Question 1

A good is more likely to be produced at home than in the market if _____.

Accepted Answer

It requires few specialized resources.

Question 2

Which of the following is not a reason why some production continues in households?

Accepted Answer

The answer of Which of the following is not a...

Question 3

You are more likely to paint your own house than to pay someone to paint your house if _____

Accepted Answer

The opportunity cost of your time being low means that you value your time less and therefore it makes more sense for you to spend your time painting your own house rather than paying someone else to do it.

Question 4

The change spawned by the microchip and the Internet which has also enhanced the acquisition, analysis, and transmission of information is known as _____

Accepted Answer

The change that has occurred due to advancements in microchip technology and the Internet is known as the Information Revolution. This revolution has greatly impacted the way we acquire, analyze, and transmit information. The other options, such as the Industrial Revolution and Agricultural Revolution, refer to different periods of history where there were significant changes in the way goods were produced and agriculture was practiced, respectively. The Innovation Revolution and Manufacturing Revolution are not commonly used terms to refer to the changes brought about by technology and are not as widely recognized as the Information Revolution.

Question 5

Which of the following is primarily a function of the federal government?

Accepted Answer

Dealing with externalities, such as pollution and other negative environmental impacts, is a primary function of the federal government. This is because externalities can affect society as a whole and require government intervention to ensure a fair and efficient outcome. The other options listed are either not typically the responsibility of the federal government (such as ensuring firms maximize profits) or fall within the purview of other entities (such as providing home mortgage loans, which is often done by banks and other financial institutions).

Question 6

Which of the following occurred during the Information Revolution?

Accepted Answer

The Information Revolution, characterized by the rise of digital technology and the internet, has indeed made it more feasible and common for people to work from their homes, thanks to advancements in communication technologies.

Question 7

Contracts are enforced by:

Accepted Answer

Contracts are legally binding agreements between parties, and as such they are enforced by the government through the judicial system. If a party breaches a contract, the other party can take legal action to seek damages or other remedies through the court system. While some contracts may include buy-out clauses or other provisions for enforcement, these are typically subject to legal scrutiny and may not be enforceable if they violate laws or public policy. Law firms may assist parties with contract negotiation and drafting, but ultimately the legal system is responsible for enforcing the terms of the contract.

Question 8

Which of the following is the best example of a public good?

Accepted Answer

Public goods are characterized by non-excludability and non-rivalry. Police services fit this description as they are available to everyone and consumption by one person does not diminish others' access to the service. Food stamps, trash removal, and a restaurant meal are all excludable goods as they are only available to those who pay for or are authorized to use them. An iPad is also excluded and rivalry as only one person can use it at a time, and it can be restricted to a particular user.

Question 9

Government antitrust laws were designed to _____

Accepted Answer

The answer of Government antitrust laws were designed to _____
...

Question 10

Identify a correct statement about household production.

Accepted Answer

Household production is more likely to occur when the opportunity cost of household work is relatively small. This means that if the cost of forgoing market work (i.e. the opportunity cost) is high, then individuals are more likely to choose market production over household production. Conversely, if the opportunity cost is low, individuals are more likely to choose household production.

Question 11

A group of farmers in southwestern Pennsylvania bought a pesticide-free pasture. They sold their locally raised organic beef in the butcher shop they owned together. This group of farmers would be identified as a(n) ______

Accepted Answer

The group of farmers who jointly own a pesticide-free pasture and sell their organic beef through a butcher shop would be classified as a producer cooperative. This is because they have come together for a common economic purpose, pooling their resources and expertise to produce and market their product, with the goal of achieving better prices and profits for their members. They also share in the decision-making and profits of the cooperative, making it a democratic and sustainable business model. The other choices do not fit the description of this type of business.

Question 12

Household production is more likely to occur when ______

Accepted Answer

Household production is more likely to occur when individuals want more control over the final product, such as in home-cooked meals or DIY home repairs.

Question 13

You are more likely to repair a leaky drainpipe yourself than hire a plumber if _____.

Accepted Answer

When you do the job yourself, you avoid the costs associated with hiring a professional, such as searching for a reputable plumber, negotiating the price, and ensuring the work is done to your satisfaction. These are known as transaction costs. Reducing these costs makes self-repair more appealing.

Question 14

A group of producers who join forces to buy supplies and equipment and to market their output is a(n) ______

Accepted Answer

A group of producers who join forces to buy supplies and equipment and to market their output is a producer cooperative.

Question 15

You are more likely to hire a plumber to repair a leaky drainpipe if _____.

Accepted Answer

The opportunity cost of your time is the value of what you could be doing instead of repairing the leaky drainpipe. If the opportunity cost of your time is high, then it would be more cost-effective to hire a plumber to complete the repair work while you use your time more efficiently. The other options do not necessarily affect the decision to hire a plumber.

Question 16

Despite specialization and comparative advantage, household production still exists because for some households _____.

Accepted Answer

Producing a good at home can be less costly than purchasing it in the market for some households, which is why household production still exists despite the economic principles of specialization and comparative advantage. This can be due to factors like saving on the cost of labor, transportation, or the premium prices of finished goods in the market.

Question 17

You are more likely to hire your teenage child than a landscaping firm to mow your lawn _____.

Accepted Answer

Opportunity cost refers to the cost of the next best alternative that must be given up in order to undertake a certain action. In this scenario, if the teenager has a lower opportunity cost of mowing the lawn than the landscaping firm, meaning that they have fewer options and less valuable time, then it would make more sense to hire the teenager to do the job.

Question 18

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

Accepted Answer

The Information Revolution actually resulted in more people being able to work from their homes, thanks to advancements in communication technology and the rise of remote work. Therefore, E is the correct answer as it goes against this trend.

Question 19

Which of the following is a reason why the government is a participant in a market-oriented economy?

Accepted Answer

The government's role in enforcing contracts and protecting private property is necessary to maintain a functioning market-oriented economy. Without these protections, firms and individuals may be deterred from participating in economic transactions.

Question 20

Natural monopolies occur when _____

Accepted Answer

Natural monopolies occur when one firm can provide goods or services to the entire market at a lower cost than two or more firms could, due to economies of scale. As the firm grows and produces more, its average cost of production decreases. This means that smaller firms would not be able to compete with the larger firm's lower prices and would eventually go out of business. The result is a market dominated by one firm, which is referred to as a natural monopoly.

Quiz 3: Economic Decision Makers.