Question 1

Which of the following would be a private cost to a cigarette smoker?

Accepted Answer

A)  Cost to the employer of the higher health insurance premiums due to the hiring of a smoker. 
B)  Cost to the employer of the extra effort lost due to the increased missed days of work as a result of smoking. 
C)  Cost to the city of extra park cleanup due to the presence of cigarette butts. 
D)  Price of the pack of cigarettes. 
E)  Cost to the government to pay the hospital expenses of indigent smokers. 
A)  Cost to the employer of the higher health insurance premiums due to the hiring of a smoker. 
B)  Cost to the employer of the extra effort lost due to the increased missed days of work as a result of smoking. 
C)  Cost to the city of extra park cleanup due to the presence of cigarette butts. 
D)  Price of the pack of cigarettes. 
E)  Cost to the government to pay the hospital expenses of indigent smokers.

Question 2

​A price ceiling set below the equilibrium price creates a shortage.

Accepted Answer

A) True 
 B)False

Question 3

An increase in demand and a decrease in supply cause which of the following?

Accepted Answer

A)  Equilibrium price change is indeterminate. 
B)  Equilibrium quantity decreases. 
C)  Equilibrium price falls. 
D)  Equilibrium price rises. 
E)  Equilibrium quantity increases. 
A)  Equilibrium price change is indeterminate. 
B)  Equilibrium quantity decreases. 
C)  Equilibrium price falls. 
D)  Equilibrium price rises. 
E)  Equilibrium quantity increases.

Question 4

Exhibit 4-7 Demand and supply schedules for movie tickets
​ $$\begin{array} { | c | c | c | } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Supplied }
\end{array} \
\hline \$ 10 & 200 & 500 \
8 & 240 & 470 \
6 & 370 & 420 \
4 & 390 & 390 \
2 & 410 & 310 \
\hline
\end{array}$$
-In Exhibit 4-7, the equilibrium price of a movie ticket is:

Accepted Answer

A)  $10. 
B)  $8. 
C)  $6. 
D)  $4. 
E)  $2. 
A)  $10. 
B)  $8. 
C)  $6. 
D)  $4. 
E)  $2.

Question 5

Voluntary recycling is available in many parts of the country. If citizens of these areas have collected recyclable material at home, they can bring it to a recycling center. These materials reduce landfill space, reduce the need for virgin material extraction, and provide an inexpensive input in many production processes. The information in this question suggests what about areas without voluntary recycling?

Accepted Answer

A)  Externalities exist. 
B)  There is mandatory recycling. 
C)  Raw materials are less expensive. 
D)  The cost of production is higher. 
E)  Nothing. 
A)  Externalities exist. 
B)  There is mandatory recycling. 
C)  Raw materials are less expensive. 
D)  The cost of production is higher. 
E)  Nothing.

Question 6

Exhibit 4-3 Supply and demand curves  
-The market shown in Exhibit 4-3 is initially in equilibrium at E4. Changes in market conditions result in a new equilibrium at E3. This change is stated as a(n):

Accepted Answer

A)  increase in supply and an increase in quantity demanded. 
B)  increase in supply and a decrease in demand. 
C)  decrease in supply and a decrease in quantity demanded. 
D)  increase in demand an increase in supply. 
A)  increase in supply and an increase in quantity demanded. 
B)  increase in supply and a decrease in demand. 
C)  decrease in supply and a decrease in quantity demanded. 
D)  increase in demand an increase in supply.

Question 7

Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause:

Accepted Answer

A)  an increase in the supply of piercings and a lower price for piercings. 
B)  an increase in the supply of piercings and a higher price for piercings. 
C)  a decrease in the supply of piercings and a higher price for piercings. 
D)  a decrease in the supply of piercings and a lower price for piercings. 
A)  an increase in the supply of piercings and a lower price for piercings. 
B)  an increase in the supply of piercings and a higher price for piercings. 
C)  a decrease in the supply of piercings and a higher price for piercings. 
D)  a decrease in the supply of piercings and a lower price for piercings.

Question 8

A good that provides external benefits to society has:

Accepted Answer

A)  too few resources devoted to its production. 
B)  too many resources devoted to its production. 
C)  the optimal resources devoted to its production. 
D)  not provided profits to producers of the good. 
A)  too few resources devoted to its production. 
B)  too many resources devoted to its production. 
C)  the optimal resources devoted to its production. 
D)  not provided profits to producers of the good.

