. B. two video game rentals. C. the cost of the Pokemon cards. D. He does not incur an opportunity cost. Reset Selection

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160 MCQ’s Tutorial
Part 1 of 1 -
5.0 Points
Question 1 of 20
Which statement is true?
A. A depression followed both World War I and World War II.
B. A depression followed neither World War I nor World War II.
C. A depression followed World War I, but not World War II.
D. A depression followed World War II but not World War I.
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5.0 Points
Question 2 of 20
There was full employment in:
A. 1929 and 1942.
B. neither 1929 nor 1942.
C. 1929 only.
D. 1942 only.
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Question 3 of 20
Between 1939 and 1944 our national output:
A. rose by 50%.
B. nearly doubled.
C. rose by 150%.
D. nearly tripled.
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Question 4 of 20
The early 1930s was a period of:
A. inflation and deflation.
B. neither inflation nor deflation.
C. inflation.
D. deflation.
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Question 5 of 20
The name of Andrew Carnegie is most closely associated with the __________ industry.

2. A. steel
B. rubber
C. meatpacking
D. chemical
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Question 6 of 20
The transcontinental railroads were completed in the 25 years:
A. before the Civil War.
B. after the Civil War.
C. after 1890.
D. after the 20th century began.
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5.0 Points
Question 7 of 20
The term "the affluent society" was coined by:
A. Michael Harrington.
B. John Kenneth Galbraith.
C. Karl Marx.
D. Adam Smith.
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5.0 Points
Question 8 of 20
In order to raise our rate of economic growth we would need to:
A. increase the level of labor or capital.
B. reduce the level of labor.
C. spend more on military goods.
D. spend more on consumer goods.
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5.0 Points
Question 9 of 20
Human wants are:
A. relatively limited.
B. relatively unlimited.
C. easily satisfied.
D. about equal to our productive capacity.
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5.0 Points
Question 10 of 20
Whom of the following is NOT an entrepreneur?
A. Henry Ford (Ford Motor Company)

3. B. Tim Berners-Lee (creator of the World Wide Web)
C. John David Rockefeller (Standard Oil)
D. Bill Gates (Microsoft)
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5.0 Points
Question 11 of 20
Which of the following is an example of capital?
A. Money in a Swiss bank account
B. A bulldozer
C. A CD by Metallica
D. A Dracula costume for Halloween
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5.0 Points
Question 12 of 20
Tommy spends most of his monthly budget on $3 video game rentals or $6 packets of Pokemon
cards. The opportunity cost to Tommy of an extra packet of Pokemon cards is:
A. one video game rental.
B. two video game rentals.
C. the cost of the Pokemon cards.
D. He does not incur an opportunity cost.
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5.0 Points
Question 13 of 20
The invisible hand is:
A. perfect competition.
B. the profit motive.
C. government direction.
D. the mixed economy.
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Question 14 of 20
Hitler's Germany was an example of a __________ economic system.
A. capitalist
B. fascist
C. communist
D. socialist
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Question 15 of 20
Karl Marx said that:
A. whoever controls a society's capital controls that society.
B. in the long run capitalism would survive.

4. C. the U.S.S.R.'s communist system was "state capitalism."
D. capitalists and workers generally have the same economic interests.
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Question 16 of 20
Private ownership of most of the means of production is common to:
A. capitalism and communism.
B. capitalism and fascism.
C. capitalism and socialism.
D. fascism and communism.
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Question 17 of 20
Sweden and Norway would best be described as __________ countries.
A. capitalist
B. fascist
C. communist
D. socialist
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Question 18 of 20
Characteristics of the "invisible hand" concept include all of the following, EXCEPT:
A. simple markets.
B. individuals and firms pursue their own self-interest without any central direction or
regulation.
C. a complete lack of government involvement in the economy.
D. All of the choices are characteristics of the "invisible-hand."
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Question 19 of 20
"The theory of the Communists may be summed up in a single sentence: Abolition of private
property." is from:
A. The Communist Manifesto.
B. The Capitalist Manifesto.
C. The Socialist Manifesto.
D. The Fascist Manifesto.
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Question 20 of 20
The nation closest to a centrally planned, socialist economy is:
A. China.
B. Japan.

