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Economics Chapter 3

STUDY
PLAY
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