Exam 4: Markets in Action

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?

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):

Which of the following is a public good?

In the case of negative externalities in production, the firm's internal costs:

City streets, sewage systems, and police protection are all examples of:

If the government imposes a price floor above the market equilibrium price, then:

Noise pollution is a serious problem. One major contributor is the recent development of very powerful amplification equipment for automobile radios. Many people complain that the windows in their home vibrate when some cars drive by. Others complain that loud car radios set off very sensitive alarms in nearby parked cars. What do we know about the drivers of cars with loud stereos?

A cost or benefit of a good imposed on people other than the consumers or producer of a good is called a(n):

If the government imposes a price ceiling below the market equilibrium price, which of the following will result?

Suppose that X and Y are substitutes. If the price of Y increases, how will this change the market equilibrium for X? ​

Which of the following would raise both the equilibrium price and the equilibrium quantity of strawberries?

Exhibit 4-7  Demand and supply schedules for movie tickets In Exhibit 4-7, a 100 decrease in quantity demanded at every price level would cause the new equilibrium price to become:

Suppose prices for new homes have risen, yet sales of new homes have also risen. We can conclude that:

Which of the following is a free rider?

​ A decrease in demand with the supply held constant leads to:

Exhibit 4-8  Demand and supply curves In Exhibit 4-8, a movement from A to C is best described as a(n)

Suppose that the average equilibrium monthly rental price of apartments and rooms in a college town had been steady at $600, but then the college expanded enrollment from 10,000 to 12,000. Suddenly there is a shortage of rental housing at the prevailing price of $600. Which of the following is most likely to be true ?

If a good gives rise to substantial external benefits to society that are associated with its production and/or consumption, then the good likely has too many resources devoted to its production.

Market failure occurs when supply and demand curves only reflect:

Exhibit 4-4  Supply and demand curves for good X A decrease in buyers' income, assuming good X is a normal good, combined with a decrease in the wage rate paid to workers producing good X would be represented by which of the following changes in equilibrium shown in Graph C of Exhibit 4-4?