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Contemporary Economics

William A. McEachern

Chapter 3

U.S. Private and Public Sectors - all with Video Answers

Educators

Chapter Questions

Problem 1

Choose the term that best fits the definition. On a separate sheet of paper, write the letter of the answer. Some terms will not be used.
a. antitrust laws
b. firm
c. fiscal policy
d. household
e. income-assistance programs
f. Industrial Revolution
g. median income
h. monetary policy
i. natural monopoly
j. negative externalities
k. open-access good
l. positive externalities
m. private good
n. private property rights
o. public good
p. quasi-public good
q. social insurance
r. utility
The satisfaction received from consumption

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Problem 2

Choose the term that best fits the definition. On a separate sheet of paper, write the letter of the answer. Some terms will not be used.
a. antitrust laws
b. firm
c. fiscal policy
d. household
e. income-assistance programs
f. Industrial Revolution
g. median income
h. monetary policy
i. natural monopoly
j. negative externalities
k. open-access good
l. positive externalities
m. private good
n. private property rights
o. public good
p. quasi-public good
q. social insurance
r. utility
Laws that prohibit anticompetitive behavior and promote competition

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Problem 3

Choose the term that best fits the definition. On a separate sheet of paper, write the letter of the answer. Some terms will not be used.
a. antitrust laws
b. firm
c. fiscal policy
d. household
e. income-assistance programs
f. Industrial Revolution
g. median income
h. monetary policy
i. natural monopoly
j. negative externalities
k. open-access good
l. positive externalities
m. private good
n. private property rights
o. public good
p. quasi-public good
q. social insurance
r. utility
. Legal claims that guarantee an owner the right to use a good or resource exclusively or to charge others for its use

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Problem 4

Choose the term that best fits the definition. On a separate sheet of paper, write the letter of the answer. Some terms will not be used.
a. antitrust laws
b. firm
c. fiscal policy
d. household
e. income-assistance programs
f. Industrial Revolution
g. median income
h. monetary policy
i. natural monopoly
j. negative externalities
k. open-access good
l. positive externalities
m. private good
n. private property rights
o. public good
p. quasi-public good
q. social insurance
r. utility
The federal government’s use of taxing and public
spending to influence the national economy

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Problem 5

Choose the term that best fits the definition. On a separate sheet of paper, write the letter of the answer. Some terms will not be used.
a. antitrust laws
b. firm
c. fiscal policy
d. household
e. income-assistance programs
f. Industrial Revolution
g. median income
h. monetary policy
i. natural monopoly
j. negative externalities
k. open-access good
l. positive externalities
m. private good
n. private property rights
o. public good
p. quasi-public good
q. social insurance
r. utility
The Federal Reserve System’s attempts to control the money supply to influence the national economy

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Problem 6

Choose the term that best fits the definition. On a separate sheet of paper, write the letter of the answer. Some terms will not be used.
a. antitrust laws
b. firm
c. fiscal policy
d. household
e. income-assistance programs
f. Industrial Revolution
g. median income
h. monetary policy
i. natural monopoly
j. negative externalities
k. open-access good
l. positive externalities
m. private good
n. private property rights
o. public good
p. quasi-public good
q. social insurance
r. utility
. One firm that can serve an entire market at a lower
per-unit cost than can two or more firms

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Problem 7

Choose the term that best fits the definition. On a separate sheet of paper, write the letter of the answer. Some terms will not be used.
a. antitrust laws
b. firm
c. fiscal policy
d. household
e. income-assistance programs
f. Industrial Revolution
g. median income
h. monetary policy
i. natural monopoly
j. negative externalities
k. open-access good
l. positive externalities
m. private good
n. private property rights
o. public good
p. quasi-public good
q. social insurance
r. utility
. A good with two features: (1) the amount
consumed by one person is unavailable to others
and (2) nonpayers can easily be excluded

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Problem 8

Choose the term that best fits the definition. On a separate sheet of paper, write the letter of the answer. Some terms will not be used.
a. antitrust laws
b. firm
c. fiscal policy
d. household
e. income-assistance programs
f. Industrial Revolution
g. median income
h. monetary policy
i. natural monopoly
j. negative externalities
k. open-access good
l. positive externalities
m. private good
n. private property rights
o. public good
p. quasi-public good
q. social insurance
r. utility
. A good that, once produced, is available for all to
consume, but the producer cannot easily exclude
nonpayers

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Problem 9

Choose the term that best fits the definition. On a separate sheet of paper, write the letter of the answer. Some terms will not be used.
a. antitrust laws
b. firm
c. fiscal policy
d. household
e. income-assistance programs
f. Industrial Revolution
g. median income
h. monetary policy
i. natural monopoly
j. negative externalities
k. open-access good
l. positive externalities
m. private good
n. private property rights
o. public good
p. quasi-public good
q. social insurance
r. utility
A good that is rival in consumption but exclusion is
costly

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Problem 10

Choose the term that best fits the definition. On a separate sheet of paper, write the letter of the answer. Some terms will not be used.
a. antitrust laws
b. firm
c. fiscal policy
d. household
e. income-assistance programs
f. Industrial Revolution
g. median income
h. monetary policy
i. natural monopoly
j. negative externalities
k. open-access good
l. positive externalities
m. private good
n. private property rights
o. public good
p. quasi-public good
q. social insurance
r. utility
By-products of consumption or production that benefit third parties, who are not buyers or sellers

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01:12

Problem 11

All those who live under one roof are considered to be part of the same __?__.

Cole Hogan
Cole Hogan
Numerade Educator
01:59

Problem 12

. Firms organizing production in large, centrally
powered factories did all of the following
except
a. promote a more efficient division of labor.
b. reduce transportation costs.
c. reduce consumer reliance on trade.
d. enable the use of specialized machines

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
03:12

Problem 13

. In the evolution of the firm, the __?__ was the
bridge between the self-sufficient farm
household and the modern firm.

EA
Erwin Antoni
Numerade Educator
01:07

Problem 14

Which of the following is correct?
a. Revenue Profit Cost of Production
b. Profit Cost of Production Revenue
c. Profit Revenue Cost of Production
d. Cost of Production Revenue  Profit

Carson Merrill
Carson Merrill
Numerade Educator
06:51

Problem 15

True or False International trade occurs because the opportunity cost of producing specific goods differs among countries.

Puneet Prajapati
Puneet Prajapati
Numerade Educator

Problem 16

. A(n) __?__ awards an inventor the exclusive
right to produce a good for a specific period
of time.

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Problem 17

Which of the following is not a true statement
about monoplies?
a. Monopolies try to charge higher prices
than would result through competition.
b. By maximizing profits, monopolies
ultimately benefit social welfare.
c. Antitrust laws attempt to reduce
monopoly power.
d. Monopolies may try to influence the
political system in order to protect and
enhance their power.

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01:50

Problem 18

Which of the following is the best example of
the government regulating a natural
monopoly?
a. emission standards for automobiles
b. required testing and approval to market
new drugs
c. rules for selling new shares of corporate
stock
d. set prices for distributing natural gas to
homes

Crystal Wang
Crystal Wang
Numerade Educator
03:11

Problem 19

. True or False Public goods can be used by all
consumers and have no economic cost.

Pavitr Ahuja
Pavitr Ahuja
Numerade Educator
02:35

Problem 20

_?_ are nonrival but exclusive, such as cable
TV signals.

Amna Khalid
Amna Khalid
Numerade Educator
07:22

Problem 21

True or False Poverty is a relative term that
has different meanings at different times and
in different locations.

Souvik Ghosh
Souvik Ghosh
Numerade Educator
03:32

Problem 22

Which of the following would be an example
of an attempt by the Federal Reserve System
to stimulate the economy through monetary
policy?
a. a 5 percent reduction in federal income
tax rates
b. an increase in government spending for
road construction
c. an increase in the amount of money in
the economy
d. an increase in the tax on goods
purchased from other countries

Xiaomin Bian
Xiaomin Bian
Numerade Educator
05:31

Problem 23

Another term for welfare is
a. job-placement program.
b. income-assistance program.
c. social insurance program.
d. tax rebate program.

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator

Problem 24

. Identifying Goods Copy the figure below.
Place the letter of each of the following in the
correct box of the figure.
a. Police protection
b. Shrimp in the ocean
c. Public vaccinations
d. Picnic tables in a national park
e. Your television set
f. An unused public tennis court
g. Seashells on a beach
h. Your uncle’s fishing boat

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01:13

Problem 25

Examples in Your Community Make a second
copy of the figure in exercise 24. Place two
examples of each type of good that exist in
your community in the appropriate boxes.
Use examples that are different from those in
exercise 24.

Amy Jiang
Amy Jiang
Numerade Educator
01:06

Problem 26

Your Share of the Cost In 2001, the cost of
national defense for the United States was
just over $300 billion. At that time, there were
approximately 280 million people living in
this country. Calculate the cost of national
defense per person in 2001. Explain why it is
difficult to charge individuals their “fair
share” of the cost of national defense.

Carson Merrill
Carson Merrill
Numerade Educator
06:43

Problem 27

Sharpen Your Skills—Use Mathematics to Draw Conclusions In 2001, the value of total production in the United States was $10.442
trillion. In that year, the federal government spent or transferred $1.864 trillion. What percent of the nation’s total income flowed through the federal government in 2001? The table below shows the experience over a
longer period. On a separate sheet, fill in the
right-hand column. What has been the trend
over the period? What do these data show
about the importance of federal government
spending and transfers in the economy in
these years? Considering recent history,
would you expect this trend to continue in
the future?

Willis James
Willis James
Numerade Educator
06:15

Problem 28

. Access EconData Online at thomsonedu.com/
school/econxtra. Under "Microeconomics,"
click on “Income Distribution and Poverty,”
and then “Civilian Unemployment Rate.” After
analyzing the information available, write a
paragraph to explain why the unemployment
rate is inversely related to the growth rate of
real GDP over the business cycle.

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator