Question 1

The Salvation Army is an example of a(n) :​

Accepted Answer

A)  military organization.
B)  not-for-profit organization.
C)  partnership.
D)  S corporation.
E)  U.S. government agency.F) A) and B)
G) A) and D)

Question 2

Which of the following taxes is most clearly based on the benefits-received principle of taxation?​

Accepted Answer

A)  Corporate income tax
B)  Gasoline tax​
C)  Personal income tax​
D)  Payroll tax​
E)  Value added tax​F) C) and D)
G) B) and C)

Question 3

Chris had a before-tax income of $20,000 and paid taxes of $3,000. Pat had a before-tax income of $10,000 and paid taxes of $1,000. Based on this information, which of the following is correct?​

Accepted Answer

A)  The tax system is regressive.
B)  The tax system is proportional.
C)  The tax system is progressive.
D)  The tax system is based on the benefits received.
E)  There is insufficient information to answer the question.F) B) and E)
G) C) and D)

Question 4

A common assumption that economists make about the behavior of elected officials is that they try to:​

Accepted Answer

A)  maximize the size of their government salaries.
B)  maximize their control over the budget process.
C)  maximize the number of votes they receive in the next election.
D)  minimize the government's expenditures in order to balance the budget.
E)  conform to the wishes of special interest groups so that the government behaves as a single, consistent decision maker.F) None of the above
G) B) and D)

Question 5

Suppose you own a proprietorship that is in serious financial difficulty. The assets of the company are $100,000 but liabilities are $175,000. You also have, however, stock in General Motors worth $200,000. If you file for bankruptcy, what amount of personal assets do you stand to lose?​

Accepted Answer

A)  $100,000
B)  $75,000​
C)  $200,000​
D)  $275,000​
E)  $375,000​F) A) and E)
G) B) and C)

Question 6

Consider a system in which a person earning $10,000 pays $1,000 in taxes, a person earning $25,000 pays $2,000, and someone earning $60,000 pays $4,000. This is an example of:​

Accepted Answer

A)  progressive taxation.
B)  proportional taxation.
C)  regressive taxation.
D)  a property tax.
E)  a tax based on the benefits-principle of taxation​F) B) and D)
G) A) and D)

Question 7

A large number of businesses are organized as sole proprietorships because it is easy for them to acquire large amounts of financing.​

Accepted Answer

A) True 
 B)False

Question 8

Which category includes the largest number of firms?​

Accepted Answer

A)  Sole proprietorship
B)  Partnership​
C)  Corporation​
D)  S corporation​
E)  Limited partnershipsF) A) and D)
G) A) and E)

Question 9

Federal individual income taxes illustrate the ability-to-pay principle of taxation.​

Accepted Answer

A) True 
 B)False

Question 10

Katie had a before-tax income of $40,000 and paid taxes of $6,000. Rinji had a before-tax income of $35,000 and paid taxes of $5,250. Based on this information, the tax system is:​

Accepted Answer

A)  regressive for all income levels.
B)  proportional.
C)  progressive.
D)  based on the ability-to-pay principle.
E)  regressive for income levels between $35,000 and $40,000.F) C) and E)
G) None of the above

Question 11

Which of the following includes the four basic resources supplied by households?​

Accepted Answer

A)  Natural resources, labor, intelligence, capital
B)  Money, labor, natural resources, entrepreneurial ability​
C)  Intellectual ability, physical ability, money, natural resources​
D)  Labor, capital, intelligence, entrepreneurial ability​
E)  Labor, natural resources, entrepreneurial ability, capital​F) C) and D)
G) C) and E)

Question 12

A realized capital gain is:​

Accepted Answer

A)  the difference between the price of a share of stock and what the investor paid for it (i.e., the broker's fee) .
B)  the difference between the original value of a piece of equipment and its depreciated value.
C)  an increase in the net worth of a sole proprietorship or partnership.
D)  an increase in the market value of a share of stock held by an individual.
E)  the difference between the selling price and the purchase price of a share of stock.F) A) and B)
G) A) and C)

Question 13

Household income is spent on all of the following except one. Which is the exception?​

Accepted Answer

A)  Services
B)  Tax payments​
C)  Durable goods​
D)  Nondurable goods​
E)  Dividends​F) A) and D)
G) All of the above

Question 14

If one US dollar costs 0.8 Euros, then 1 Euro must cost _____ US dollars.​

Accepted Answer

A)  0.5
B)  0.8​
C)  1.0​
D)  1.25​
E)  1.5​F) D) and E)
G) A) and B)

Question 15

A tariff is:​

Accepted Answer

A)  a tax on imports.
B)  a legal limit on quantities of goods that can be imported.
C)  a voluntary limit on quantities of goods that can be imported.
D)  a quality restriction on imports.
E)  a subsidy for exports.F) None of the above
G) A) and B)

Question 16

Caleb teaches economics at Happy State University and is paid $50,000 per year. He also provides economic forecasts for local businesses for which he charges $100 per hour. Which of the following is true?​