5. C. France.
D. Germany.
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Part 1 of 1 -
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Question 1 of 20
When the market price is higher than the equilibrium price, there is:
A. a surplus.
B. a shortage.
C. both a shortage and a surplus.
D. neither a shortage nor a surplus.
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Question 2 of 20
A decrease in demand means that quantity demanded falls:
A. at least one price.
B. at a few prices.
C. at most prices.
D. at all prices.
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Question 3 of 20
If the market price is below equilibrium price, quantity demanded:
A. is less than quantity supplied.
B. is equal to quantity supplied.
C. is greater than quantity supplied.
D. remains the same.
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Question 4 of 20
At equilibrium, quantity demanded __________ equals quantity supplied.
A. always
B. usually
C. sometimes
D. never
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Question 5 of 20
When the market price is above equilibrium price, the market price will be driven:

6. A. up by buyers.
B. up by sellers.
C. down by buyers
D. down by sellers.
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Question 6 of 20
Changes in demand are caused by each of the following EXCEPT changes in:
A. income.
B. the prices of related goods and services.
C. tastes and preferences.
D. supply.
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Question 7 of 20
An increase in the price of a complement will result in a(n) __________ for the product.
A. decrease in the quantity demanded
B. increase in the quantity demanded
C. decrease in the demand
D. increase in the demand
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5.0 Points
Question 8 of 20
If coffee is a substitute for tea, and the price of coffee rises, what will happen?
A. Demand for tea will decrease.
B. Demand for tea will increase.
C. The quantity demanded of coffee will rise.
D. The quantity demanded of tea will decrease.
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5.0 Points
Question 9 of 20
The most important determinant of the degree of elasticity of demand is:
A. whether or not the item is a big ticket item.
B. whether or not the item is a luxury or not.
C. how many uses the product has.
D. the availability of substitutes.
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Question 10 of 20
If a car dealership decides to offer a rebate to reduce the selling price of its cars and as a result
finds an increase in its total revenues, then the demand for cars from this dealership is:
A. price elastic.

7. B. price inelastic.
C. rebate inelastic.
D. unit elastic.
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Question 11 of 20
Total revenue will increase if price:
A. rises and demand is elastic.
B. rises and demand is unit elastic.
C. falls and demand is inelastic.
D. falls and demand is elastic.
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5.0 Points
Question 12 of 20
Cross elasticity of demand measures the response in:
A. the quantity of one good demanded to a change in the price of another good.
B. the income of consumers to the change in the price of goods.
C. the price of a good to a change in the quantity of another good demanded.
D. quantity of one good demanded when the quantity demanded of another good
changes.
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Question 13 of 20
A person would be maximizing her total utility when:
A. she had a consumer surplus.
B. her marginal utility was zero.
C. her marginal utility was equal to her total utility.
D. she had no consumer surplus.
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5.0 Points
Question 14 of 20
Melissa says she will have to be paid in order to even try Jason's cooking, so her marginal utility
for Jason's cooking is:
A. constant.
B. increasing.
C. positive.
D. negative.
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Question 15 of 20
According to the general utility formula, the marginal utility of a good divided by the price of
that good is:

8. A. less that negative one.
B. equal to one.
C. greater than one.
D. equal to zero.
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5.0 Points
Question 16 of 20
If your marginal utility from your last session with your personal trainer is equal to the price
she charged you, then:
A. you have had exactly the right number of sessions.
B. you have had too many sessions.
C. you have not had enough sessions.
D. there is no way to determine whether you have had enough sessions.
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5.0 Points
Question 17 of 20
A decrease in the demand for a service means that the:
A. demand curve shifts to the right.
B. demand curve shifts to the left.
C. supply curve shifts to the right.
D. supply curve shifts to the left.
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Question 18 of 20
The market demand curve is derived:
A. so that it slopes downward and to the left as quantity rises.
B. by totaling the average demands for products in all markets.
C. by horizontally summing potential buyers' individual demand curves.
D. by vertically summing the demand curves of individuals in the market.
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Question 19 of 20
An increase in supply means that quantity supplied rises:
A. at least one price.
B. at a few prices.
C. at most prices.
D. at all prices.
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Question 20 of 20
When the market price is lower than the equilibrium price, there is:
A. a surplus.

9. B. a shortage.
C. both a shortage and a surplus.
D. neither a shortage nor a surplus.
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Part 1 of 1 -
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Question 1 of 20
As output rises:
A. AFC rises.
B. AFC falls.
C. AFC remains the same.
D. There is no way of determining what happens to AFC.
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Question 2 of 20
When average total cost is declining, then:
A. marginal cost must be less than average total cost.
B. marginal cost must be greater than average total cost.
C. average total cost must be greater than average fixed cost.
D. average variable cost must be declining.
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5.0 Points
Question 3 of 20
The law of diminishing returns:
A. is completely invalid.
B. states that if units of a resource are added to a fixed proportion of other resources,
eventually marginal output will decline.
C. states that if any two resources are combined, production will fall.
D. states that profit margins decline as output rises.
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5.0 Points
Question 4 of 20
If fixed cost is $8,000, variable cost is $5,000 at an output of 2 and $9,000 at an output of 3,
how much is marginal cost at an output of 3?
A. $3,000
B. $4,000
C. $5,000
D. $8,000
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10. 5.0 Points
Question 5 of 20
Which statement is true?
A. AFC declines with output.
B. ATC declines with output.
C. AFC - AVC = ATC.
D. Output divided by fixed cost = AFC.
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5.0 Points
Question 6 of 20
The average fixed cost curve:
A. is a vertical line.
B. is a horizontal line.
C. slopes downward to the right as output rises.
D. is U-shaped (it declines as output rises, reaches a minimum, and then rises).
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5.0 Points
Question 7 of 20
As a firm's output expands, the:
A. ATC will reach a minimum before the AVC.
B. AVC will reach a minimum before the ATC
C. ATC and AVC will reach minimums at the same output.
D. ATC and AVC will reach maximums at the same output.
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5.0 Points
Question 8 of 20
Marginal cost may be defined as the __________ cost that results from producing one more
unit of output.
A. change in average total
B. change in average variable
C. change in total
D. rate of change in total fixed
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5.0 Points
Question 9 of 20
Which is most clearly a fixed cost?
A. Insurance premiums
B. Wages of production workers
C. Cost of raw materials
D. Shipping costs
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11. 5.0 Points
Question 10 of 20
Fixed cost is sometimes referred to as __________ cost.
A. sunk
B. variable
C. total
D. economic
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5.0 Points
Question 11 of 20
Adam Smith noted each of the following economies of scale EXCEPT:
A. specialization.
B. diminishing returns.
C. saving of time that would otherwise be spent going from one task to another.
D. employment of expensive equipment.
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5.0 Points
Question 12 of 20
Parkinson's Law is an example of:
A. economies of scale.
B. diseconomies of scale.
C. Adam Smith's pin factory.
D. the firm's search for its most profitable output.
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5.0 Points
Question 13 of 20
Which of the following is the most likely to be a variable cost?
A. Raw material costs
B. Leasing payments of tour buses for rock and roll bands
C. Interest on bonded indebtedness
D. Real estate taxes
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Question 14 of 20
As long as there are __________ costs, we are in the short run.
A. variable
B. fixed
C. marginal
D. average
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Question 15 of 20

12. If price is between the break-even point and the shutdown point, in the long run the firm will:
A. operate.
B. make a profit.
C. stay in business.
D. go out of business.
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5.0 Points
Question 16 of 20
Adam Smith used a pin factory to demonstrate:
A. the advantages of economies of scale.
B. diseconomies of scale.
C. the long-run average cost curve.
D. the advantage of being established.
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Question 17 of 20
When output is 0, total cost equals __________ cost.
A. total variable
B. total fixed
C. marginal
D. average variable
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5.0 Points
Question 18 of 20
At an output of 1, marginal cost is:
A. $0.
B. $200.
C. $300.
D. $400.
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5.0 Points
Question 19 of 20
The law of diminishing marginal returns implies:
A. the more hours you spend studying economics the less you will know.
B. your understanding of economics will be increased by decreasing your marginal study
time.
C. after a certain point, the more hours you spend studying economics per day, the less
you will learn with each added hour.
D. the more hours you spend studying economics per day, the more you will learn with
each added hour.
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13. 5.0 Points
Question 20 of 20
Which of the following cost curves will NOT shift downward if the price of a variable input
decreases?
A. Total cost
B. Average cost
C. Marginal cost
D. Average fixed cost
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Part 1 of 1 -
5.0 Points
Question 1 of 20
A firm produces at that output at which marginal cost = marginal revenue:
A. all of the time.
B. most of the time.
C. some of the time.
D. on rare occasions.
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5.0 Points
Question 2 of 20
Which statement is true?
A. The marginal cost curve is used to determine if a firm is operating at peak efficiency.
B. A firm will always try to maximize its total revenue.
C. A firm's long-run supply curve is identical to its entire marginal cost curve.
D. A firm is operating most efficiently when it is at its break-even point.
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5.0 Points
Question 3 of 20
Which statement is true?
A. Price is calculated by dividing output by total revenue.
B. The lowest point on the short-run supply curve is at the break-even point.
C. When price exceeds marginal cost, a profit-maximizing firm will decrease production.
D. The marginal cost curve intersects the average total cost curve at the break-even
point
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5.0 Points
Question 4 of 20
To find the output at which the firm maximizes its profits you must know the firm's:
A. ATC.
B. AVC.
C. AFC.

