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We Are Good

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Economics 202 Fall 2013 Quiz 2

1. Which of the following is true about sole proprietorships in the United States? a. It is the most common form of business organization. b. It is responsible for the largest portion of business sales. c. It offers the owner the least personal liability of any form of business organization. d. There is no opportunity cost to operating the business.

2. Which of the following taxes is based on the ability to pay principle? a. tolls on a bridge b. income taxes c. gasoline taxes d. user fees that collect the same amount from each person

3. Which of the following would not shift the demand curve for pork? a. an increase in the price of beef, a substitute for pork b. an increase in the price of pork c. an increase in the incomes of pork consumers d. a finding that consumption of beef, a pork substitute, increases the risk of heart attack

4. The difference between normal and inferior goods is that a. normal goods are always better quality than inferior goods b. an increase in price will shift the demand curve for a normal good rightward and the demand curve for an inferior good leftward a. an inferior good is something that will not be demanded until quantities of the normal good have been exhausted d. an increase in income will shift the demand curve for a normal good rightward and the demand curve for an inferior good leftward

5. If two goods are substitutes then a. a decrease in the demand for one leads to a decrease in the supply of the other b. an increase in the demand for one leads to a decrease in the supply of the other c. an increase in the price of one leads to an increase in the demand for the other d. a decrease in the price of one leads to an increase

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