Question 1

If it costs $2,000 to pick up the litter along a highway,then the cost of the externality is:

Accepted Answer

A) $0. 
B) more than $0 but less than $2,000. 
C) $2,000. 
D) more than $2,000 but finite. 
E) infinite. 
A) $0. 
B) more than $0 but less than $2,000. 
C) $2,000. 
D) more than $2,000 but finite. 
E) infinite.

Question 2

Which of the following is not a characteristic of a public good?

Accepted Answer

A) It is scarce. 
B) It is not diminished in amount as additional people consume the product. 
C) Its benefits cannot be withheld from anyone. 
D) It is free. 
E) It yields widespread benefits. 
A) It is scarce. 
B) It is not diminished in amount as additional people consume the product. 
C) Its benefits cannot be withheld from anyone. 
D) It is free. 
E) It yields widespread benefits.

Question 3

Which of the following is the best example of a public good?

Accepted Answer

A) Potatoes. 
B) Government building. 
C) Lighthouse. 
D) Commercial TV. 
A) Potatoes. 
B) Government building. 
C) Lighthouse. 
D) Commercial TV.

Question 4

A free rider is a person who:

Accepted Answer

A) is harmed by another's actions. 
B) is subject to a negative externality. 
C) receives benefits from someone else's action but does not pay for them. 
D) pays less than the full value for a product. 
E) won the lottery. 
A) is harmed by another's actions. 
B) is subject to a negative externality. 
C) receives benefits from someone else's action but does not pay for them. 
D) pays less than the full value for a product. 
E) won the lottery.

Question 5

The reason individual homeowners usually do not hire a private contractor to fill the potholes on their street is because:

Accepted Answer

A) it costs too much. 
B) the value to the neighbourhood exceeds the cost of repair. 
C) others who use the street will be free riders. 
D) they do not trust the government. 
E) there are negative externalities associated with the repair. 
A) it costs too much. 
B) the value to the neighbourhood exceeds the cost of repair. 
C) others who use the street will be free riders. 
D) they do not trust the government. 
E) there are negative externalities associated with the repair.

Question 6

Suppose a price ceiling is set by the government below the market equilibrium price.Which of the following will result?

Accepted Answer

A) The demand curve will shift to the left. 
B) The quantity demanded will exceed the quantity supplied. 
C) The quantity supplied will exceed the quantity demanded. 
D) There will be a surplus. 
A) The demand curve will shift to the left. 
B) The quantity demanded will exceed the quantity supplied. 
C) The quantity supplied will exceed the quantity demanded. 
D) There will be a surplus.

Question 7

Suppose the government sets a price ceiling.Which of the following will result?

Accepted Answer

A) The quantity supplied will be greater than quantity demanded. 
B) There will be a shortage. 
C) There will be a surplus. 
D) The quantity supplied will be equal to quantity demanded. 
A) The quantity supplied will be greater than quantity demanded. 
B) There will be a shortage. 
C) There will be a surplus. 
D) The quantity supplied will be equal to quantity demanded.

Question 8

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 the 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 the products through subsidies. 
E) Establish strict limits on the amount of pollution allowed.

Question 9

Non-smoking sections in restaurants are designed to remove _____ from a market _____.

Accepted Answer

A) smoke; with food service 
B) third parties; for food service 
C) externalities; with public goods 
D) third parties; externality 
E) non-smokers; for food service 
A) smoke; with food service 
B) third parties; for food service 
C) externalities; with public goods 
D) third parties; externality 
E) non-smokers; for food service

Question 10

Which of the following is not a market failure?

Accepted Answer

A) A lack of competition in some markets. 
B) Prices determined in competitive markets, which consumers, as individuals, have no control over. 
C) The presence of externalities in some markets. 
D) A lack of public goods desired by a majority of citizens. 
E) Income inequality. 
A) A lack of competition in some markets. 
B) Prices determined in competitive markets, which consumers, as individuals, have no control over. 
C) The presence of externalities in some markets. 
D) A lack of public goods desired by a majority of citizens. 
E) Income inequality.

Question 11

Price floors are used as a method to:

Accepted Answer

A) assure buyers that goods won't be cheaper tomorrow. 
B) see that production levels don't fall too low. 
C) guarantee there will be enough food for everyone. 
D) combat excess demand in the market. 
E) assure sellers of a minimum price for their goods. 
A) assure buyers that goods won't be cheaper tomorrow. 
B) see that production levels don't fall too low. 
C) guarantee there will be enough food for everyone. 
D) combat excess demand in the market. 
E) assure sellers of a minimum price for their goods.

Question 12

A market consequence of a price floor program is that:

Accepted Answer

A) a shortage of the product will develop. 
B) producers will stop supplying the product. 
C) some rationing device must then be instituted. 
D) a surplus of the product will develop. 
E) there will be an excess demand for the product. 
A) a shortage of the product will develop. 
B) producers will stop supplying the product. 
C) some rationing device must then be instituted. 
D) a surplus of the product will develop. 
E) there will be an excess demand for the product.

Question 13

The shortage because of the price ceiling might result in:

Accepted Answer

A) less waiting times. 
B) more goods on offer. 
C) lower quality of the good. 
D) higher quality of the good. 
A) less waiting times. 
B) more goods on offer. 
C) lower quality of the good. 
D) higher quality of the good.

Question 14

A public good may be defined as any good or service that:

Accepted Answer

A) must be provided only to certain groups. 
B) must be distributed to all citizens in equal shares. 
C) excludes free riders. 
D) is not exclusive. 
A) must be provided only to certain groups. 
B) must be distributed to all citizens in equal shares. 
C) excludes free riders. 
D) is not exclusive.

Question 15

Price ceilings are imposed if the government:

Accepted Answer

A) believes that the market will not achieve an equilibrium price. 
B) wants to provide 'essential service'. 
C) wants to spend money. 
D) wants producers to increase the supply. 
A) believes that the market will not achieve an equilibrium price. 
B) wants to provide 'essential service'. 
C) wants to spend money. 
D) wants producers to increase the supply.

Question 16

If the price of fish rises,then the demand for chips will:

Accepted Answer

A) rise. 
B) fall. 
C) remain unchanged. 
D) react unpredictably. 
A) rise. 
B) fall. 
C) remain unchanged. 
D) react unpredictably.

Question 17

The private sector will not provide public goods because:

Accepted Answer

A) it cost too much to produce. 
B) consumers are likely to be free riders. 
C) it is provided by government anyway. 
D) it takes a long time to change the production. 
A) it cost too much to produce. 
B) consumers are likely to be free riders. 
C) it is provided by government anyway. 
D) it takes a long time to change the production.

Question 18

Externalities get their name from the fact that they are:

Accepted Answer

A)  B and D. 
B) unintended. 
C) short-lived. 
D) outside of decisions. 
E)  outside of marketplace. 
A)  B and D. 
B) unintended. 
C) short-lived. 
D) outside of decisions. 
E)  outside of marketplace.

Question 19

Exhibit 4-2 Supply and demand curves
  
-The market shown in Exhibit 4-2 is initially in equilibrium at E₃.Changes in market conditions result in a new equilibrium at E₄.This change is stated as a/an:

Accepted Answer

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

Question 20

In 2002 a community in the United States passed a beautification ordinance (law)prohibiting the placement of indoor furniture outside of homes (e.g.,no couches on the porch).The law represents a conflict between _____ and _____.

Accepted Answer

A) the rich; the poor 
B) third parties; market participants 
C) victims; criminals 
D) public goods; private goods 
E) residents; visitors 
A) the rich; the poor 
B) third parties; market participants 
C) victims; criminals 
D) public goods; private goods 
E) residents; visitors

If it costs $2,000 to pick up the litter along a highway,then the cost of the externality is:

Which of the following is not a characteristic of a public good?

Which of the following is the best example of a public good?

A free rider is a person who:

The reason individual homeowners usually do not hire a private contractor to fill the potholes on their street is because:

Suppose a price ceiling is set by the government below the market equilibrium price.Which of the following will result?

Suppose the government sets a price ceiling.Which of the following will result?

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

Non-smoking sections in restaurants are designed to remove _ from a market _.

Which of the following is not a market failure?

Price floors are used as a method to:

A market consequence of a price floor program is that:

The shortage because of the price ceiling might result in:

A public good may be defined as any good or service that:

Price ceilings are imposed if the government:

If the price of fish rises,then the demand for chips will:

The private sector will not provide public goods because:

Externalities get their name from the fact that they are:

Exhibit 4-2 Supply and demand curves -The market shown in Exhibit 4-2 is initially in equilibrium at E₃.Changes in market conditions result in a new equilibrium at E₄.This change is stated as a/an:

In 2002 a community in the United States passed a beautification ordinance (law)prohibiting the placement of indoor furniture outside of homes (e.g.,no couches on the porch).The law represents a conflict between _ and _.

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Exam 4: Markets in action

If it costs $2,000 to pick up the litter along a highway,then the cost of the externality is:

Which of the following is not a characteristic of a public good?

Which of the following is the best example of a public good?

A free rider is a person who:

The reason individual homeowners usually do not hire a private contractor to fill the potholes on their street is because:

Suppose a price ceiling is set by the government below the market equilibrium price.Which of the following will result?

Suppose the government sets a price ceiling.Which of the following will result?

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

Non-smoking sections in restaurants are designed to remove _____ from a market _____.

Which of the following is not a market failure?

Price floors are used as a method to:

A market consequence of a price floor program is that:

The shortage because of the price ceiling might result in:

A public good may be defined as any good or service that:

Price ceilings are imposed if the government:

If the price of fish rises,then the demand for chips will:

The private sector will not provide public goods because:

Externalities get their name from the fact that they are:

Exhibit 4-2 Supply and demand curves -The market shown in Exhibit 4-2 is initially in equilibrium at E₃.Changes in market conditions result in a new equilibrium at E₄.This change is stated as a/an:

In 2002 a community in the United States passed a beautification ordinance (law)prohibiting the placement of indoor furniture outside of homes (e.g.,no couches on the porch).The law represents a conflict between _____ and _____.

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Non-smoking sections in restaurants are designed to remove _ from a market _.

In 2002 a community in the United States passed a beautification ordinance (law)prohibiting the placement of indoor furniture outside of homes (e.g.,no couches on the porch).The law represents a conflict between _ and _.