Economics: Chapter 4 Quiz

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Multiple Choice5 points
Question The personal distribution of income refers to the: Answer division of income between personal taxes, consumption expenditures, and saving.
division of income on the basis of industry sources, for example, agriculture, transportation, and mining.
distribution of income to basic resource classes, that is, wages, rents, interest, and profits.
way income is distributed among specific households or spending units.

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Question The personal distribution of income in the United States is such that the richest fifth receives about _____ percent of personal income. Answer 30
40

50
60

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Question Other things equal, a rapid rise in profits relative to other types of income would affect: Answer the functional distribution of income only.
the personal distribution of income only.

both the functional and personal distributions of income.
the relative size of the public sector.

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Question Economists define durable goods as those products expected to last at least _____ year(s). Answer 1

3
5
10

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Question In economics, an organization that employs resources to produce goods and services for profit and operates one or more plants is called a(n): Answer industry.
shop.
conglomerate.

firm.

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Question A firm comprised of plants or units operating in different industries, say, beer and theme parks, best illustrates a: Answer vertically integrated firm.
multinational corporation.
multiplant firm.

conglomerate.

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Question The owners of a firm face unlimited liability for the firm's debts in: Answer a corporation.
a partnership, but not in a proprietorship.
a proprietorship, but not in a partnership.

both a proprietorship and a partnership.

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Question In a competitive market:
Answer external benefits will always exceed external costs.
resources will be misallocated if government does not properly adjust demand and supply for large external costs and benefits.
resources will be allocated efficiently only if external benefits equal external costs.
an efficient allocation of resources is realized even where there are large external costs and benefits.

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Question An external cost or external benefit is also known as a(n): Answer marginal benefit.
principal-agent problem.
transfer payment.

spillover.

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Question Nonrivalry and nonexcludability are the main characteristics of: Answer capital goods.
private goods.

public goods.
consumption goods.

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Question Unlike a private good, a public good:
Answer produces no external benefits or external costs.
has no opportunity costs.

has benefits that are available to all, regardless of payment.
is characterized by rivalry and excludability.

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