Question: Which of the following is true regarding an unregulated market that imposes costs on others through pollution?
Answer Choices:
The market will be less efficient if taxes are imposed on production.
The market is inefficient because the price of the good does not reflect the true costs of production.
Regardless of the damage caused by pollution, free markets are always the most efficient.
Production of the good should be subsidized to improve overall market efficiency.
Answer: The market is inefficient because the price of the good does not reflect the true costs of production.
Question: Which of the following are true regarding the CPI? (choose all that are correct)
Answer Choices:
The basket of goods included in the CPI is updated every year.
The CPI is calculated by the U.S. Bureau of Labor Statistics (BLS) every month.
Changes in the CPI are commonly used to measure inflation.
When new products are introduced into consumer markets, they are immediately included in the CPI market basket of goods.
To accurately measure average prices, the CPI gives all goods and services equal weight.
Answer: The CPI is calculated by the U.S. Bureau of Labor Statistics (BLS) every month.
Changes in the CPI are commonly used to measure inflation.
Question: Dave borrowed $500 from Petra in January, promising to pay her back $525 a year later. That is, they agreed to a 5% annual interest rate. Over the course of the year, inflation was 3%. What was the real rate of interest on the loan?
Answer Choices:
8%
5%
3%
2%
0%
-3%
-2%
Answer: 2%
Question: Taxing goods with relatively inelastic demand will result in more “deadweight” efficiency loss per dollar of tax revenue than taxing goods with relatively elastic demand.
Answer Choices:
True
False
Answer: False
Question: When a polluting activity creates any amount of harm to society, the most efficient solution is to ban that activity.
Answer Choices:
True
False
Answer: False
Question: Which of the following is NOT a form of poverty relief in the United States?
Answer Choices:
college debt forgiveness
training and job opportunities
social insurance
direct assistance
Answer: college debt forgiveness
Question: Private prisons are an example of privatization through ________.
Answer Choices:
contracting
franchising
subsidizing
tax incentivizing
Answer: contracting
Question: Resistance is an expected response to change.
Answer Choices:
True
False
Answer: True
Question: Which of the following transactions would not be included in 2019 GDP? (choose all that are correct)
Answer Choices:
In July 2019, Bob sold $10,000 in fresh corn directly to consumers at a local farmers’ market.
In December 2019, Jane sold $5,000 worth of Apple stock (equities) that she inherited from her mother.
In September 2019, Sandy sold her prized collection of Pokémon cards at auction for $4,500.
In May and June 2019, Chris donated 20 hours of labor to Habitat for Humanity.
In February 2019, BigCorp Paper sold $12,000 worth of raw card stock to a retailer in Canada.
Answer: In December 2019, Jane sold $5,000 worth of Apple stock (equities) that she inherited from her mother.
In September 2019, Sandy sold her prized collection of Pokémon cards at auction for $4,500.
In May and June 2019, Chris donated 20 hours of labor to Habitat for Humanity.
Question: Which of the following is a common barrier to entry that allows large “name brand” firms in oligopoly markets to maintain market power?
Answer Choices:
Government licensing
Economies of scale
Spending on advertising to create brand loyalty among consumers
Technology
Answer: Spending on advertising to create brand loyalty among consumers
Question: “If there were no demand for coal, there would be no demand for coal miners.” What type of demand does this statement reflect?
Answer Choices:
interdependent
talent and efficiency
derived
technologically determined
Answer: derived
Question: Which of the following best describes the profit-maximizing strategy for a monopolist?
Answer Choices:
Set quantity where average total cost is at its minimum.
Produce the quantity where marginal revenue is equal to marginal cost, and set price according to demand at that quantity.
Produce the quantity where marginal cost is minimized, and set price based on a fixed markup over that cost.
Produce the quantity where demand is the most elastic.
Answer: Produce the quantity where marginal revenue is equal to marginal cost, and set price according to demand at that quantity.