Principles of Microeconomics Exam Practice Tests
Course Introduction
Principles of Microeconomics introduces students to the fundamental concepts and analytical tools used to study the behavior of individuals, households, and firms in making decisions about the allocation of scarce resources. Topics include supply and demand, market equilibrium, elasticity, consumer and producer theory, market structures such as competition and monopoly, and the role of government in addressing market failures. The course emphasizes the application of microeconomic principles to real-world issues, fostering critical thinking and problem-solving skills relevant to economic decision-making.
Recommended Textbook
Microeconomics Private and Public Choice 14th Edition by James D. Gwartney
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33 Chapters
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Page 2
Chapter 1: The Economic Approach
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Sample Questions
Q1) When economists say a good is scarce, they mean
A)there are only a limited number of consumers who would be interested in purchasing the good.
B)the human desire for the good exceeds the amount freely available from nature.
C)most people in poorer countries do not have enough of the good.
D)the production of the good has no opportunity cost for society.
Answer: B
Q2) Because information is costly to acquire,
A)people will rationally choose not to become fully informed when making decisions.
B)people will generally choose to become as fully informed as possible when making decisions.
C)people will generally choose to acquire no information that would be relevant to their decisions.
D)none of the above are true.
Answer: A
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3
Chapter 2: A: Some Tools of the Economist
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Sample Questions
Q1) Points A and B in Figure 2-3 indicate consumption and investment for two economies. Other things constant, which of the economies is likely to grow more rapidly in the future?
A)economy A
B)economy B
C)They can be expected to grow at the same rate.
D)This is uncertain since growth is not influenced by the factors indicated in this example.
Answer: B
Q2) Which of the following is true regarding value and exchange?
A)Middlemen fail to create value since they do not expand the supply of physical goods.
B)A good or service has a given value regardless of who uses it or how it is used.
C)If it were not for middlemen, transaction costs would be zero.
D)Voluntary exchange creates value by channeling goods into the hands of people who value them most.
Answer: D
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Chapter 2: B: Some Tools of the Economist
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Sample Questions
Q1) A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are being used efficiently. If an economy operates at a point inside its production possibilities curve,
A)it lacks the resources necessary to produce at full employment.
B)it is utilizing some resources inefficiently.
C)it does not confront the problem of scarce goods relative to unlimited wants.
D)it does not exist in the real world since it is impossible for an economy to operate inside its production possibilities curve.
Answer: B
Q2) The process by which new products and methods of production are continuously replacing old ones is known as:
A)opportunity cost.
B)the production possibilities frontier.
C)creative destruction.
D)the fallacy of composition.
Answer: C
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Chapter 3: A: Supply, Demand, and the Market Process
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Sample Questions
Q1) The price of a good will tend to rise when
A)there is excess demand for the good.
B)there is excess supply of the good.
C)demand for the good decreases.
D)the supply of the good increases.
Q2) When economists say the demand for a product has increased, they mean the
A)demand curve has shifted to the right.
B)price of the product has fallen, and consequently, consumers are buying more of it.
C)cost of producing the product has risen.
D)amount of the product that consumers are willing to purchase at various prices has decreased.
Q3) When economists say the quantity demanded of a product has increased, they mean the
A)demand curve has shifted to the left.
B)demand curve has shifted to the right.
C)price of the product has fallen, and consequently, consumers are buying more of it.
D)price of the product has risen, and consequently, consumers are buying less of it.
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6
Chapter 3: B: Supply, Demand, and the Market Process
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Q1) Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause
A)an increase in the supply of piercings and a lower price for piercings.
B)an increase in the supply of piercings and a higher price for piercings.
C)a decrease in the supply of piercings and a higher price for piercings.
D)a decrease in the supply of piercings and a lower price for piercings.
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 is the "invisible hand" referred to in this statement?
A)the elasticity of the market demand curve
B)the power of government when decisions are made democratically C)the guidelines and regulations set for his industry by the government
D)the incentive structure accompanying market prices
Q3) Suppose a person defects from Cuba (a country that generally disregards the use of markets) to the United States and asks to see a market in action. Where would you take her? Did you give her a complete showing of this market?
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Chapter 4: A: Supply and Demand: Applications and Extensions
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Sample Questions
Q1) When a tax is imposed on a good, the actual incidence of the tax generally
A)falls entirely on the buyer.
B)falls entirely on the seller.
C)is shared between the buyer and seller.
D)is the same as the statutory incidence.
Q2) When a tax is imposed on a good,
A)the supply curve for the good always shifts.
B)the demand curve for the good always shifts.
C)the amount of the good that buyers are willing to buy at each price always remains unchanged.
D)the equilibrium quantity of the good always decreases.
Q3) If we observe long lines of people camping out to get tickets to a concert, this tells us
A)the ticket price is below the market equilibrium price.
B)the ticket price is above the market equilibrium price.
C)it is likely to be a good concert, but it doesn't tell us anything about the ticket price.
D)the opportunity cost of time of the people in line is higher than the average for the general population.
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Page 8
Chapter 4: B: Supply and Demand: Applications and Extensions
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Sample Questions
Q1) Refer to Figure 4-20. The amount of the tax per unit is
A)$1.
B)$2.
C)$3.
D)$5.
Q2) When the price of a good is legally set below the equilibrium level, a shortage often results. This shortage
A)is a temporary failure of the market mechanism.
B)is the result of a shift in demand.
C)is the result of a shift in supply.
D)occurs because the price ceiling prevents the market mechanism from establishing an equilibrium price.
Q3) 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.
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Page 9
Chapter 5: Difficult Cases for the Market and the Role of Government
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Sample Questions
Q1) The "free rider problem" occurs in connection with A)private goods.
B)both public and private goods.
C)goods that are not scarce. D)public goods.
Q2) When a nuclear-powered electrical plant is permitted to dump radioactive waste at no cost into a recreational waterway lowering the value boaters receive from the waterway, the A)firm's cost of producing electricity will be higher than the community's true opportunity cost.
B)firm will tend to produce too little electricity from the viewpoint of economic efficiency. C)community generally receives an external benefit from the production of electricity. D)firm's cost of producing electricity will be lower than the community's true opportunity cost.
Q3) Why is a stable monetary system essential for the smooth operation of a market system? What would an unstable monetary system be like? Why isn't a barter economy just as efficient as an economy with money?
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Page 10
Chapter 6: The Economics of Collective Decision-Making
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Sample Questions
Q1) Public choice theory indicates that representative government yields outcomes more consistent with economic efficiency when a close relationship exists between the benefits received and the costs borne by each voter. Which of the following methods of financing a government program will most likely result in a close relationship between voter benefits and costs?
A)progressive income tax
B)retail sales tax
C)property tax
D)user charges
Q2) From the standpoint of society as a whole, rent seeking is
A)counterproductive because it takes resources away from the creation of wealth in the private sector.
B)counterproductive because it fails to alter public policy.
C)productive because each interest group gains more than they spend on rent-seeking activities.
D)productive because the resources used in rent seeking have no opportunity cost to society.
Q3) Suppose domestic automobiles were allocated in the United States the way public education is allocated. Describe how this system might work.
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Chapter 7: Consumer Choice and Elasticity
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Sample Questions
Q1) A local restaurant offers an "all you can eat" ribs special. You pay $11.95, and then you can eat as many servings as you desire at no additional cost. It would follow that you will stop eating when
A)your marginal utility (or value) derived from eating another serving is zero.
B)your total utility (or value) derived from all of the servings consumed just equals $11.95.
C)your marginal utility (or value) derived from another serving equals $11.95.
D)it is physically impossible for you to eat any more.
Q2) Suppose there are only two goods, apples and oranges. What happens if the price of each good increases by 15 percent?
A)The consumer will substitute apples for oranges.
B)The consumer will substitute oranges for apples.
C)There is no substitution effect because relative prices have remained constant.
D)Demand for both goods increases.
E)Demand for both goods decreases.
Q3) Mark complains: "I can't believe they raised the price of comic books, and because of this, I'm going to reduce my demand for comic books." Is Mark stating the concept of demand correctly?
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Page 12
Chapter 8: A: Costs and the Supply of Goods
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Sample Questions
Q1) The minimum points of the average variable cost and average total cost curves occur where
A)the marginal cost curve lies below the average variable cost and average total cost curves.
B)the marginal cost curve intersects those curves.
C)the average variable cost and average total cost curves intersect.
D)the slope of total cost is the smallest.
Q2) Advantages of the corporate form of business organization include
A)the ease of transferring ownership in a corporation.
B)the limited liability concept that protects the stockholder from potential debts incurred by the corporation.
C)the lack of employee shirking that occurs in corporations.
D)both a and b.
Q3) What is the firm's total cost in Figure 8-1 when it produces four units?
A)11
B)15
C)60
D)75
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13
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) Kim used to work at "The Big One" accounting firm, and she earned $50,000 a year. She saved her money and has now invested $100,000 in her own firm. Profit is $20,000 a year, which Kim receives as her only compensation. She concludes that this is great because a 20 percent return is much better than the 8 percent she could get in another investment (the opportunity cost of the funds). What is wrong with this line of thinking?
Q3) 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?
Q4) 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?
Q5) The AB Manufacturing Company has hired an economist to evaluate its financial situation. She explains to the board of directors that the company is making zero economic profit. Should the company go out of business?
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Page 14
Chapter 9: A: Price Takers and the Competitive Process
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Sample Questions
Q1) Refer to Scenario 9-1. At Q = 1,000, the firm's profit amounts to A)-$200.
B)$1,000.
C)$3,000.
D)$4,000.
Q2) If a profit-maximizing firm shuts down in the short run, it must be true that before the shutdown, at all positive output levels,
A)average total cost was less than average variable cost
B)fixed cost was greater than total revenue
C)variable cost was greater than total revenue
D)profit was zero
E)total cost plus total revenue was less than profit
Q3) In a price-taker market, the short-run market supply curve is the
A)vertical sum of the marginal cost curves of all firms in the market.
B)vertical sum of the average variable cost curves of all firms.
C)horizontal sum of the marginal cost curves of all firms so long as price exceeds average variable cost.
D)horizontal sum of the average total cost curves of all the firms in the market so long as average total cost exceeds the market price.
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Page 15
Chapter 9: B: Price Takers and the Competitive Process
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Sample Questions
Q1) If the demand for pizza falls, pizza suppliers will suffer economic losses, and some firms will leave the industry. Why is this considered good? Shouldn't we feel sorry for these business owners?
Q2) "I'm losing money, but having invested so much in equipment, I simply cannot afford to shut down." If the firm were attempting to maximize profit, this decision may be
A)correct if the firm is covering its fixed costs.
B)incorrect because a firm experiencing economic losses should never continue to operate.
C)correct if the firm is covering its variable costs and expects the price of its product to rise in the near future.
D)incorrect since the firm's fixed costs are sunk costs.
Q3) 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.
Q4) Why is it considered "ideal" for price to just equal marginal cost?
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Page 16
Chapter 10: Price-Searcher Markets With Low Entry Barriers
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Sample Questions
Q1) What is the maximum economic profit this firm depicted in Figure 10-9 will be able to earn?
A)zero profit
B)$200 profit
C)$400 profit
D)$600 profit
Q2) Airfares are generally cheaper if they include a Saturday night stay at the destination. This is because
A)hotels give the airlines kickbacks to price this way.
B)business travelers are less likely than leisure travelers to be willing to stay Saturday night away from home, and business travelers will generally have more inelastic demand for air travel.
C)business travelers are less likely than leisure travelers to be willing to stay Saturday night away from home, and business travelers will generally have more elastic demand for air travel.
D)this reduces the demand for travel on Saturdays, which is a high-cost day to fly airplanes.
Q3) What type of model would be best if we wanted to analyze the market for fast food? Why?
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Page 17
Chapter 11: A: Price-Searcher Markets With High Entry
Barriers
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Sample Questions
Q1) In the case where a natural monopoly exists in an industry,
A)a competitive market structure will be costly and difficult to maintain.
B)a competitive market structure will be more efficient and more equitable.
C)government regulations will always improve efficiency in this industry.
D)economies of scale will not be a consideration when analyzing the proper structure of the industry.
Q2) Which one of the following factors reduces the likelihood that a cartel agreement will lead to higher producer profit?
A)significant barriers to entry into the cartelized market
B)the development of substitutes for the good produced by the cartel
C)government restrictions that limit competition from new rivals
D)a small number of sellers involved in the cartel agreement
Q3) Refer to Figure 11-17. The average total cost curve for a monopoly firm is depicted by curve
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Chapter 11: B: Price-Searcher Markets With High Entry
Barriers
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Q1) Under what conditions can a monopolist have potentially lower costs and possibly charge a lower price than would exist if the market were competitive?
A)when the monopolist operates on the inelastic portion of the demand curve
B)when the monopolist is a profit maximizer rather than a revenue maximizer
C)when substantial diseconomies of scale are present
D)when substantial economies of scale are present
Q2) Mr. Stewart owns the only hardware store in a small Midwestern town. His nearest competition is more than 50 miles away, yet he does not earn any economic profit. Does someone need to explain the economic concept of monopoly to him?
Q3) Why does the U.S. government maintain a monopoly in the delivery of first-class mail? Does the Postal Service nevertheless face other forms of competition?
Q4) Which of the following is true under natural monopoly?
A)the monopolist will ignore consumers' desires.
B)the marginal cost curve will lie below the average total cost curve.
C)the monopolist will set price equal to marginal cost and will earn economic profits.
D)output is produced under conditions of constant cost.
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Page 19
Chapter 12: The Supply of and Demand for Productive Resources
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Q1) Which of the following expresses the correct decision-making rule for a profit-maximizing firm hiring units of labor?
A)If the MRP was rising, less labor would be employed as time passed.
B)The firm should continue to hire workers as long as their MRP is greater than the wage rate.
C)The firm should continue to hire workers until the total costs of all workers equals the total revenue from the output of the workers.
D)The firm should continue to hire workers until the wage rate equals the price of the product.
Q2) Unions often attempt to obtain stricter certification requirements and/or longer apprenticeships. These changes will tend to raise union workers' wages because they A)create unnecessary unemployment.
B)shift the labor supply curve leftward.
C)decrease the marginal product of labor.
D)increase the demand for the product.
Q3) There is an Italian soccer player who makes more than $10 million a year. Why?
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Page 20
Chapter 13: Earnings, Productivity, and the Job Market
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Q1) Given the amount of time and other costs of investing in human capital that it takes to earn a Ph.D., why are college professors paid less than other occupations that require similar or lesser amounts of human capital?
Q2) Economic theory suggests that the standard of living of American workers would rise if
A)the minimum wage were doubled.
B)automation was outlawed.
C)the amount of physical capital increased.
D)technological setbacks lowered output per worker hour.
Q3) Which of the following is true?
A)When workers are more productive, the demand for their services will be higher.
B)In order to earn a large income, one must provide large benefits to others.
C)High productivity (a large output per hour worked) is the key to high earnings for both individuals and countries.
D)All of the above are true.
Q4) Joanne states: "The best way to increase the wages of workers is to increase worker productivity." Is Joanne correct? Why or why not?
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21
Chapter 14: Investment, the Capital Market, and the Wealth of Nations
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Q1) If the money rate of interest is 9 percent and the real rate of interest 6 percent, the inflationary premium is
A)3 percent.
B)6 percent.
C)9 percent.
D)12 percent.
Q2) For the past several decades, the percentage of national income in the United States allocated to physical capital (rents, interest, profit) has been approximately A)20 percent.
B)40 percent.
C)60 percent.
D)80 percent.
Q3) If an investment project costing $2,700 was expected to yield $1,000 (to be received at year end) for each of the next three years, a profit-maximizing entrepreneur would A)definitely undertake the project.
B)never undertake the project.
C)undertake the project if the interest rate exceeded 12 percent.
D)undertake the project if the interest rate was 5 percent or less.
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Chapter 15: Income Inequality and Poverty
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Q1) When deciding whether to classify a family as in poverty, official figures
A)count all transfer and welfare benefits received by the family as income.
B)do not count in-kind benefits in the calculation of the family's income.
C)do not count cash benefits in the calculation of the family's income.
D)do not count any transfer or welfare benefits as income.
Q2) As shown in Figure 15-1, 60 percent of families earned a cumulative share of about ____ of income.
A)5 percent
B)15 percent
C)30 percent
D)50 percent
Q3) Data indicate that the large increase in government spending on income transfers that started with the War on Poverty during the latter half of the 1960s has resulted in A)a substantial reduction in the poverty rate.
B)a more equal distribution of income.
C)fewer single-parent families because a married couple receives benefits twice as large.
D)little change in the official poverty rate.
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Chapter 16: Appendix: Government Spending and Taxation
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Q1) How much does it cost to tax a dollar of revenue away from the private sector and transfer it to the government to finance a government program?
A)one dollar
B)less than one dollar because the administration of and compliance with the tax laws creates jobs for people
C)more than a dollar because collection of the taxes requires resources that would otherwise be available for private sector production
D)more than a dollar because of the excess burden resulting from the elimination of productive exchanges by the taxes
E)Both c and d are correct.
Q2) Which of the following provides the bulk of revenue for the federal government?
A)corporate income taxes and grants from state and local governments
B)personal income and payroll taxes
C)user charges and funds borrowed from the general public
D)corporate income and sales taxes
Q3) As real incomes grow, what happens to federal tax revenues as a share of the economy?
Q4) 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) As the baby boom generation, born during 1946 through 1960, reaches retirement age during the 2011 through 2030 period, the number of workers per Social Security beneficiary is expected to
A)increase to five.
B)remain constant at approximately seven.
C)decline to approximately five.
D)decline to approximately two.
Q2) When the Social Security system enters its deficit years and the bonds held in the trust funds are drawn down,
A)overall taxes will be reduced as the trust funds are used to pay benefits to retirees.
B)the payroll taxes used to finance Social Security benefits can be reduced because the trust funds will be sufficient to pay the retirement benefits of the baby boom generation.
C)income and other federal taxes will have to be raised (or additional funds will have to be borrowed) in order to redeem the bonds held by the trust fund.
D)income taxes will have to be reduced in order to keep the revenues and expenditures of the Social Security system in balance.
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25
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Q1) Consider a stock with a 50 percent probability of zero net earnings and a 50 percent probability of net earnings equal to $20 per share each year continuously in the future. Furthermore, assume that people are risk averse: That is, they will have to be compensated for uncertainty accompanying variation in their future wealth. If the interest rate were 5 percent, how much would people be willing to pay for a share of this stock?
A)$10
B)$200
C)less than $200
D)more than $200
E)$400
Q2) A firm's stock price will be higher when the interest rate is ____ and the value of the firm's expected future profits are ____.
A)lower; larger
B)lower; smaller
C)higher; larger
D)higher; smaller
Q3) Does it ever make sense to purchase a stock that has never paid a dividend? Explain.
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Chapter 19: Appendix: Great Debates in Economics: Keynes Versus
Hayek
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Q1) John Maynard Keynes and Friedrich Hayek
A)had similar views with regard to the cause of the Great Depression and what might be done to prevent it from happening again.
B)both believed that perverse monetary policy was the primary cause of the ups and downs of the business cycle.
C)both believed that budget deficits and surpluses could be used to smooth the ups and downs of the business cycle.
D)had polar opposite views with regard to the underlying causes of economic booms and bust, but nonetheless their scholarly work commanded widespread respect among economists.
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27
Chapter 20: Appendix: the Crisis of 2008: Causes and Lessons for the Future
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Q1) Which of the following contributed to the rising mortgage default and foreclosure rates and the eventual economic crisis of 2008?
A)tightened mortgage lending standards and the reduction of loanable funds during 2001-2005
B)the increase in the greed of Wall Street bankers and other commercial lenders
C)the substantial increase in sub-prime and adjustable rate mortgages as a share of the total during 2001-2006
D)the increase in the household savings rate during the two decades following 1985
E)the increase in fixed rate mortgages as a share of the total during the decade prior to the crisis
Q2) When interest payments on home mortgages and home equity loans are tax deductible,
A)households will keep other forms of debt separate from their home mortgage.
B)households will shift other forms of debt to their home mortgage.
C)households are likely to increase the amount of equity in their home.
D)the overall amount of household debt is likely to decrease in relation to household income.
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Page 28
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) Which of the following factors contributed to a breakdown of the economy during the Great Depression?
A)a sharp increase in tax rates in 1932
B)a sharp decline in the money supply during 1929 through 1933
C)a sharp increase in tariff rates during 1930
D)all of the above
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Chapter 22: Appendix: the Economics of Healthcare
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Source URL: https://quizplus.com/quiz/28934
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Q1) Economic analysis indicates that the increasing government expenditures and growth of third-party payments accompanying the Medicare and Medicaid programs
A)reduced the demand for healthcare services.
B)reduced the incentive of consumers to economize on their use of healthcare.
C)increased the incentive of consumers to economize on their use of healthcare.
D)placed downward pressure on the prices of healthcare services.
Q2) Third-party payments by either the government or an insurance company accounted for ____ of the 2009 healthcare expenditures, compared to ____ paid by third parties in 1960.
