Indicate whether the sentence or statement is true or false.
__T__ 1. Economic growth occurs when a nation's total output of goods and services increases over time.
__T__ 2. In economics, land refers to the natural resources needed for production, such as forests, minerals, and
__T__ 3. Economic products consist of both goods and services that are useful, relatively scarce, and transferable to
__F__ 4. A nation's wealth refers to a worth that can be expressed in dollars and cents.
__F__ 5. The production possibilities frontier can be reached even if certain resources remain idle.
__F__ 6. Voluntary exchange is a characteristic of command economies.
__T__ 7. Preferred stock represents the nonvoting ownership of a corporation.
__F__ 8. One advantage of a corporation is the ease of obtaining a charter.
__T__ 9. Many schools, medical care facilities, and churches operate as nonprofit organizations.
__T__ 10. Labor unions use collective bargaining to negotiate job-related issues with management.
__F__ 11. Sole proprietorships must request a charter from the state in which they are organized.
__T__ 12. People form partnerships because it often improves a business's management and can usually attract capital
more easily than proprietorships.
__F__ 13. Investors in corporations have unlimited liability for the company's debts.
__T__ 14. A professional association tries to improve the working conditions, skill levels, and public perceptions of the
__F__ 15. The government is a nonprofit organization that plays a direct role in the economy by, for example, regulating
public utilities that would operate with few or no competitors.
__T__ 16. Productivity will decrease if workers are unmotivated.
__F__ 17. When more suppliers enter the market, the market supply will typically decline.
__T__ 18. The theory of production deals with the relationship between the factors of production and the output of
goods and services.
__T__ 19. The production function describes the relationship of changes in output to different amounts of a single input
while other inputs are held constant.
__T__ 20. An increase in output as each new input is added, as in the addition of a worker, describes Stage I of the
stages of production.
__T__ 21. The number of items sold multiplied by the average price of each item yields the total revenue of a business.
__T__ 22. The mix of variable costs and fixed costs that a business faces affects the way the business operates.
__F__ 23. Marginal cost is the change in total revenue when one more unit of output is sold.
__T__ 24. The four important measures of cost are: total cost, fixed cost, variable cost, and marginal cost.
__F__ 25. Economists often use an academic model to help analyze behavior and predict outcomes.
__T__ 26. Market equilibrium is the situation in which the quantity of output supplied is equal to the quantity demanded.
__F__ 27. If the price of an item is too high in a competitive market, a shortage appears until the price goes down.
__F__ 28. A private agency usually approves prices for water and electric utilities.
__T__ 29. “Truth in advertising laws” are designed to prevent market failures caused by inadequate information.
__F__ 30. The Clayton Antitrust Act was the first significant law against monopolies in the United States.
__T__ 31. The government can “internalize an externality” by using the tax system.
__F__ 32. The Sherman Antitrust Act prohibits monopolistic competition.
__T__ 33. When striking workers picket, they parade in front of the employer's business carrying signs about the
__T__ 34. Most Americans favored unions in the 1930s but shifted to favoring management after World War II.
__F__ 35. The agency shop requires that an employee join the union shortly after being hired.
__F__ 36. If an agreement cannot be reached during collective bargaining, workers use the boycott—refusing to work
until their demands are met.
__T__ 37. Historically, unions were considered to be conspiracies against businesses and were prosecuted in the courts.
__F__ 38. During arbitration, a third party makes a non-binding compromise to resolve a dispute between labor and
__T__ 39. The traditional theory of wage determination states that wages are set according to the laws of supply and
__T__ 40. Supply and demand are used to predict the incidence of a tax.
__T__ 41. Taxes on most personal property are seldom collected because of the problem of valuation.
__T__ 42. Distribution of income explains the way in which income is allocated to individuals, families, or other
__T__ 43. When the government produces goods and services, it often competes with producers in the private sector.
__T__ 44. Interstate highway construction programs are examples of grants-in -aid.
__F__ 45. Approximately two -thirds of the federal budget consists of discretionary spending.
__T__ 46. Payments to aged and disabled Americans through the Social Security program make up the largest category
of federal spending.
__T__ 47. Government spending can directly affect both the allocation of resources and the distribution of income.
__F__ 48. The fastest growing category of federal expenditures since 1980 has been defense.
__F__ 49. One of the major concerns about the national debt is that more than 50 percent of it is owed to investors
outside of the United States.
__T__ 50. Consequences of the national debt include the redistribution of income and diminishing incentives to work,
save, and invest