Accepted Answer

A)  All of Caleb's income is salary.
B)  Some of Caleb's income is salary and some is personal interest.
C)  All of Caleb's income is proprietor's income.
D)  Some of Caleb's income is salary and some is proprietor's income.
E)  All of Caleb's income is personal interest.F) A) and B)
G) B) and C)

Question 17

Public goods are both rival and nonexclusive.​

Accepted Answer

A) True 
 B)False

Question 18

Some people have argued that government should provide only those goods that we would truly define as public goods. If so, which of the following should government provide?​

Accepted Answer

A)  National defense
B)  Daycare centers for children of working mothers​
C)  Mail delivery​
D)  Unemployment benefits​
E)  Subsidies for agricultural products​F) All of the above
G) A) and E)

Question 19

The most common form of business organization in the United States is the partnership.​

Accepted Answer

A) True 
 B)False

Question 20

Economists generally assume that:​

Accepted Answer

A)  firms act to maximize the dividends paid to stockholders.
B)  households act to maximize their wealth.
C)  households act to maximize utility.
D)  firms act to maximize revenue.
E)  both households and firms act to minimize expenditures.F) All of the above
G) C) and E)

Exam 3: Economic Decision Makers

The Salvation Army is an example of a(n) :​

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Which of the following includes the four basic resources supplied by households?​

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Katie had a before-tax income of $40,000 and paid taxes of $6,000. Rinji had a before-tax income of $35,000 and paid taxes of $5,250. Based on this information, the tax system is:​

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Federal individual income taxes illustrate the ability-to-pay principle of taxation.​

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A large number of businesses are organized as sole proprietorships because it is easy for them to acquire large amounts of financing.​

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If one US dollar costs 0.8 Euros, then 1 Euro must cost _____ US dollars.​

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A tariff is:​

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Caleb teaches economics at Happy State University and is paid $50,000 per year. He also provides economic forecasts for local businesses for which he charges $100 per hour. Which of the following is true?​

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Public goods are both rival and nonexclusive.​

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Consider a system in which a person earning $10,000 pays $1,000 in taxes, a person earning $25,000 pays $2,000, and someone earning $60,000 pays $4,000. This is an example of:​

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Chris had a before-tax income of $20,000 and paid taxes of $3,000. Pat had a before-tax income of $10,000 and paid taxes of $1,000. Based on this information, which of the following is correct?​

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Suppose you own a proprietorship that is in serious financial difficulty. The assets of the company are $100,000 but liabilities are $175,000. You also have, however, stock in General Motors worth $200,000. If you file for bankruptcy, what amount of personal assets do you stand to lose?​

Correct AnswerverifiedShow Answer

The most common form of business organization in the United States is the partnership.​

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Which category includes the largest number of firms?​

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Which of the following taxes is most clearly based on the benefits-received principle of taxation?​

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Some people have argued that government should provide only those goods that we would truly define as public goods. If so, which of the following should government provide?​

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Household income is spent on all of the following except one. Which is the exception?​

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A realized capital gain is:​

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Economists generally assume that:​

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A common assumption that economists make about the behavior of elected officials is that they try to:​

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The Salvation Army is an example of a(n) :

Correct Answer
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Which of the following includes the four basic resources supplied by households?

Correct Answer
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Katie had a before-tax income of $40,000 and paid taxes of $6,000. Rinji had a before-tax income of $35,000 and paid taxes of $5,250. Based on this information, the tax system is:

Correct Answer
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Federal individual income taxes illustrate the ability-to-pay principle of taxation.

Correct Answer
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A large number of businesses are organized as sole proprietorships because it is easy for them to acquire large amounts of financing.

Correct Answer
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If one US dollar costs 0.8 Euros, then 1 Euro must cost _____ US dollars.

Correct Answer
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A tariff is:

Correct Answer
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Caleb teaches economics at Happy State University and is paid $50,000 per year. He also provides economic forecasts for local businesses for which he charges $100 per hour. Which of the following is true?

Correct Answer
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Public goods are both rival and nonexclusive.

Correct Answer
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Consider a system in which a person earning $10,000 pays $1,000 in taxes, a person earning $25,000 pays $2,000, and someone earning $60,000 pays $4,000. This is an example of:

Correct Answer
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Chris had a before-tax income of $20,000 and paid taxes of $3,000. Pat had a before-tax income of $10,000 and paid taxes of $1,000. Based on this information, which of the following is correct?

Correct Answer
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Suppose you own a proprietorship that is in serious financial difficulty. The assets of the company are $100,000 but liabilities are $175,000. You also have, however, stock in General Motors worth $200,000. If you file for bankruptcy, what amount of personal assets do you stand to lose?

Correct Answer
verified

The most common form of business organization in the United States is the partnership.

Correct Answer
verified

Which category includes the largest number of firms?

Correct Answer
verified

Which of the following taxes is most clearly based on the benefits-received principle of taxation?

Correct Answer
verified

Some people have argued that government should provide only those goods that we would truly define as public goods. If so, which of the following should government provide?

Correct Answer
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Household income is spent on all of the following except one. Which is the exception?

Correct Answer
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A realized capital gain is:

Correct Answer
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Economists generally assume that:

Correct Answer
verified

A common assumption that economists make about the behavior of elected officials is that they try to:

Correct Answer
verified