Micro Test 3 (real test)

Question 1

According to the statistics, the distribution of money income:

Answer 1

c. has not changed greatly since 1947

Question 2

The highest fifth of all families receive approximately ____ of the distribution of annual money income among families

Answer 2

d. 50 percent

Question 3

The Lorenz curve shows the

Answer 3

d. actual cumulative percentage of income received compared to a perfectly equal cumulative percentages of income

Question 4

Of the following demographic groups, which has the lowest poverty rate in the U.S.?

Answer 4

d. Families in which the “head of the household” has attained at least a bachelor’s degree form a college or university

Question 5

Which of the following are NOT counted when we compare a family’s income to the poverty line?

Answer 5

a. In-kind transfer such as food stamps, Medicaid, and public housing

Question 6

The social security tax is called FICA, which stands for:

Answer 6

d. Federal Insurance Contributions Act

Question 7

Which of the following is an in-kind transfer payment?

Answer 7

a. Medicaid

Question 8

Under a negative income tax program,

Answer 8

a. the government guarantees a minimum level of family income

Question 9

Comparable worth is the principle that:

Answer 9

d. employees who perform comparable jobs should be paid the same wage

Question 10

Starting in 1964, the U.S. government has defined the poverty line as income at or below ____ the amount of money needed to buy a minimum diet for all family members.

Answer 10

b. three times

Question 11

Firms that place their assets in the custody of a board of trustees is called a(n):

Answer 11

c. trust

Question 12

The practice of firms temporarily reducing prices in order to eliminate competition is called:

Answer 12

b. predatory pricing

Question 13

Officers of five large building-materials companies meet and agree than none of them will submit bids on government contracts lower than an agreed-upon level. This is an example of:

Answer 13

a. price fixing

Question 14

What act of Congress declared restraint of trade illegal and declared any attempt at monopolizing unlawful?

Answer 14

b. Sherman Antitrust Act

Question 15

The primary purpose of antitrust legislating is to:

Answer 15

b. protect the competitiveness of U.S. businesses

Question 16

The Clayton Act of 1914:

Answer 16

c. prohibited price discrimination that reduces competition and cannot be justified based on cost differences

Question 17

Which of the following practices is prohibited by the Clayton Act?

• Price discrimination that substantially lessens competition
• Trying contacts that substantially lessen competition
• Exclusive dealing that substantially lessens competition

Answer 17

d. All of these

Question 18

Campbell Soup agrees to sell its brand to a grocery chain only if the chain also agrees to buy a minimum number of cases of its V-8 juice. This is an example of:

Answer 18

d. price discrimination

Question 19

Which of the following is NOT one of the four anti-competitive activities outlined in the Clayton Act?

Answer 19

d. Buying a competitor’s plants and equipment

Question 20

Today, the Federal Trade Commission (FTC) is concerned with:

• enforcing consumer protection legislation
• prohibiting deceptive advertising
• preventing collusion

Answer 20

d. all of these

Question 21

Which of the following antitrust laws broadened the list of illegal price discrimination practices and is often called the “Chain Store Act”?

Answer 21

c. The Robinson-Patman Act

Question 22

If a firm engages in a merger that substantially reduces competition, then it would be in violation of the:

Answer 22

e. Celler-Kefauver Antimerger Act

Question 23

When the court determines that a firm’s size alone is sufficient to find that it violated antitrust laws, this criterion is called:

Answer 23

c. per se

Question 24

A merger between firms that compete in the same market is called a:

Answer 24

a. horizontal merger

Question 25

A merger of firms with a supplier is a:

Answer 25

a. vertical merger

Question 26

Which of the following BEST describes social benefits?

Answer 26

b. The sum of external benefits and private benefits

Question 27

Economists view pollution as an economic problem that arises because:

Answer 27

d. firms that pollute do not pay the full social cost of producing their output

Question 28

People are unlikely to choose to pay extra for a low-emissions automobile, because they:

Answer 28

b. are better off “free-riding” on others’ attempts to reduce emissions

Question 29

Negative externalities impose MOST of their costs:

Answer 29

d. on individuals other than consumers of the polluting product

Question 30

Which of the following is the environmental approach found in the Clean Air Act of 1990?

Answer 30

a. marketable pollution permits

Question 31

When using the traditional command-and-control approach to environmental regulations, the government attempts to:

Answer 31

d. set standards that are applicable to all situations and does not recognize unique circumstances

Question 32

According the Coase Theorem, the private sector can achieve social efficiency if the government:

Answer 32

a. establishes and enforces property rights