14. D. MC.
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5.0 Points
Question 5 of 20
The monopolist and the perfect competitor differ in that:
A. they face different demand curves.
B. the monopolist does not always produce at an output in which MC = MR.
C. the monopolist is always a large firm.
D. the monopolist is more efficient.
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5.0 Points
Question 6 of 20
Which statement is true?
A. The monopolist operates at the minimum point of her average total cost curve.
B. Once a monopoly is set up, it is impossible to dislodge it.
C. Monopolies are always large firms.
D. Price is always read off the demand curve.
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5.0 Points
Question 7 of 20
Which statement is true?
A. All monopolists' products have close substitutes.
B. Most firms in the United States are monopolies.
C. There are no monopolies in the United States.
D. A monopoly is a firm that produces all the output in an industry.
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5.0 Points
Question 8 of 20
The monopolist is a(n):
A. imperfect competitor and has a horizontal demand curve.
B. imperfect competitor and has a downward-sloping demand curve.
C. perfect competitor and has a horizontal demand curve.
D. perfect competitor and has a downward-sloping demand curve.
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5.0 Points
Question 9 of 20
Price is always read off the __________ curve.
A. MC
B. MR
C. ATC
D. demand

15. Reset Selection
5.0 Points
Question 10 of 20
The most efficient output is found:
A. where MC and MR cross.
B. at the bottom of the ATC curve.
C. when the demand and MR curves are equal.
D. where the ATC and demand curves cross.
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5.0 Points
Question 11 of 20
The basis for monopolistic competition is:
A. product differentiation.
B. price.
C. economies of scale.
D. reaching a break-even point.
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5.0 Points
Question 12 of 20
__________ is (are) legal in the United States.
A. Convert collusion
B. Cut throat competition
C. Cartels
D. Price fixing
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5.0 Points
Question 13 of 20
A Herfindahl-Hirschman Index of 10,000 would mean there is (are) how many firm(s) in the
industry?
A. 1
B. 10
C. 100
D. 1000
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5.0 Points
Question 14 of 20
The least competitive industry would be one that has:
A. price leadership.
B. covert collusion.
C. overt collusion.
D. a cartel.

16. Reset Selection
5.0 Points
Question 15 of 20
Which statement is true?
A. The monopolistic competitor always makes a profit in the short run.
B. The monopolistic competitor operates at peak efficiency.
C. Product differentiation takes place in the minds of the buyers.
D. Most consumers would prefer lower prices and less product differentiation.
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5.0 Points
Question 16 of 20
Monopolistic competition differs from perfect competition only with respect to:
A. the number of firms in the industry.
B. product differentiation.
C. barriers to entry.
D. economies of scale.
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5.0 Points
Question 17 of 20
In the long run in monopolistic competition:
A. most firms are making a profit.
B. the absence of entry barriers ensures that there are no profits.
C. economies of scale ensure that there are no profits.
D. most firms are losing money.
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5.0 Points
Question 18 of 20
Which statement is true?
A. Most firms in the United States are monopolistic competitors.
B. Most firms in the United States are perfect competitors.
C. Most consumers would prefer lower prices and less product differentiation.
D. The monopolistic competitor always makes a profit in the short run.
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5.0 Points
Question 19 of 20
The closer the industry concentration ratio is to 100, the more likely it is that:
A. there are a reasonably large number of medium-sized firms.
B. this is an industry approaching perfect competition.
C. there is a small number of large firms.
D. price competition is being practiced.
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17. 5.0 Points
Question 20 of 20
Which is the least competitive?
A. Overt collusion
B. Covert collusion
C. Price leadership
D. All are equally competitive
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Part 1 of 1 -
5.0 Points
Question 1 of 20
A conglomerate merger takes place when:
A. a firm acquires a competitor.
B. similar firms agree to compete.
C. a firm integrates its production backward toward its source of supply or forward in its
marketing chain.
D. a firm buys another firm unrelated to the original firm's business.
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5.0 Points
Question 2 of 20
You can find the MRP by multiplying marginal physical product by price for:
A. both the perfect competitor and the imperfect competitor.
B. neither the perfect competitor nor the imperfect competitor.
C. only the perfect competitor.
D. only the imperfect competitor.
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Question 3 of 20
The additional output that one additional input of labor is responsible for is its __________
product.
A. marginal revenue
B. marginal physical
C. average revenue
D. average physical
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5.0 Points
Question 4 of 20
The firm's demand schedule for a resource is its __________ schedule.

