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Household pretax income that is used for spending, paying taxes, and saving is:

	A.	disposable income.
	B.	private income.
	C.	national income.
	D.	personal income.

1 points

Question 2

A transfer payment is

	A.	money transferred from a corporation to its stockholders.
	B.	money received from the government for which there is no direct work performed in return.
	C.	income earned from rent, interest, and dividends.
	D.	all of the above are examples of transfer payments.

1 points

Question 3

Of the following groups, the highest average household income occurs in households headed by a:

	A.	female.
	B.	person with a college degree.
	C.	person in their late 20s or early 30s.
	D.	high school graduate.

1 points

Question 4

Durable goods:

	A.	have a short useful life.
	B.	have more than one use.
	C.	are recycled goods.
	D.	have a useful life of more than one year.

1 points

Question 5

An example of a nondurable good is:

	A.	a semester of education.
	B.	an automobile.
	C.	a visit to the dentist.
	D.	a meal at a restaurant.

1 points

Question 6

Maximizing economic well-being requires that:

	A.	an individual earn the maximum attainable income.
	B.	the benefits and costs of different courses of action be weighed.
	C.	an individual acquire all of the goods and services that can possibly be attained with a given income.
	D.	all of the above.

1 points

Question 7

The satisfaction realized from consuming a good or service is referred to by economists as:

	A.	consumer well-being.
	B.	economic gain.
	C.	utility.
	D.	consumer surplus.

1 points

Question 8

To maximize satisfaction from earning income, an individual should:

	A.	work as few hours as possible.
	B.	obtain the highest paying job possible.
	C.	balance the added income from working against the opportunities forgone because of work.
	D.	all of the above.

1 points

Question 9

Unlimited liability is a risk faced by:

	A.	a sole proprietor.
	B.	a bondholder in a corporation.
	C.	a stockholder in a corporation.
	D.	all of the above.

1 points

Question 10

A business can continue on indefinitely if it is organized as a:

	A.	corporation or partnership.
	B.	corporation.
	C.	partnership.
	D.	sole proprietorship.

1 points

Question 11

Which of the following entitles its holder to the same dividend every year?

	A.	Common stock of a partnership.
	B.	Preferred stock of a proprietorship.
	C.	Preferred stock of a corporation.
	D.	Common stock of a corporation.

1 points

Question 12

Which of the following faces unlimited liability?

	A.	The holder of a corporate bond.
	B.	The holder of a corporation's common stock.
	C.	The holder of a corporation's preferred stock.
	D.	None of the above.

1 points

Question 13

In any given year, the largest share of business receipts typically goes to:

	A.	proprietorships.
	B.	corporations.
	C.	partnerships.
	D.	partnerships and proprietorships taken together.

1 points

Question 14

The acquisition of General Motors by Ford Motor Company would be an example of a:

	A.	vertical merger.
	B.	general merger.
	C.	conglomerate merger.
	D.	horizontal merger.

1 points

Question 15

When one corporation acquires another corporation that is unrelated to its operation, this is a:

	A.	vertical merger.
	B.	horizontal merger.
	C.	conglomerate merger.
	D.	none of the above.

1 points

Question 16

A corporation formed for the purpose of owning stock in other corporations is a:

	A.	holding company.
	B.	general partnership corporation.
	C.	cartel.
	D.	blind trust.

1 points

Question 17

In economics, it is usually assumed that the fundamental objective of a business firm is to maximize:

	A.	its share of the market.
	B.	the income of its managers.
	C.	profit or minimize loss.
	D.	total revenue.

1 points

Question 18

In which of the legal forms of business do profits goes to stockholders?

	A.	Partnerships.
	B.	Corporations.
	C.	Sole proprietorships.
	D.	All of the above

1 points

Question 19

Individuals in households maximize their economic well-being by:

	A.	working as few hours as possible.
	B.	buying the lowest priced items they can find.
	C.	acquiring as many goods and services as possible.
	D.	none of the above.

1 points

Question 20

The majority of business firms in the United States are organized as:

	A.	partnerships.
	B.	trusts.
	C.	corporations.
	D.	sole proprietorships.

1 points

Question 21

The change in total satisfaction from consuming each additional unit of a good, service, or activity is:

	A.	total utility.
	B.	adjusted utility.
	C.	average utility.
	D.	marginal utility.

1 points

Question 22

Marginal utility is the:

	A.	change in total satisfaction from consuming an additional unit of a good or service.
	B.	average satisfaction from each unit of a good or service consumed.
	C.	satisfaction from the total amount of a good or service consumed.
	D.	difference between the satisfaction from consuming a good or service and its cost.

1 points

Question 23

Total utility is the:

	A.	difference between the satisfaction from consuming a good or service and its cost.
	B.	satisfaction from the total amount of a good or service consumed.
	C.	change in total satisfaction from consuming an additional unit of a good or service.
	D.	satisfaction from each unit of a good or service consumed.

1 points

Question 24

Marginal cost for a person consuming a good or service is the:

	A.	total cost of consuming a given amount of the good or service.
	B.	cost of the alternative forgone.
	C.	cost per unit of the good or service consumed.
	D.	change in total cost from consuming an additional unit of the good or service.

1 points

Question 25

Net benefit is maximized where:

	A.	marginal benefit exceeds marginal cost by the greatest amount.
	B.	total benefit equals total cost.
	C.	marginal benefit equals marginal cost.
	D.	average benefit exceeds average cost by the greatest amount.

1 points

Question 26

Payments a business makes to acquire factors of production such as labor, raw materials, and machinery are:

	A.	depreciated costs.
	B.	explicit costs.
	C.	implicit costs.
	D.	nondiscretionary costs.

1 points

Question 27

Explicit costs are:

	A.	variable costs.
	B.	payments made to acquire factors of production such as labor and machinery.
	C.	opportunity costs.
	D.	fixed costs.

1 points

Question 28

Implicit costs are:

	A.	fixed costs.
	B.	payments made to acquire factors of production such as labor and machinery.
	C.	variable costs.
	D.	opportunity costs.

1 points

Question 29

Normal profit is:

	A.	not a cost of production.
	B.	the average profit for all businesses in the United States.
	C.	the profit necessary to keep a business in operation.
	D.	the amount over and above what an entrepreneur could earn in his or her next best alternative.

1 points

Question 30

John passes up an offer for a job paying $50,000 a year and, instead, starts his own business. His new business brings in $160,000 in sales during the first year, and his total costs for items such as materials, labor, equipment, shipping, and insurance come to $65,000.

Reference: Ref 11-9

John's explicit costs are:

	A.	$50,000.
	B.	$115,000.
	C.	$95,000.
	D.	$65,000.

1 points

Question 31

Reference: Ref 11-9

John's implicit costs are:

	A.	$50,000.
	B.	$115,000.
	C.	$65,000.
	D.	$95,000.

1 points

Question 32

When calculating profit economists include:

	A.	explicit costs.
	B.	implicit costs.
	C.	explicit, implicit and external costs.
	D.	explicit and implicit costs.

1 points

Question 33

Excess profit is the profit:

	A.	above what is necessary to continue a business.
	B.	necessary to recover explicit costs.
	C.	necessary to continue a business.
	D.	necessary to recover implicit costs.

1 points

Question 34

Total revenue is the:

	A.	difference between the revenue from selling a good or service and its cost of production.
	B.	revenue from the total amount of a good or service sold.
	C.	revenue from one unit of a good or service sold.
	D.	change in revenue from selling an additional unit of a good or service.

1 points

Question 35

Total revenue is calculated as:

	A.	average cost x quantity sold.
	B.	revenue/quantity sold.
	C.	revenue - cost.
	D.	price x quantity sold.

1 points

Question 36

Given the table below, what is the marginal revenue generated when the third unit is sold?

	A.	$50.
	B.	$150.
	C.	$100.
	D.	$110.

1 points

Question 37

Benefits to a business are typically measured in terms of:

	A.	the number of consumers using the business's product.
	B.	opportunity costs.
	C.	units of satisfaction to the owner.
	D.	dollars of revenue.

1 points

Question 38

Total cost to a firm is the:

	A.	change in cost when one more unit of a good or service is produced.
	B.	cost of producing a specified number of units of a good or service.
	C.	difference between the explicit costs and implicit costs of production.
	D.	cost per unit of a good or service produced.

1 points

Question 39

The marginal cost for a product is the:

	A.	cost of producing a specified number of units of the good or service.
	B.	cost per unit of the good or service produced.
	C.	difference between the explicit costs and implicit costs of production.
	D.	change in total cost when one more unit of the good or service is produced.

1 points

Question 40

A business will maximize its profit by operating at the output where marginal revenue:

	A.	equals marginal cost.
	B.	is less than marginal cost.
	C.	and marginal cost are both greater than zero.
	D.	is greater than marginal cost.

1 points

Question 41

A producing sector classification for grouping goods, services, and the firms that produce them:

	A.	is broader than an industry classification.
	B.	may be broader or narrower than an industry classification, depending upon the types of products classified.
	C.	includes the same number of firms as an industry classification, but arranges the firms differently.
	D.	is narrower than an industry classification.

1 points

Question 42

Industries:

	A.	are more narrowly defined than sectors.
	B.	are made up of firms that use similar processes.
	C.	are made up of firms that produce similar products.
	D.	all of the above.

1 points

Question 43

A production function:

	A.	is the body of knowledge that exists about production and its processes.
	B.	is a rule for maximizing net benefits.
	C.	shows the type and amount of output that can be attained from a set of inputs when those inputs are combined in a specific way.
	D.	is the body of knowledge covering general truths and the operation of general laws.

1 points

Question 44

In economics it is most often assumed that the main concern of a firm in choosing a production technique is to:

	A.	maximize profit.
	B.	produce the largest attainable output.
	C.	maximize revenue.
	D.	use the latest available technology.

1 points

Question 45

The concept that new, technologically advanced processes and machinery cause the disuse and ultimate disappearance of old processes and machinery is called:

	A.	creative destruction.
	B.	capital-intensive production.
	C.	capital switching.
	D.	industrial unrest.

1 points

Question 46

To an economist, the short run refers to a time period:

	A.	during which production takes place using only fixed factors of production.
	B.	during which all factors of production are variable.
	C.	of less than one year.
	D.	during which production takes place using some variable and some fixed factors of production.

1 points

Question 47

In the short run, all factors of production are:

	A.	fixed.
	B.	either fixed or variable.
	C.	variable.
	D.	semi-fixed.

1 points

Question 48

To an economist, the long run refers to a time period:

	A.	during which some factors of production are variable in amount.
	B.	during which all factors of production are variable in amount.
	C.	during which all factors of production are owned by the firm.
	D.	of one year or longer.

1 points

Question 49

In the long run, all factors of production are:

	A.	fixed.
	B.	either fixed or variable.
	C.	semi-fixed.
	D.	variable.

1 points

Question 50

A cost that does not change as the amount of output produced changes is a:

	A.	semi-variable cost.
	B.	variable cost.
	C.	fixed cost.
	D.	semi-fixed cost.

1 points

Question 51

The short-run cost that is zero when nothing is produced but changes as the level of output changes is:

	A.	total cost.
	B.	total fixed cost.
	C.	total variable cost.
	D.	none of the above.

1 points

Question 52

Over the short run, total cost is equal to:

	A.	average fixed cost multiplied by average variable cost.
	B.	average total cost plus marginal cost.
	C.	total fixed cost plus total variable cost.
	D.	total variable cost multiplied by average total cost.

1 points

Question 53

Average total cost is the:

	A.	cost of all variable factors of production.
	B.	cost of all fixed factors of production.
	C.	change in total cost when one additional unit of output is produced.
	D.	cost per unit of output produced.

1 points

Question 54

Given the following table, what is the average total cost of producing 20 units of output?

	A.	$10.00.
	B.	$50.00.
	C.	$25.00.
	D.	$2.50.

1 points

Question 55

Given the following table, what is the marginal cost of the third unit of output?

	A.	$55.00.
	B.	$110.00.
	C.	$80.00.
	D.	$40.00.

1 points

Question 56

Short-run costs behave as they do because of:

	A.	the Law of Diminishing Returns.
	B.	economies and diseconomies of scale.
	C.	diminishing marginal utility.
	D.	the Law of Supply.

1 points

Question 57

The Law of Diminishing Returns governs production:

	A.	when all factors of production are fixed in amount.
	B.	in the short run.
	C.	in both the long run and the short run.
	D.	in the long run.

1 points

Question 58

Which of the following is correct?

	A.	The Law of Diminishing Returns causes short-run marginal cost to behave as it does.
	B.	The Law of Diminishing Returns underlies short-run cost behavior.
	C.	The Law of Diminishing Returns takes effect when students study.
	D.	All of the above are correct.

1 points

Question 59

Which of the following is NOT calculated for the long run?

	A.	Average total cost.
	B.	Fixed cost.
	C.	Marginal cost.
	D.	Variable cost.

1 points

Question 60

A firm's long-run average total cost curve assumes its particular shape because of:

	A.	the Law of Supply.
	B.	the Law of Diminishing Returns.
	C.	the cost pattern for fixed factors.
	D.	economies of scale, constant returns to scale, and diseconomies of scale.