A)40 percent; 20 percent
B)20 percent; 40 percent
C)86 percent; 45 percent
D)96 percent; 73 percent
Q3) When health insurance is purchased primarily through one's employer,
A)direct purchase of health insurance becomes cheaper.
B)the benefits of the healthcare insurance are fully taxable.
C)it is more costly for employees to switch jobs and move to areas where jobs are available.
D)the overall number of people without health insurance decreases.
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Chapter 23: Appendix:education: Problems and Performance
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Q1) In contrast to schools in a voucher system, charter schools are
A)not allowed to be religious schools.
B)not allowed to charge tuition.
C)not exempt from a variety of standards including financial, safety, and educational outcomes.
D)All of the above apply to charter schools.
Q2) Compared to a system based on customer choice and competition, the current structure of the educational system tends to ____ education costs and ____ the quality of education.
A)lower; lower
B)lower; raise
C)raise; lower
D)raise; raise
Q3) Which of the following is true?
A)The impact of charter schools on student achievement is inconclusive.
B)Most parents of students in charter schools indicate they are dissatisfied with their children's schools.
C)Charter schools are more racially segregated than traditional public schools.
D)Charter schools tend to reduce the level of competition between schools.
Q4) What are charter schools? How do they differ from voucher programs?
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Chapter 24: Appendix: Earnings Differences Between Men and Women
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Q1) Which of the following is true?
A)Employers who discriminate against women will have lower costs than rival firms that hire employees strictly on the basis of merit (productivity).
B)If employers can hire equally productive female employees at a lower wage than males, the profit motive gives them a strong incentive to do so.
C)The female/male earnings ratio is higher for persons who are married than for those who remain single.
D)Both a and c are true.
Q2) If a firm refuses to hire any females due to a personal prejudice, its profits will A)increase markedly.
B)decrease.
C)not be affected.
D)increase slightly.
Q3) "If it were not for employment discrimination against women, the average earnings of men and women would be equal." Is this statement true or false?
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32
Chapter 26: Appendix: the Question of Resource Exhaustion
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Q1) While the price of a resource may increase sharply during some periods, the structure of ____ accompanying the price increase makes depletion highly unlikely and provides the seeds for future reversal.
A)government programs
B)foreign competition
C)incentives
D)taxation
Q2) In the Central Utah Project, the water delivered from dams to users
A)is very well utilized, because planners allocated water to its highest valued uses and users.
B)cannot generally be traded, so is often wastefully used in low-valued uses.
C)is often sold to water-short cities by farmers who can then enjoy a profit from the sale.
D)is very expensive to the users who get it.
Q3) Compared with 1920, the United States today has
A)far less forest land.
B)far more forest land.
C)about the same amount of forest land.
D)far fewer trees growing per acre of forest land.
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Chapter 25: Appendix: Do Labor Unions Increase the Wages of Workers
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Q1) Which of the following is not a cause of the decline in unionization in the United States?
A)deregulation in transportation and communication industries
B)increased foreign competition
C)growth in the number of smaller firms
D)an increase in the number of workers wishing to be union members
Q2) A union representing a group of workers will tend to be stronger when
A)there are no good substitutes for the labor services of the unionized workers.
B)the domestic producers of the good produced by the unionized workers face intense competition from foreign suppliers of the good.
C)the cost of employing the unionized workers is a large part of the total cost of the product that they produce.
D)the demand for the good produced by the unionized workers is highly elastic.
Q3) Which of the following is most likely to belong to a union?
A)a government employee
B)a salesperson
C)a chef at a four-star restaurant
D)a taxi driver
Q4) What common goals, if any, do labor and management share?
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Chapter 27: Appendix: Difficult Environmental Cases and the
Role of Government
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Q1) When a park is funded by visitors but not by taxpayers in general,
A)there will be too few parks because most people will not pay to use a park.
B)visitors will be better served because poor service would lead to reductions in revenues.
C)park budgets will decline.
D)park quality will decline.
Q2) When is the definition and enforcement of property rights especially difficult?
A)When many polluters harm a large group of people with the same pollutant.
B)When a single polluter is harming a single person or entity.
C)When land is owned by a corporation.
D)When the benefits of prosecution are clear.
Q3) Government regulation is
A)subject to the same problems of lack of information and lack of incentives for economic efficiency as centrally planned economies.
B)the only reliable way to improve environmental quality.
C)not subject to political concerns when it comes to environmental quality.
D)the most economically efficient way to reduce greenhouse gases.
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