18. A. MPP
B. MRP
C. total revenue
D. output
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5.0 Points
Question 5 of 20
As output rises:
A. both marginal revenue product and marginal physical product rise.
B. both marginal revenue product and marginal physical product fall.
C. marginal revenue product rises and marginal physical product falls.
D. marginal revenue product rises and marginal physical product rises.
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5.0 Points
Question 6 of 20
If the price that a perfect competitor received for his or her final product doubled, the firm's
MRP schedule would:
A. rise.
B. fall.
C. double at each price.
D. stay about the same.
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5.0 Points
Question 7 of 20
As output rises, the MRP of an imperfect competitor will __________ that of a perfect
competitor.
A. rise faster than
B. fall faster than
C. rise at the same rate as
D. fall at the same rate as
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5.0 Points
Question 8 of 20
The Standard Oil trust:
A. was broken up in 1946.
B. was controlled by several foreign nations.
C. forced its rivals out of business.
D. was put together by the U.S. government.
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5.0 Points
Question 9 of 20
The Clayton Act prohibited:

19. A. interlocking directorates.
B. all forms of monopoly.
C. foreign control of U.S. corporations.
D. false and deceptive advertising.
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5.0 Points
Question 10 of 20
The conventional merger is the __________ merger.
A. horizontal
B. vertical
C. conglomerate
D. diversifying
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Question 11 of 20
Each of the following is an advantage of forming a conglomerate EXCEPT:
A. tax advantages.
B. forming a big company.
C. diversification.
D. accumulation of power within two or three closely related industries.
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5.0 Points
Question 12 of 20
A key passage of the __________ Act stated that "every contract, combination in form of trust
or otherwise, in restraint of commerce among the several states, or with foreign nations, is
hereby declared illegal."
A. Clayton
B. FTC
C. DuPont
D. Sherman
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5.0 Points
Question 13 of 20
The Microsoft case ended with a(n):
A. clear-cut win for the federal government.
B. compromise settlement between Microsoft and the federal government.
C. guilty plea by Microsoft, but no breakup of the company.
D. abandonment of the case by the federal government.
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5.0 Points
Question 14 of 20
In the 1960s, about 80% of the mergers were of the __________ variety.

20. A. horizontal
B. vertical
C. conglomerate
D. conventional
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5.0 Points
Question 15 of 20
Each of the following industries was deregulated during the last 30 years EXCEPT:
A. the airlines.
B. trucking.
C. banking.
D. radio and TV.
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5.0 Points
Question 16 of 20
A merger of a firm and its supplier is called a __________ merger.
A. vertical
B. horizontal
C. conglomerate
D. direct
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5.0 Points
Question 17 of 20
A horizontal merger takes place when:
A. a firm acquires a competitor.
B. similar firms agree to compete.
C. firms in different industries merge.
D. a firm diversifies by merging with a foreign firm.
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5.0 Points
Question 18 of 20
The Sherman Act of 1890:
A. exempted labor unions from antitrust prosecution.
B. included stringent enforcement provisions.
C. outlawed unfair business practices to exclude rivals from selling in markets.
D. outlawed all monopolies.
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5.0 Points
Question 19 of 20
A conglomerate merger involves combining firms:
A. involved in the same industry.

21. B. that are based in different countries.
C. from unrelated industries.
D. that control various stages of the production of a particular good from raw materials
to finished manufacture.
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5.0 Points
Question 20 of 20
Which statement is true?
A. Microsoft is subject to American antitrust laws, but not those of Europe, Asia, or
elsewhere.
B. Microsoft has never been involved in an antitrust suit.
C. The European Commission fined Microsoft over $600 billion for its anticompetitive
behavior.
D. Microsoft has always gone out of its way to be helpful to its competitors.
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Part 1 of 1 -
5.0 Points
Question 1 of 20
The predecessor to the AFL was the:
A. Teamsters Union.
B. Knights of Labor.
C. CIO.
D. The International Workers of the World.
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5.0 Points
Question 2 of 20
The __________ Act allows states to enact "right-to-work" laws.
A. National Labor Relations
B. Taft-Hartley
C. Landrum-Griffin
D. Sherman Antitrust
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5.0 Points
Question 3 of 20
An industrial union would be organized among a group such as:
A. air traffic controllers.
B. plumbers.
C. airline pilots.
D. steel workers.

22. Reset Selection
5.0 Points
Question 4 of 20
When a firm exercises monopsony power:
A. the firm increases its profits at the expense of its workers.
B. workers gain but the firm loses.
C. workers, consumers, and owners of the firm are made better off.
D. both the firm and the workers gain.
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5.0 Points
Question 5 of 20
Which statement is true with respect to the two basic ways that unions have of exerting power?
A. Only inclusion leads to higher wages.
B. Only exclusion leads to higher wages.
C. Both inclusion and exclusion lead to higher wages.
D. Neither inclusion nor exclusion leads to higher wages.
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5.0 Points
Question 6 of 20
A monopsony is:
A. the seller of a product for which there are no close substitutes.
B. the buyer of a product for which there are no close substitutes.
C. both the seller and buyer of a product for which there are no close substitutes.
D. neither the seller nor buyer of a product for which there are no close substitutes.
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5.0 Points
Question 7 of 20
Collective bargaining agreements in the United States generally:
A. are negotiated for only a 1-year period.
B. are very detailed and specify wages levels and fringe benefits for a period of 2-3
years.
C. cover wages only.
D. are negotiated for only a 6-month period.
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5.0 Points
Question 8 of 20
In 1991, the base year, you were earning $350/week. Your wages rose to $450 in 2000, the
current year, when the Consumer Price Index stood at 135. What statement can you make
about what happened to your real wages over this period?
A. They rose.
B. They fell.
C. They remained the same.

23. D. There is not enough information to determine whether they rose, fell, or remained the
same.
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5.0 Points
Question 9 of 20
The amount a person earns over and above the amount she/he would be willing to work for is
called:
A. marginal resource cost.
B. economic rent.
C. marginal revenue product.
D. profit on human capital.
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5.0 Points
Question 10 of 20
Suppose your economics professor earns an equal annual salary of $40,000. The professor
loves teaching and would not quit her job if her pay were reduced to $15,000 per year. Your
professor is earning annual economic rent of:
A. $40,000.
B. $25,000.
C. $55,000.
D. $15,000.
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5.0 Points
Question 11 of 20
According to the theory of the backward-bending labor supply curve, as the wage rate rises:
A. first the substitution effect sets in, and then the income effect.
B. first the income effect sets in, and then the substitution effect.
C. the substitution effect and the income effect set in at the same time.
D. there is neither a substitution effect nor an income effect.
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5.0 Points
Question 12 of 20
Which statement is true?
A. The highest paid professional athletes earn economic rent.
B. Economic rent is paid on land, but not in the form of wages.
C. Economic rent is earned mainly by the poor and the lower middle class.
D. Economic rent is paid in proportion to the marginal revenue product of a resource.
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5.0 Points
Question 13 of 20
Conservative economists would like to help younger workers get work experience by:
A. setting up a government jobs program.

24. B. raising the minimum wage rate.
C. lowering the minimum wage rate.
D. passing a law requiring employers to hire teenagers ahead of older workers who are
equally qualified.
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5.0 Points
Question 14 of 20
Lorenz curves tell us about the:
A. absolute distribution of income.
B. poverty line.
C. inverse relationship between price and the quantity demanded.
D. relative distribution of income.
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5.0 Points
Question 15 of 20
Which goes exclusively to the poor?
A. Medicaid
B. Medicare
C. Social Security
D. Unemployment insurance benefits
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5.0 Points
Question 16 of 20
If the value of non-cash assistance to the poor were included in their income, the:
A. official number of persons classified as poor would be higher.
B. official number of persons classified as poor would be lower.
C. poverty income threshold would decrease.
D. poverty income threshold would increase.
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5.0 Points
Question 17 of 20
During the decade of the 1980s our Lorenz curve:
A. moved inward, toward the line of perfect equality.
B. moved outward, away from the line of perfect equality.
C. stayed about the same distance from the line of perfect equality.
D. crossed the line of perfect equality.
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5.0 Points
Question 18 of 20
According to official statistics in the United States, a person is classified as poor:
A. if the person's money income is below the poverty income threshold.
B. only if the person's money income is below the poverty income threshold AND the

25. person is not working.
C. only if the person's money income is below the poverty income threshold AND the
person is homeless.
D. if the person's money income and the value of non-cash transfers is below the
poverty income threshold.
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5.0 Points
Question 19 of 20
In which of the following groups of people in the U.S. would the incidence of poverty be the
greatest?
A. Black families with a female head
B. All families of seven or more members
C. Farmers and farm laborers
D. Families whose head is age 65 or over
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5.0 Points
Question 20 of 20
Which of the following groups has the lowest median income in the United States?
A. Married couples with both spouses working
B. Female-headed families with no husband present
C. Male-headed families with no wife present
D. Married couple families with the wife not working
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Part 1 of 1 -
5.0 Points
Question 1 of 20
In general, a plot of land goes to:
A. whomever the government designates.
B. the highest bidder.
C. the person who can make the best use of it.
D. the person who has been using the land over time.
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5.0 Points
Question 2 of 20
The supply of land is:
A. perfectly elastic.
B. relatively elastic.
C. relatively inelastic.
D. perfectly inelastic.
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26. 5.0 Points
Question 3 of 20
Who wanted to tax away all rent from landlords?
A. David Ricardo
B. Henry George
C. Joseph Schumpeter
D. Frank Knight
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5.0 Points
Question 4 of 20
Which is NOT determined by supply and demand?
A. The wage rate
B. The interest rate
C. Rent
D. Profits
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Question 5 of 20
"Profits are a reward for risk-bearing" would be a view held by:
A. Joseph Schumpeter.
B. Frank Knight.
C. Henry George.
D. Karl Marx.
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5.0 Points
Question 6 of 20
__________ sees the entrepreneur as an exploiter of labor.
A. Joseph Schumpeter
B. Frank Knight
C. Henry George
D. Karl Marx
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5.0 Points
Question 7 of 20
A change in rent will be brought about by a change in:
A. the supply of land.
B. the demand for land.
C. both the supply of and the demand for land.
D. neither the supply of nor the demand for land.
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5.0 Points
Question 8 of 20

27. Usury laws lead to:
A. a surplus of loanable funds.
B. a shortage of loanable funds.
C. a floor under interest rates.
D. more lenders than borrowers.
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Question 9 of 20
Rent on marginal land is:
A. very high.
B. above 0.
C. 0.
D. negative.
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5.0 Points
Question 10 of 20
Henry George advocated each of the following EXCEPT that:
A. all land should be free.
B. all rents should be taxed away.
C. the government should raise all its tax revenue from a single tax on land.
D. since land did not really belong to the landlords, rent was an unearned surplus.
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5.0 Points
Question 11 of 20
Which economist believes that all profits are linked with uncertainty and risk?
A. Frank Knight
B. Joseph Schumpeter
C. Karl Marx
D. John Maynard Keynes
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5.0 Points
Question 12 of 20
If there were no usury law the interest rate would be:
A. 6%.
B. 12%.
C. 18%.
D. 24%.
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5.0 Points
Question 13 of 20
Usury is considered the charging of:

28. A. higher interest rates than people are willing to pay.
B. lower interest rates than people are willing to pay.
C. unconscionably high interest rates.
D. extremely low rates of interest.
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5.0 Points
Question 14 of 20
Who said this: "The most hated sort, with the greatest reason, is usury, which makes a gain out
of money itself, and not from the natural objects of it. For money was intended to be used in
exchange, but not to increase at interest…of all modes of getting wealth this is the most
unnatural."
A. Aristotle
B. Joseph Schumpeter
C. Benjamin Franklin
D. Frank Knight
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5.0 Points
Question 15 of 20
Which statement is true?
A. Joseph Schumpeter said, "risk bearing is no part of the entrepreneurial function."
B. Benjamin Franklin said, "It is better to borrow than to lend."
C. Aristotle said, "the fair rate of interest is exactly what the market will bear."
D. David Ricardo said, "the landlord's return, rent, should be taxed away by the
government."
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5.0 Points
Question 16 of 20
Which is the most accurate statement?
A. Fringe and sub-prime lending should be outlawed.
B. Poor people cannot get loans in the United States.
C. Payday lenders like the Military Financial Network make low interest loans to our
military personnel.
D. When poor people get personal loans, they usually pay much higher interest rates
than the average American.
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5.0 Points
Question 17 of 20
The theory of rent formulated by __________ is still used by most economists today.
A. Karl Marx
B. David Ricardo
C. Frank Knight
D. Joseph Schumpeter
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29. 5.0 Points
Question 18 of 20
When the demand for a plot of land falls, its:
A. supply will fall.
B. supply will rise.
C. price will fall.
D. price will rise.
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5.0 Points
Question 19 of 20
As the demand for land falls, rents:
A. rise and more marginal land comes into use.
B. fall and less marginal land is used.
C. rise and less marginal land is used.
D. fall and more marginal land comes into use.
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5.0 Points
Question 20 of 20
The concept that a dollar today is worth more than a dollar in the future is called:
A. the net productivity of capital.
B. economic rent.
C. present value.
D. the capitalization of assets.
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Part 1 of 1 -
5.0 Points
Question 1 of 20
The principle of comparative advantage:
A. applies only when the gold standard is in effect.
B. is the basic reason that the United States has been running trade deficits.
C. states that it is advantageous to export more than you import.
D. states that total output is greatest when each product is made by the country that has
the lowest opportunity cost.
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5.0 Points
Question 2 of 20
At the core of the American trade problem is that:
A. Americans spend too much on consumption.
B. the dollar is too low
C. the Japanese are excluding American products by means of high protective tariffs.