Question 9

A good example of a price floor is:

Accepted Answer

A)  rent controls on apartments in major cities. 
B)  general admission tickets to concerts. 
C)  the minimum wage law. 
D)  food stamp regulations. 
E)  rock concert tickets. 
A)  rent controls on apartments in major cities. 
B)  general admission tickets to concerts. 
C)  the minimum wage law. 
D)  food stamp regulations. 
E)  rock concert tickets.

Question 10

If the equilibrium price of bread is $2 and the government imposes a $1.50 price ceiling on the price of bread, then:

Accepted Answer

A)  more bread will be produced. 
B)  there will be a shortage of bread. 
C)  the demand for bread will decrease. 
D)  producers will charge $0.50 for bread. 
E)  $0.50 in tax revenue will be paid for each unit of bread. 
A)  more bread will be produced. 
B)  there will be a shortage of bread. 
C)  the demand for bread will decrease. 
D)  producers will charge $0.50 for bread. 
E)  $0.50 in tax revenue will be paid for each unit of bread.

Question 11

In the presence of positive externalities, a free market will choose a price which is too ____ and produce an output which is too ____ compared with the social optimum.

Accepted Answer

A)  high; low 
B)  low; low 
C)  high; high 
D)  low; high 
E)  marginal; inequitable 
A)  high; low 
B)  low; low 
C)  high; high 
D)  low; high 
E)  marginal; inequitable

Question 12

Which of the following is a public good?

Accepted Answer

A)  An economics lecture. 
B)  A television set. 
C)  Higher education. 
D)  Housing. 
E)  Clean air 
A)  An economics lecture. 
B)  A television set. 
C)  Higher education. 
D)  Housing. 
E)  Clean air

Question 13

A decrease in demand leads to a (an):

Accepted Answer

A)  increased equilibrium price and an increased equilibrium quantity. 
B)  decreased equilibrium price and a decreased equilibrium quantity. 
C)  decreased equilibrium price and an increased equilibrium quantity. 
D)  increased equilibrium price and a decreased equilibrium quantity. 
A)  increased equilibrium price and an increased equilibrium quantity. 
B)  decreased equilibrium price and a decreased equilibrium quantity. 
C)  decreased equilibrium price and an increased equilibrium quantity. 
D)  increased equilibrium price and a decreased equilibrium quantity.

Question 14

Public goods are usually provided by:

Accepted Answer

A)  private industry. 
B)  the government. 
C)  private citizens. 
D)  internal markets 
E)  local industry. 
A)  private industry. 
B)  the government. 
C)  private citizens. 
D)  internal markets 
E)  local industry.

Question 15

An increase in the price of plastic raises the cost of manufacturing DVDs. As a result, the market changes to a new equilibrium because of a(n):

Accepted Answer

A)  surplus of DVDs. 
B)  increase in the demand for DVDs. 
C)  leftward shift in the demand curve for DVDs. 
D)  leftward shift in the supply curve for DVDs. 
A)  surplus of DVDs. 
B)  increase in the demand for DVDs. 
C)  leftward shift in the demand curve for DVDs. 
D)  leftward shift in the supply curve for DVDs.

Question 16

It's easy for a private firm to provide a public good because of free riders.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is the best description of the effects of an increase in the supply of bread?

Accepted Answer

A)  Consumers will pay more for bread. 
B)  Bread prices will fall, and bread sales will rise. 
C)  A permanent surplus of bread will remain on the market. 
D)  Bakers will have higher marginal costs. 
A)  Consumers will pay more for bread. 
B)  Bread prices will fall, and bread sales will rise. 
C)  A permanent surplus of bread will remain on the market. 
D)  Bakers will have higher marginal costs.

Question 18

If each of us relied exclusively on the market to determine what to buy, we would probably end up with few, if any:

Accepted Answer

A)  streetlights. 
B)  strawberries. 
C)  CDs. 
D)  raincoats. 
E)  televisions. 
A)  streetlights. 
B)  strawberries. 
C)  CDs. 
D)  raincoats. 
E)  televisions.

Question 19

Which of the following is not a solution to the problem of negative externalities due to pollution?

Accepted Answer

A)  Create private property rights. 
B)  Levy pollution taxes. 
C)  Create obligatory controls. 
D)  Reward the production of these products through subsidies. 
E)  Establish strict limits on the amount of pollution allowed. 
A)  Create private property rights. 
B)  Levy pollution taxes. 
C)  Create obligatory controls. 
D)  Reward the production of these products through subsidies. 
E)  Establish strict limits on the amount of pollution allowed.

