Exam 4: Markets in Action

Which of the following is the most likely result of an increase in the minimum wage?

Why do negative externalities like pollution result in inefficiency?

Exhibit 4-3 Supply and demand curves -In Exhibit 4-3, an increase in quantity supplied would cause a movement from which equilibrium point to another, other things being equal?

​Price floors typically improve market efficiency.

Over a ten year period, the monthly charge for cellular phone service decreased from $120 per month to $30 per month. At the same time, the number of subscribers increased from less than 10 million to more than 75 million. Which of the following provides the best explanation for these changes?

Much of the nation's coal is extracted by strip mining. This process leaves a huge barren hole in the ground when complete, and the cost of replanting the trees is approximately $10 per ton of coal. Burning the coal for electricity causes air pollution. No one knows how much damage the air pollution causes, but we know that for another $10 per ton the power plant can be outfitted with a pollution control device. What is one measure of the true social cost of coal fired electricity, in dollars per ton?

Each year around Valentine's Day, we would expect:

Exhibit 4-2 Supply and demand curves ​ -In Exhibit 4-2 an increase in supply would cause a movement from which equilibrium point to another, other things being equal?

Exhibit 4-1 Supply and demand data Price Quantity demanded Quantity supplied \ 1.00 500 50 1.50 450 150 2.00 400 250 2.50 300 300 3.00 150 350 ​ -In Exhibit 4-1, suppose that a reduction in the price of an important input used to produce the good causes an increase in quantity supplied of 150 units at every price level. Assuming that demand does not change, the new equilibrium price will be:

A price floor is:

A community in a Southeastern state passed a beautification ordinance (law) prohibiting the placement of indoor furniture outside of homes (i.e., no couches on the porch). The law represents a conflict between ____ and ____.

Assume that the production of a good imposes external costs upon third parties. If the price and quantity of this good is set by supply and demand the price will be too:

Exhibit 4-2 Supply and demand curves ​ -In Exhibit 4-2, which of the following might cause a shift from S₁ to S₂?

Exhibit 4-6 Demand and supply curves ​ -In Exhibit 4-6, the demand curve has shifted from D₁ to D₂ and, simultaneously, the supply curve has shifted from S₁ to S₂. Describe these actions in this market.

The possibility of a free rider exists:

Exhibit 4-8 Demand and supply curves ​ -In Exhibit 4-8, a movement from A to B in which price has decreased and quantity has increased is best explained by a(n):

If the equilibrium price of aspirins is $2.50 and a price ceiling is imposed at $3.00, the eventual result after market adjustment will be a(n):

Which of the following is an example of a negative externality?

From the standpoint of economic efficiency, competitive markets provide:

Exhibit 4-9 Data on supply and demand Price Quantity Demanded Quantity Supplied \ 2.00 100 300 1.50 150 250 1.00 200 200 0.50 250 150 -In Exhibit 4-9, if a price ceiling is set at $1.50 the market result after adjustment is: