Economics for Business
Final Test Solutions
Course Introduction
Economics for Business provides students with a fundamental understanding of economic principles and how they apply to real-world business decisions. The course explores key concepts such as supply and demand, market structures, pricing strategies, and the role of government in the economy. Through analysis of case studies and current events, students learn how economic forces impact business operations, resource allocation, and strategic planning. Emphasis is placed on both microeconomic and macroeconomic perspectives, enabling students to assess market environments, interpret economic data, and make informed managerial decisions in a constantly evolving global marketplace.
Recommended Textbook
Microeconomics Private and Public Choice 14th Edition by James
D. Gwartney
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4017 Verified Questions
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Chapter 1: The Economic Approach
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Sample Questions
Q1) In economics the term utility refers to
A)the subjective benefit or satisfaction a person expects to receive from a choice or course of action.
B)the number of possible uses for a resource.
C)the fact that human desire for goods is unlimited while the resources available to meet those desires is limited.
D)the highest valued alternative that must be sacrificed when a choice is made.
Answer: A
Q2) Modern economics as a field of study is usually thought to have begun with A)Adam Smith and the writing of The Wealth of Nations.
B)David Ricardo and the writing of The Principles of Political Economy and Taxation.
C)Aristotle and the writing of Politics and Ethics.
D)Moses and the Ten Commandments.
Answer: A
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Chapter 2: A: Some Tools of the Economist
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Sample Questions
Q1) A point on the production possibilities curve represents a combination of goods that is
A)inefficient.
B)efficient.
C)unattainable.
D)attainable.
Answer: B
Q2) In economics, the term that refers to the time, effort, and other resources needed to search out, negotiate, and consummate an exchange is
A)transaction costs.
B)specialization costs.
C)pecuniary costs.
D)comparative costs.
Answer: A
Q3) The law of comparative advantage suggests that
A)individuals, states, and nations can all benefit if they trade with others.
B)free trade among nations is harmful to an economy.
C)each economy should strive to be self-sufficient.
D)each country should attempt to produce roughly equal amounts of all goods.
Answer: A
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Chapter 2: B: Some Tools of the Economist
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Sample Questions
Q1) Refer to Table 2-4. Which of the following is correct?
A)In Lebos, the opportunity cost of producing one unit of food is equal to one unit of clothing.
B)In Slavia, the opportunity cost of producing one unit of food is equal to two units of clothing.
C)The opportunity cost of producing food in Lebos is less than the opportunity cost of producing food in Slavia.
D)All of the above are correct.
Answer: D
Q2) Given freedom of movement for both goods and resources, if Florida producers specialize in oranges and Georgia producers specialize in peaches, then it would be reasonable to conclude that
A)the opportunity cost of growing oranges is higher in Florida than in Georgia.
B)Georgia has a comparative advantage in producing peaches.
C)Florida has a comparative advantage in producing peaches.
D)total output will be expanded when Georgia allocates more resources to producing oranges and Florida allocates more resources to producing peaches.
Answer: B
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Chapter 3: A: Supply, Demand, and the Market Process
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Sample Questions
Q1) In which statement(s) are "supply" and "quantity supplied" used correctly? (I) "An increase in the price of computers will increase the quantity supplied of computers." (II) "A technological advance that lowers the cost of producing computers will increase the supply of computers."
A)in both statements I and II
B)in statement I only
C)in statement II only
D)in neither statements I nor II
Q2) If consumer purchases of a good are highly sensitive to the price of the good, economists say the demand for the good is relatively A)inelastic.
B)elastic.
C)robust.
D)inverse.
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Chapter 3: B: Supply, Demand, and the Market Process
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Sample Questions
Q1) Refer to Figure 3-18. When the price falls from P to P , which area represents the increase in consumer surplus to existing buyers?
A)ABD
B)ACF
C)BCED
D)DEF
Q2) "He [the producer] intends only his gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." What famous economist made this statement?
A)Alfred Marshall
B)Friedrich Hayek
C)Adam Smith
D)David Ricardo
Q3) Which of the following would most likely cause the price of wheat to decline?
A)an increase in the production costs of corn, a substitute for wheat
B)a decrease in the price of soybeans, a substitute for wheat
C)an increase in the price of fertilizer, a resource used to produce wheat
D)a sandwich craze among Americans, causing increased demand for whole-wheat bread
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Chapter 4: A: Supply and Demand: Applications and Extensions
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Sample Questions
Q1) The excess burden or deadweight loss of a tax refers to the
A)increase in product price as a result of the tax.
B)growth in government funded programs as a result of the revenue generated by the tax.
C)loss of disposable income consumers suffer from the tax.
D)reduction in gains from mutually beneficial exchanges that are eliminated as a result of the tax.
Q2) In 2010 the federal government reduced the Social Security tax withholding rate from 12.4 percent (6.2 percent on both the employer and employee) to 8.4 percent (4.2 percent on both the employer and employee) on the wages of all workers. If the supply of labor is relatively inelastic when compared to the elasticity of the demand for labor, the burden of this tax will
A)continue to fall primarily on employees.
B)continue to fall primarily on employers.
C)be divided equally between employees and employers.
D)change from primarily falling on employees to employers.
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Chapter 4: B: Supply and Demand: Applications and Extensions
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Sample Questions
Q1) Refer to Figure 4-22. The effective price sellers receive after the tax is imposed is A)$1.00.
B)$3.50.
C)$5.00.
D)$6.00.
Q2) Refer to Figure 4-22. Buyers pay how much of the tax per unit?
A)$1.00.
B)$1.50.
C)$2.50.
D)$3.00.
Q3) Refer to Figure 4-20. The burden of the tax on sellers is A)$1.00 per unit.
B)$1.50 per unit.
C)$2.00 per unit.
D)$3.00 per unit.
Q4) Suppose the United Auto Workers union obtains a substantial wage increase for auto workers. How will this affect the market for automobiles?
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Chapter 5: Difficult Cases for the Market and the Role of Government
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Sample Questions
Q1) Markets fail to allocate resources efficiently when A)prices fluctuate.
B)people who have property rights abuse their privileges.
C)property rights are poorly enforced or not well established.
D)the government refuses to intervene in private markets.
Q2) Figure 5-3 illustrates the market for a product that generates an external benefit. D is the private market demand curve, while D is the demand curve including the external benefit. Which of the following is true?
A)Point a illustrates the competitive private market outcome, while point b illustrates the outcome consistent with economic efficiency.
B)Point b illustrates the competitive private market outcome, while point a illustrates the outcome consistent with economic efficiency.
C)The competitive private market outcome is consistent with the conditions for economic efficiency.
D)The good will tend to be oversupplied relative to the conditions for economic efficiency.
Q3) Is education a public good? Focus on whether it meets the two criteria for being a public good.
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Chapter 6: The Economics of Collective Decision-Making
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Sample Questions
Q1) In 2008, the combined expenditures of federal, state, and local governments in the United States were approximately
A)14 percent of GDP.
B)24 percent of GDP.
C)35 percent of GDP.
D)44 percent of GDP.
Q2) Public choice theory assumes each voter will tend to support the political candidate who offers
A)programs with the largest benefits to society.
B)the highest potential for being a good leader in times of war.
C)programs that create the most equal distribution of income.
D)to provide the voter with the most personal benefits at the least personal cost.
Q3) Which one of the following economists has played a central role in the development of the "economics of collective decision making," better known as public choice analysis?
A)Alfred Marshall
B)John Maynard Keynes
C)James Buchanan
D)Milton Friedman
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Chapter 7: Consumer Choice and Elasticity
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Sample
Questions
Q1) An individual's demand curve for a good is derived by
A)varying the income level and observing the resulting total utility derived from both goods.
B)varying the price of one good and observing the resulting quantities of the other good.
C)shifting the budget line to the left and calculating the loss in total utility.
D)varying the price of one good and observing the resulting quantities demanded of that good.
Q2) Muriel's income elasticity of demand for football tickets is 1.5. All else equal, this means that if her income increases by 20 percent, she will buy
A)150 percent more football tickets.
B)50 percent more football tickets.
C)30 percent more football tickets.
D)20 percent more football tickets.
Q3) A local restaurant offers an "all you can eat" ribs special. If a person pays $11.95, she can eat as many servings as she desires at no additional cost. Can you infer anything about her marginal utility from observing her eating behavior?
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Page 12
Chapter 8: A: Costs and the Supply of Goods
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Sample Questions
Q1) The three basic legal forms of business enterprise are
A)monopolists, competitors, and enterprises.
B)vertical, horizontal, and conglomerate corporations.
C)conglomerates, multinationals, and partnerships.
D)proprietorships, partnerships, and corporations.
Q2) A 10-cent-per-box tax on producers of cigars will
A)shift the firm's ATC and MC curves upward by the full amount of the tax.
B)induce the firm to produce less but will not shift the firm's MC curve.
C)shift the firm's ATC and MC curves downward by the full amount of the tax.
D)shift the MC curve upward but will not cause any shift in the ATC curve.
Q3) Which of the following is characteristic of the corporate form of ownership?
A)unlimited liability
B)easy transferability of ownership rights
C)no divisible ownership rights
D)absence of the principal-agent problem
Q4) The law of diminishing marginal returns explains the general shape of the firm's
A)long-run cost curves.
B)short-run cost curves.
C)both short-run and long-run cost curves.
D)The law of diminishing returns has nothing to do with cost curves.
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Chapter 8: B: Costs and the Supply of Goods
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Sample Questions
Q1) Suppose you are planning to open a lemonade stand. List separately all the explicit and implicit costs that might be involved.
Q2) James opened a baseball manufacturing operation, and initially the more balls he made, the lower the per-unit cost. Now, as output expands, his per-unit costs are rising. He concludes that diseconomies of scale have set in. Is he correct? Why?
Q3) Mr. Jones pays his employees by the hour. He believes they purposely work slowly to maximize their personal satisfaction. What can he do to provide them with a stronger incentive to work efficiently?
Q4) Andy wants to maximize his grade-point average. Having spent six hours studying for his final exam in economics, Andy calculates his grade and discovers that even with a perfect score on the final, he will not pass the course. He decides to study two more hours so he will not have wasted the first six hours. Is this a good decision? Why or why not?
Q5) If the ABC Company decides to take over the XYZ Corporation by purchasing all of the stock of XYZ, what does this tell us about the view ABC holds of XYZ?
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Page 14
Chapter 9: A: Price Takers and the Competitive Process
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Sample Questions
Q1) In general, firms will produce at a rate of output such that marginal revenue equals marginal cost because this output rate will
A)bring total revenue into equality with total cost.
B)maximize the difference between the revenue received from the last unit and the cost incurred in producing the last unit.
C)result in the lowest possible average total costs of production.
D)maximize the firm's profit.
Q2) Refer to Figure 9-13. When price rises from P to P , the firm finds that A)marginal cost exceeds marginal revenue at a production level of Q .
B)if it produces at output level Q it will earn a positive profit.
C)expanding output to Q would leave the firm with losses.
D)it could increase profits by lowering output from Q to Q .
Q3) When the market price is $60 in Figure 9-9, the firm's maximum daily profit will be approximately A)zero.
B)$100.
C)$900.
D)$1,200.
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Chapter 9: B: Price Takers and the Competitive Process
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Sample Questions
Q1) Why is it considered "ideal" for price to just equal marginal cost?
Q2) Which of the following products would most closely fit the competitive price-taker model?
A)stereo systems-there are many reputable brands.
B)beer-it has many consumers.
C)eggs-there are many producers of this relatively homogeneous product.
D)automobiles-there are substantial economies of scale in production.
Q3) In a competitive market, profit can be considered a reward to businesses that
A)produce a good that consumers value more highly than its component resources.
B)reduce the value of resources used as inputs in production.
C)prohibit rival firms from entering the market and competing.
D)control costs, rather than following the wishes of consumers when deciding what products to produce.
Q4) In a competitive price taker market, a firm's short-run supply curve is its
A)average total cost curve above its average variable cost curve.
B)marginal cost curve above its average variable cost curve.
C)marginal cost curve above its average fixed cost curve.
D)entire marginal cost curve.
Q5) Regarding costs of production, can a firm ever be at a point that is not on the marginal cost curve? Explain.
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Chapter 10: Price-Searcher Markets With Low Entry Barriers
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Sample Questions
Q1) As new firms enter a competitive price-searcher market, it can be expected that
A)market price will increase.
B)the output of existing firms will increase.
C)profits of existing firms will increase.
D)market demand should decrease.
E)profits of existing firms will decrease
Q2) Given the cost and demand conditions depicted in Figure 10-10 for the competitive price-searcher firm, what is the price that the firm should charge if it wants to maximize its profit?
A)20
B)30
C)40
D)50
Q3) Refer to Figure 10-12. Panel (a) shows a profit-maximizing competitive price-searcher firm that is
A)earning zero economic profit.
B)likely to exit the market in the long run.
C)producing its efficient scale of output.
D)not maximizing its profit.
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Chapter 11: A: Price-Searcher Markets With High Entry
Barriers
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Sample Questions
Q1) A firm that is a "pure monopoly" is
A)a seller of a highly advertised and differentiated product in a market with low barriers to entry in the long run.
B)the only seller of a good for which there are no good substitutes in a market with high barriers to entry.
C)the only buyer of a unique raw material.
D)the producer of a product subsidized by the government.
Q2) Which of the following is most likely to contribute to the presence of monopoly in an industry?
A)economies of scale
B)an elastic market demand for the product produced by the industry
C)inefficiency due to bureaucratic decision-making procedures in the industry
D)controlling over 50 percent of the market
Q3) If the firms in the industry depicted in Figure 11-13 can effectively operate as a cartel, what would the industry's price and output be?
A)price, $10; output, 600
B)price, $20; output, 400
C)price, $25; output, 300
D)price, $30; output, 200
Page 18
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Chapter 11: B: Price-Searcher Markets With High Entry
Barriers
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Sample Questions
Q1) Licensing is a process in which a firm wanting to enter a market must
A)require all potential customers to obtain government permission to purchase the product.
B)notify the government within a certain period after it has entered the market.
C)pay all overdue taxes before entering the market.
D)obtain permission from the government to enter the market.
Q2) Which of the following is a characteristic of an oligopolistic industry?
A)interdependence of a firm's price and output decisions
B)low barriers to entry
C)small output of individual firms relative to the total market
D)a large number of competing firms
Q3) From the viewpoint of allocative efficiency, which of the following is a defect of pure monopoly?
A)The monopolist undersupplies the market and charges too high a price.
B)The monopolist is a revenue maximizer not a profit maximizer.
C)A monopolist has little incentive to produce efficiently (at a low cost).
D)All of the above are true.
Q4) Monopoly is a word derived from Greek origins that means, roughly, single seller. Why is the definition of monopoly as single seller inadequate in economic terms?
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Chapter 12: The Supply of and Demand for Productive Resources
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Sample Questions
Q1) A decrease in the marginal product of labor would be represented by
A)increase in labor demand.
B)decrease in labor demand.
C)increase in the quantity demanded of labor.
D)decrease in the quantity demanded of labor.
E)an increase in wages.
Q2) The demand for a factor of production depends largely on the A)supply of the factor.
B)supply of other factors of production.
C)demand for other factors of production.
D)demand for the products that it helps to produce.
Q3) What happens to labor supply in the pear-picking market when the wage paid to apple pickers increases?
A)The labor supply will stay unchanged until the wages paid to pear pickers change.
B)The labor supply will decrease.
C)The labor supply will increase.
D)The labor supply may fall or rise, depending on the price of pears.
Q4) There is an Italian soccer player who makes more than $10 million a year. Why?
Page 20
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Chapter 13: Earnings, Productivity, and the Job Market
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Sample Questions
Q1) When comparisons are made between the earnings of whites and minorities with the same age, quantity of schooling, marital status, sector of employment, union and industry status, regional location, and annual hours worked, recent studies indicate that A)the corrected earnings of minority men are about two-thirds the earnings of white men.
B)earnings differentials between whites and minorities are due almost exclusively to employment discrimination.
C)the corrected earnings of Mexican-Americans, Asian-Americans, and American Indians were between 7 and 9 percent less than the earnings of similar white men.
D)most minority men now have higher earnings than white men.
Q2) Which of the following is the primary source of rapid growth in the real earnings of workers?
A)strong unions
B)government regulation of labor markets
C)rapid growth in worker productivity
D)increases in the minimum wage
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Chapter 14: Investment, the Capital Market, and the Wealth of Nations
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Sample Questions
Q1) Economic profit provides an incentive for persons investing in human and physical capital to
A)undertake investment projects yielding an uncertain return.
B)discover and develop beneficial (productive) investment opportunities.
C)produce products that increase the value of resources.
D)do all of the above.
Q2) Which of the following encourages people to engage in activities that yield uncertain returns?
A)perfect information
B)economic profit
C)accounting profit
D)all of the above
Q3) In a barter economy that had no form of currency, how could interest exist?
Q4) If the interest rate is 5 percent, the net present value of $200 to be received two years from now is
A)$165.29.
B)$181.41.
C)$200.
D)$210.
Chapter 15: Income Inequality and Poverty
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Sample Questions
Q1) Since 1970, income inequality in the United States has A)decreased.
B)increased.
C)remained the same.
D)increased throughout the 1970s and 1980s but fell during the 1990s.
Q2) Figure 15-4 shows the Lorenz Curve for three countries, I, II, and III. Which of the following statements is true?
A)Country I has the most unequal income distribution.
B)Country II has the most unequal income distribution.
C)Country I has the most equal income distribution.
D)Country III has the most equal income distribution.
E)Country II has a more equal income distribution than Country I.
Q3) Assume that Jill is a single parent who is in poverty. She receives food stamps and Medicaid. For every $100 that she earns, Jill loses $20 of her food stamp benefits and $15 in her Medicaid benefits. Jill's implicit marginal tax rate from these two programs is
A)20 percent.
B)30 percent.
C)35 percent.
D)45 percent.
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Page 23
Chapter 16: Appendix: Government Spending and Taxation
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Q1) Government expenditures for Social Security and unemployment benefits are examples of
A)government consumption.
B)government investment.
C)government purchases.
D)transfer payments.
Q2) How has the share of the personal income tax paid by the rich (the top 1 percent of earners) and the not-so-well-off (the bottom half of earners) changed during the last four decades?
A)The rich now pay a larger share and the not-so-well-off pay a smaller share of the personal income tax.
B)The rich now pay a smaller share and the not-so-well-off pay a larger share of the personal income tax.
C)The share of the personal income tax paid by the rich increased between 1960 and 1980, but the share of the revenues collected from the rich has declined sharply since 1980.
D)The relative shares paid by the rich and the not-so-well-off have been virtually unchanged during the last four decades.
Q3) Discuss how size of government can negatively affect economic growth.
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Page 24
Chapter 17: Appendix: the Economics of Social Security
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Q1) Which of the following tends to increase the attractiveness of a retirement system based on savings and investment rather than pay-as-you-go principles?
A)a persistent increase in the number of workers relative to the number of retirees
B)a large number of workers relative to the number of retirees
C)a reduction in the number of workers relative to the number of retirees
D)a persistent increase in the life expectancy of retirees.
Q2) The Social Security retirement program is financed by a 10.6 percent payroll tax that applies to earnings up to an income cutoff that is adjusted upward annually by the growth rate of nominal wages. As of 2011, the income cutoff was
A)$15,000.
B)$32,700.
C)$106,800.
D)$250,000.
Q3) Briefly explain why the Social Security system will face a "crisis" in the coming years.
Q4) Jane states that "Social Security is an unfair program. It discriminates against married women in the workforce and middle-income recipients." Evaluate this view.
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Page 25
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Q1) Buying shares of corporate stock tends to be more risky when A)the stock of a single corporation is purchased.
B)the stock may have to be sold within a few months.
C)all stocks bought are in the same industry.
D)all of the above are true.
Q2) Since 1802, the American stock market has yielded an average annual real return (the return adjusted for inflation) of approximately
A)3 percent.
B)5 percent.
C)7 percent
D)11 percent.
Q3) Does it ever make sense to purchase a stock that has never paid a dividend? Explain.
Q4) Currently, about ____ of U.S. households own stock, either directly or through an equity mutual fund.
A)10 percent
B)20 percent
C)50 percent
D)80 percent
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Chapter 19: Appendix: Great Debates in Economics: Keynes Versus
Hayek
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Q1) In his book The Road to Serfdom, Friedrich Hayek argued that the growth of government
A)was essential if the ups and downs of the business cycle were going to be controlled.
B)must be increased if western democracies were going to survive.
C)could only be achieved if monetary policy-makers were willing to expand the supply of money more rapidly.
D)endangered freedom and moved Western democracies toward tyranny, just as it had done in Nazi Germany and the Soviet Union.
Q2) Adam Smith stated, "The man of system is apt to be very wise in his own conceit. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board." Which is true of this statement?
A)Keynes would tend to agree with the statement; Heyek would disagree with it.
B)Keynes would tend to disagree with the statement; Hayek would agree with it.
C)As the rap video indicates, both Keynes and Hayek strongly agree with this statement.
D)As the rap video indicates, both Keynes and Hayek strongly disagree with this statement.
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Page 27
Chapter 20: Appendix: the Crisis of 2008: Causes and Lessons for the Future
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Q1) Which of the following describes the relationship between interest rates and interest-sensitive goods, such as housing?
A)As interest rates decline, the demand for interest-sensitive goods increases.
B)As interest rates decline, the demand for interest-sensitive goods decreases.
C)As interest rates increase, the demand for interest-sensitive goods increases, driving prices upward.
D)As interest rates increase, the demand for interest-sensitive goods decreases, driving prices upward.
Q2) Which of the following makes it difficult for monetary policy-makers to institute policy changes in a manner that will promote economic stability?
A)Monetary policy-makers do not have sufficient tools to alter the supply of money.
B)The time lags between changes in monetary policy and when the changes exert an impact on output and prices are long and variable.
C)Monetary policy is unable to alter short-term interest rates.
D)Even though monetary policy can alter interest rates, there is little evidence that interest rates influence the demand for and prices of housing.
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Chapter 21: Appendix: Lessons From the Great Depression
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Q1) Why do nations impose trade barriers, such as those instituted during the Great Depression, that make it difficult for their own citizens to trade with people in other countries?
A)Trade restrictions are a good way for a country to increase the total employment and income level of its citizens.
B)As the experience during the 1930s illustrates, trade restrictions are an effective way to increase exports and tax revenues.
C)Trade restrictions provide gains to domestic residents at the expense of foreigners.
D)Trade restrictions often provide benefits to highly visible special interest groups while imposing a less visible cost on the general populace.
Q2) How do high tariffs and other restraints on international trade affect a nation's prosperity?
A)They increase employment and thereby promote the growth of GDP.
B)They prevent a nation from fully realizing the potential gains from specialization, exchange, and competition.
C)They protect domestic producers and thereby promote economic growth.
D)Both a and c are correct.
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Chapter 22: Appendix: the Economics of Healthcare
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Q1) What percentage of U.S. healthcare expenditures is currently paid for by a third party, either the government or an insurance company?
A)less than 10 percent
B)approximately 30 percent
C)approximately 50 percent
D)more than 85 percent
Q2) During the last four decades, the share of health-care expenditures paid for by third parties (either the government or insurance companies)
A)has remained relatively constant.
B)fell from approximately 60 percent in 1960 to 30 percent in 2007.
C)increased from approximately 45 percent in 1960 to over 85 percent in 2007.
D)declined during the 15 years following the passage of Medicare but has been increasing since 1980.
Q3) The only two options to control the growth of healthcare spending are
A)price controls and political rationing or competition and market prices.
B)taxation or political mandates.
C)subsidizing of healthcare insurance or government provision of healthcare.
D)free healthcare or subsidized healthcare.
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Chapter 23: Appendix:education: Problems and Performance
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Q1) During the 2009-2010 school year, how many students attended charter schools?
A)250,000
B)700,000
C)1,100,000
D)1,600,000
Q2) A school voucher program targeted towards low- and middle-income families would cause
A)racial and economic segregation among schools to rise.
B)per-pupil funding in the public schools to fall.
C)salaries for outstanding teachers to rise.
D)competition between public and private schools to fall.
Q3) Which of the following is true?
A)A school voucher program targeted towards low- and middle-income families would cause an increase in the degree of racial and economic segregation among schools.
B)Charter schools are often operated by religious organizations.
C)An expansion in school voucher programs would tend to increase the salaries of excellent teachers.
D)School voucher programs would reduce the degree of competition between public and private schools.
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Chapter 24: Appendix: Earnings Differences Between Men and Women
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Q1) Which of the following is true about those graduating with college degrees?
A)The proportion of college degrees earned by women has been declining in recent decades.
B)The proportion of college degrees earned by women has been virtually constant during the last four decades.
C)In 2008, only about 42 percent of those graduating from college were women.
D)In 2008, only about 42 percent of those graduating from college were men.
Q2) When employment discrimination results from the personal prejudices of employers, economic theory suggests that
A)employers who discriminate will have lower production costs.
B)the wages of employees who are discriminated against will rise.
C)employers who discriminate will have the same production costs as those who do not discriminate.
D)employers who discriminate will have lower profits.
Q3) Traditionally, men have been more willing to accept jobs that
A)required continuous employment in the labor force.
B)require relocation if necessary to get a higher paying job.
C)have long working hours.
D)All of the above are correct.
Page 32
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Chapter 26: Appendix: the Question of Resource Exhaustion
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Q1) Non-renewable resources are those that
A)are not renewed by nature, but their supply can be easily expanded by humans.
B)are naturally renewed by nature; timber provides an example.
C)are not renewed by nature, at a significant rate.
D)cannot be recycled, by their very nature.
Q2) Which of the following statements is true about the demand for and/or the supply of natural resources?
A)The supply curve for natural resources is more elastic in the long run than in the short run.
B)The elasticity of demand for electricity, natural gas, and gasoline equals approximately 0.1 in both the short run and the long run.
C)Natural resources are demanded by consumers and producers in steadily growing amounts, so future shortages are inevitable.
D)The supply of many natural resources is finite; thus the long-run elasticity of supply must be zero.
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Chapter 25: Appendix: Do Labor Unions Increase the Wages of Workers
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Q1) Measured as a share of the labor force, union membership was at its highest level in the United States during the A)1930s
B)1950s
C)1970s
D)1990s
Q2) The experience of the Teamsters in the late 1970s and early 1980s suggests that A)there are few restraints on the ability of a strong union to increase the wages of its members.
B)product market competition with goods made from (or services provided by) nonunion labor significantly limits the ability of a union to get increased wages for its members.
C)higher wages tend to stimulate aggregate demand, which makes it easier for a union to gain still higher wages.
D)wages are established by the relative skill of union and management negotiators, independent of market conditions.
Q3) In a strike, what does the union have to lose? What does management lose?
Q4) What common goals, if any, do labor and management share?
Q5) List some factors that might make the threat of a strike more effective.
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Chapter 27: Appendix: Difficult Environmental Cases and the
Role of Government
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Q1) An economist would argue that global warming is
A)unquestionably a human-generated problem that should be stopped immediately at all costs.
B)simply fear mongering, for there is no scientific evidence that the average temperature on earth is changing.
C)likely to cause massive starvation as temperatures on earth rise, reducing agricultural productivity.
D)a serious issue that may best be addressed primarily by making changes as problems occur in the future.
Q2) Which of the following is, so far, the most utilized method to reduce emissions of industrial pollution to politically chosen levels, while encouraging efficient choices by polluters?
A)government pollution charges or taxes
B)non-tradable emission standards that cap allowable pollution for each emitter
C)cap and trade emission permits
D)regulations that would effectively prohibit all emissions
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