Question 20

A price ceiling that sets the price of a good below market equilibrium will cause:

Accepted Answer

A)  An increase in quantity demanded of the good. 
B)  A decrease in quantity supplied of the good. 
C)  A shortage of the good. 
D)  All of these. 
A)  An increase in quantity demanded of the good. 
B)  A decrease in quantity supplied of the good. 
C)  A shortage of the good. 
D)  All of these.

Which of the following would be a private cost to a cigarette smoker?

A price ceiling set below the equilibrium price creates a shortage.

An increase in demand and a decrease in supply cause which of the following?

Exhibit 4-7 Demand and supply schedules for movie tickets Price Quantity Demanded Quantity Supplied \ 10 200 500 8 240 470 6 370 420 4 390 390 2 410 310 -In Exhibit 4-7, the equilibrium price of a movie ticket is:

Exhibit 4-3 Supply and demand curves -The market shown in Exhibit 4-3 is initially in equilibrium at E₄. Changes in market conditions result in a new equilibrium at E₃. This change is stated as a(n):

Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause:

A good that provides external benefits to society has:

A good example of a price floor is:

If the equilibrium price of bread is $2 and the government imposes a $1.50 price ceiling on the price of bread, then:

In the presence of positive externalities, a free market will choose a price which is too and produce an output which is too compared with the social optimum.

Which of the following is a public good?

A decrease in demand leads to a (an):

Public goods are usually provided by:

An increase in the price of plastic raises the cost of manufacturing DVDs. As a result, the market changes to a new equilibrium because of a(n):

It's easy for a private firm to provide a public good because of free riders.

Which of the following is the best description of the effects of an increase in the supply of bread?

If each of us relied exclusively on the market to determine what to buy, we would probably end up with few, if any:

Which of the following is not a solution to the problem of negative externalities due to pollution?

A price ceiling that sets the price of a good below market equilibrium will cause:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exam 4: Markets in Action

Which of the following would be a private cost to a cigarette smoker?

​A price ceiling set below the equilibrium price creates a shortage.

An increase in demand and a decrease in supply cause which of the following?

Exhibit 4-7 Demand and supply schedules for movie tickets ​ Price Quantity Demanded Quantity Supplied \ 10 200 500 8 240 470 6 370 420 4 390 390 2 410 310 -In Exhibit 4-7, the equilibrium price of a movie ticket is:

Exhibit 4-3 Supply and demand curves -The market shown in Exhibit 4-3 is initially in equilibrium at E4. Changes in market conditions result in a new equilibrium at E3. This change is stated as a(n):

Suppose a new law requires all piercing studios to pass tougher licensing tests and to begin using more costly sterilization methods. Other things constant, this law would cause:

A good that provides external benefits to society has:

A good example of a price floor is:

If the equilibrium price of bread is $2 and the government imposes a $1.50 price ceiling on the price of bread, then:

In the presence of positive externalities, a free market will choose a price which is too ____ and produce an output which is too ____ compared with the social optimum.

Which of the following is a public good?

A decrease in demand leads to a (an):

Public goods are usually provided by:

An increase in the price of plastic raises the cost of manufacturing DVDs. As a result, the market changes to a new equilibrium because of a(n):

It's easy for a private firm to provide a public good because of free riders.

Which of the following is the best description of the effects of an increase in the supply of bread?

If each of us relied exclusively on the market to determine what to buy, we would probably end up with few, if any:

Which of the following is not a solution to the problem of negative externalities due to pollution?

A price ceiling that sets the price of a good below market equilibrium will cause:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

A price ceiling set below the equilibrium price creates a shortage.

Exhibit 4-7 Demand and supply schedules for movie tickets Price Quantity Demanded Quantity Supplied \ 10 200 500 8 240 470 6 370 420 4 390 390 2 410 310 -In Exhibit 4-7, the equilibrium price of a movie ticket is:

Exhibit 4-3 Supply and demand curves -The market shown in Exhibit 4-3 is initially in equilibrium at E₄. Changes in market conditions result in a new equilibrium at E₃. This change is stated as a(n):

In the presence of positive externalities, a free market will choose a price which is too and produce an output which is too compared with the social optimum.