30. D. American manufacturers are too quality conscious and should instead concentrate on
reducing costs.
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Question 3 of 20
High protective tariffs:
A. would be supported by most economists.
B. will become more likely if we do not reduce our trade deficit.
C. have very little support.
D. would definitely solve all our trade problems.
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5.0 Points
Question 4 of 20
A hollow corporation:
A. makes goods abroad and ships them to the United States.
B. makes goods in the United States and ships them abroad.
C. imports foreign goods and puts its own name on them.
D. makes goods in the United States and has them sold abroad under another
company's name.
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5.0 Points
Question 5 of 20
Which statement is true?
A. The Japanese have not been selling below cost nor taking advantage of economies of
scale.
B. The Japanese have been selling below cost and have been taking advantage of
economies of scale.
C. The Japanese have been selling below cost but have not been taking advantage of
economies of scale.
D. The Japanese have been taking advantage of economies of scale but have not been
selling below cost.
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Question 6 of 20
The Chinese economic expansion since the early 1980s and the Japanese economic expansion
from the late 1940s through the 1980s were:
A. virtually identical.
B. both dependent on the American market.
C. based in the economic principles of Karl Marx.
D. based on closing their domestic markets to American goods and services.
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5.0 Points
Question 7 of 20

31. The least applicable argument for protection of U.S. industry against foreign competition is the
__________ argument.
A. national security
B. infant industry
C. low wage
D. employment
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5.0 Points
Question 8 of 20
A balance-of-trade surplus exists:
A. if the dollar value of exports exceeds the dollar value of imports.
B. if the dollar value of imported capital exceeds the dollar value of exports.
C. only if there is relative price inflation domestically.
D. only if full employment exists domestically.
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5.0 Points
Question 9 of 20
Which statement is FALSE?
A. Chinese factories have been pirating American goods and selling those products in
China.
B. Most often "made in China" is actually made elsewhere by multinational companies
that use China as a final assembly station.
C. Both China and Japan have closed markets to American made products.
D. Our trading position with Japan is very much like a colony and a colonial power.
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5.0 Points
Question 10 of 20
Which statement is FALSE?
A. If the U.S. can produce rice more efficiently than Japan can, the U.S. enjoys an
absolute advantage.
B. Economists dislike both tariffs and import quotas.
C. Under the law of comparative advantage, total output is greatest when each product
is made by the country that produces it most efficiently.
D. No nation will engage in trade with another nation unless it will gain by that trade.
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5.0 Points
Question 11 of 20
Which statement is true?
A. Nations should strive for self-sufficiency
B. The U.S. balance of trade has always been positive
C. Our biggest trade deficit was a little over $150 billion
D. The U.S. balance of trade turned negative in the mid-1970s

32. Reset Selection
5.0 Points
Question 12 of 20
Which statement is true?
A. The U.S. is both the world's leading creditor nation and the leading debtor nation.
B. The U.S. is neither the world's leading creditor nation nor the world's leading debtor
nation.
C. The U.S. is the world's leading creditor nation and not the world's leading debtor
nation.
D. The U.S. is the world's leading debtor nation and not the world's leading creditor
nation.
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5.0 Points
Question 13 of 20
Each of the following is a requirement of a gold standard EXCEPT:
A. a nation defines its currency in terms of gold.
B. a nation's money supply is made up of gold or gold certificates.
C. a nation must maintain a fixed ratio between its gold stock and its money supply.
D. there must be no barriers to the free flow of gold into and out of the country.
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5.0 Points
Question 14 of 20
The demise of the gold standard led to:
A. more international trade.
B. greater and greater devaluation.
C. freely floating exchange rates.
D. balance-of-payment surpluses.
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5.0 Points
Question 15 of 20
A U.S. importer of French wine would pay in:
A. dollars.
B. gold.
C. euros.
D. special drawing rights.
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5.0 Points
Question 16 of 20
If we were on an international gold standard:
A. inflation would be eliminated.
B. recessions would be eliminated.
C. trade deficits and surpluses would be eliminated.

33. D. no nation would ever have to devaluate its currency.
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Question 17 of 20
Appreciation of the Canadian dollar will:
A. intensify an existing disequilibrium in Canada's balance of payments.
B. make Canada's exports less expensive and its imports more expensive.
C. make Canada's exports more expensive and its imports less expensive.
D. make Canada's exports and imports both more expensive.
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5.0 Points
Question 18 of 20
Freely floating exchange rates are determined by the:
A. forces of supply and demand for currencies.
B. government with a trade surplus.
C. government with a trade deficit.
D. IMF.
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5.0 Points
Question 19 of 20
Depreciation of the dollar relative to the yen means that the:
A. dollar price of the yen has fallen.
B. yen prices of Japanese goods have increased to the Japanese.
C. dollar prices of imported goods from Japan have increased.
D. yen are less expensive to Americans.
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5.0 Points
Question 20 of 20
Under a system of freely flexible (floating) exchange rates an American trade deficit with
Mexico will tend to cause:
A. the United States government to ration pesos to American importers.
B. a flow of gold from the United States to Mexico.
C. an increase in the peso price of dollars.
D. an increase in the dollar price of pesos.
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