Economics Chapter 3

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One explanation for the increased participation of married women in the U.S. labor force is tha

rapid growth in the service sector has provided additional job opportunities for women

Rationality in the household decision-making process means that

households act in their own best interests

Raghib teaches mathematics at Camford University and receives $40,000 per year. His spouse, Noraini, works
as a self-employed computer programmer and charges $40 per hour. Which of the following is true?

Raghib's income is a salary, and Noraini's income is a proprietor's income

The fastest-growing component of U.S. personal consumption is services. T or F?

True

Which of the following is the category to which the largest portion of households' personal income is allocated?

purchases of services

Which of the following did not occur during the Industrial Revolution?

Workers bore much of the costs of production.

The most common form of business organization in the United States is the sole proprietorship. T or F?

True

Which of the following is a major advantage of the sole proprietorship?

ease of start-up

All of the following are advantages of partnerships except one. Which is the exception?

their liability is limited by each partner's share of the business

Often trade will not occur because

transaction costs are too high

In terms of total sales, the dominant form of business firm in the U.S. economy is the

corporation

Which of the following have their profits taxed twice?

corporations

You are more likely to hire your teenage child to cut your lawn than a landscaping firm

if the teenager has a lower opportunity cost of cutting the lawn than the landscaping firm
doe

The location of production

shifted from cottages to factories during the Industrial Revolution, but now may be shifting
back to the hom

To serve the public interest, government sometimes promotes competition by breaking up natural monopolies. T or F?

False

When externalities are present, market prices do not reflect all the social costs or benefits of the activity. T or F?

True

Natural monopolies occur when

one firm can service the market more cheaply than two or more firms can

The term "fiscal policy" refers to

spending and taxing by government

The primary source of revenue for local governments is the property tax. T or F?

True

The main source of revenue for the U.S. federal government is

personal income taxe

The largest source of federal government revenue is

individual income taxes

A progressive tax means

the marginal tax rate increases as income increases

In recent decades, international trade has been

an increasing fraction of U.S. GDP

Which of the following best defines foreign exchange?

the currency of another country used for trading

Import restrictions usually benefit domestic producers at the expense of domestic consumers. T or F?

True

Restricting imports of Brazilian shoes will

raise the price of both Brazilian and domestically produced shoes

Trade restrictions result in all of the following except one. Which is the exception?

improved qualitity

In the early 1990s, communities of computer programmers formed a grassroots movement known as

open source

The more users involved in a user generated product, the less valuable that product is to each user. T or F?

False

The fact that some people now work in virtual offices is an example of the

Information Revolution

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