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Normative and Subjective statements in Microeconomics

Based on scientific nutritional studies in most countries, income of $1 a day does not provide sufficient food, shelter and clothing to live. Under these conditions the medical risk of death is high. This statement is:

a normative statement.

a subjective statement.

an art-of-economics statement.

an objective statement.

Question 2

In 1996, the Internet allowed companies such as Amazon to sell goods online without regard to geographic location. This is known as:

distribution

e-commerce

world trade

industrial revolution

Question 4

To engage in economic reasoning, you must compare:

total cost and total benefit.

marginal cost, sunk cost, and total benefit.

sunk cost and marginal cost.

marginal cost and marginal benefit.

Question 5

Waste produced by a power plant that harms local fishing industries is an example of a(n):

demerit good.

private good.

limited liability.

externality.

Question 6

In recent years, many phone banks for telemarketing and customer service have moved from the U.S. to foreign nations such as the Philippines and India. This move is usually called:

insourcing.

outsourcing.

technological change.

unfair trade.

Question 7

In a feudalist society, in comparison with mercantilism:

merchants play a more important political role than serfs.

tradition plays a more important role than the government.

government plays a large role in determining the what, how and for whom decisions.

markets make the central economic decisions.

Question 8

The Soviet socialist economy fell apart primarily because:

it was based on barter rather than monetary exchange.

individuals are not motivated by self interest.

workers lacked incentives to work and production was inefficient.

markets failed to develop.

Question 9

Microsoft has just taken some Senators out to dinner in Paris in a private jet. This is likely an example of an attempt to influence:

economic forces.

political forces.

social forces.

the price mechanism.

Question 10

Governments do all of the following except:

oversee the interaction of households and businesses in the goods and factor markets.

demand labor services from households in the factor market.

demand goods and services from businesses in the goods market.

supply labor services to businesses in the factor market.

Solution Preview

1. This is a normative statement. It is based on hard facts that can be proven.

2. This is an example of e-commerce.

4. Marginal cost and marginal benefits are the basis of economic reasoning. By finding the point where MC=MB, you can ...

Solution Summary

Multiple choice questions related to market-based economies, feudalism, and related concepts

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