Question 1

If the equilibrium price of good X is $15 and a price ceiling is imposed at $14,the result will be:

Accepted Answer

A) an accumulation of inventories of unsold X. 
B) difficult to determine. 
C) a surplus. 
D) a shortage. 
A) an accumulation of inventories of unsold X. 
B) difficult to determine. 
C) a surplus. 
D) a shortage.

Question 2

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 3

Noise pollution is a problem because:

Accepted Answer

A) it creates an external cost to others. 
B) it is damaging to those who turn the music on too high. 
C) it is very enjoyable to those who like it. 
D) it cannot be quantified. 
A) it creates an external cost to others. 
B) it is damaging to those who turn the music on too high. 
C) it is very enjoyable to those who like it. 
D) it cannot be quantified.

Question 4

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:

Accepted Answer

A) high and quantity too low for efficient resource allocation. 
B) low and quantity too low for efficient resource allocation. 
C) low and quantity too high for efficient resource allocation. 
D) high and quantity too high for efficient resource allocation. 
A) high and quantity too low for efficient resource allocation. 
B) low and quantity too low for efficient resource allocation. 
C) low and quantity too high for efficient resource allocation. 
D) high and quantity too high for efficient resource allocation.

Question 5

Suppose a new legislation is introduced and car producers have to pay higher wages to their workers.What will be the effect on the car market?

Accepted Answer

A) Price will decrease and quantity will decrease. 
B) Price will increase and quantity will increase. 
C) Price will decrease and quantity will increase. 
D) Price will increase and quantity will decrease. 
A) Price will decrease and quantity will decrease. 
B) Price will increase and quantity will increase. 
C) Price will decrease and quantity will increase. 
D) Price will increase and quantity will decrease.

Question 6

If the government imposes a price ceiling,then:

Accepted Answer

A) producers must charge the ceiling price. 
B) the price offered by producers must be at or above the ceiling price. 
C) the price offered by producers must be at or below the ceiling price. 
D) producers would be inclined to increase the quantity supplied. 
E) the market supply curve will shift to the right. 
A) producers must charge the ceiling price. 
B) the price offered by producers must be at or above the ceiling price. 
C) the price offered by producers must be at or below the ceiling price. 
D) producers would be inclined to increase the quantity supplied. 
E) the market supply curve will shift to the right.

Question 7

A way to reduce income inequality is:

Accepted Answer

A) for governments to impose a progressive income tax. 
B) for governments to reduce welfare payments. 
C) for governments to pay welfare benefits to higher income earners. 
D) for governments to stop intervening in the market. 
A) for governments to impose a progressive income tax. 
B) for governments to reduce welfare payments. 
C) for governments to pay welfare benefits to higher income earners. 
D) for governments to stop intervening in the market.

Question 8

A severe storm destroyed the banana plantations in northern Queensland.Shortly thereafter the price of bananas rose significantly.These events suggest that a/an:

Accepted Answer

A) decrease in the supply of bananas caused the price of bananas to rise. 
B) increase in the supply of bananas caused the price of bananas to rise. 
C) increase in demand caused the price of bananas to rise. 
D) decrease in demand caused the price of bananas to rise. 
A) decrease in the supply of bananas caused the price of bananas to rise. 
B) increase in the supply of bananas caused the price of bananas to rise. 
C) increase in demand caused the price of bananas to rise. 
D) decrease in demand caused the price of bananas to rise.

Question 9

Economists argue that the minimum wage results in:

Accepted Answer

A) more bargaining power for unskilled workers. 
B) zero impact if the minimum wage is above the market-clearing price. 
C) a shortage of workers. 
D) a more equal income distribution and is worth the loss of some jobs. 
A) more bargaining power for unskilled workers. 
B) zero impact if the minimum wage is above the market-clearing price. 
C) a shortage of workers. 
D) a more equal income distribution and is worth the loss of some jobs.

Question 10

John paints the exterior of his house and,as a result,his neighbour Christine is able to sell her home for $5,000 more than she could have before.John's house-painting:

Accepted Answer

A) creates a negative externality for Christine. 
B) shows John is a free rider. 
C) results in an efficient market outcome for both. 
D) creates a positive externality for Christine. 
E) was poorly done. 
A) creates a negative externality for Christine. 
B) shows John is a free rider. 
C) results in an efficient market outcome for both. 
D) creates a positive externality for Christine. 
E) was poorly done.

Question 11

Which of the following would be a social cost?

Accepted Answer

A) Price of a pack of cigarettes. 
B) Cost of the hospitalisation due to smoking related illnesses. 
C) Costs of new more efficient equipment to produce cigarettes. 
D) Cost of electricity to produce cigarettes. 
A) Price of a pack of cigarettes. 
B) Cost of the hospitalisation due to smoking related illnesses. 
C) Costs of new more efficient equipment to produce cigarettes. 
D) Cost of electricity to produce cigarettes.

Question 12

Price ceiling is:

Accepted Answer

A) any price above market equilibrium. 
B) a price above market equilibrium set by the government. 
C) a price below market equilibrium set by the government. 
D) any price below market equilibrium. 
A) any price above market equilibrium. 
B) a price above market equilibrium set by the government. 
C) a price below market equilibrium set by the government. 
D) any price below market equilibrium.

Question 13

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

Accepted Answer

A) Price of leaf tobacco. 
B) Cost to the government of the hospital expenses of indigent smokers. 
C) Increased risk of cancer to the non-smoking passengers in the smoker's carpool. 
D) Price of a pack of cigarettes. 
E) The loss in utility received because smokers must stand outside their office buildings in the winter to smoke. 
A) Price of leaf tobacco. 
B) Cost to the government of the hospital expenses of indigent smokers. 
C) Increased risk of cancer to the non-smoking passengers in the smoker's carpool. 
D) Price of a pack of cigarettes. 
E) The loss in utility received because smokers must stand outside their office buildings in the winter to smoke.

Question 14

If consumers expect the price of sugar to increase next month,the quantity of sugar demanded will:

Accepted Answer

A) decline now. 
B) increase now. 
C) stay the same. 
D) cannot be determined from the information provided. 
E) increase next month. 
A) decline now. 
B) increase now. 
C) stay the same. 
D) cannot be determined from the information provided. 
E) increase next month.

Question 15

When there are positive externalities associated with the consumption of a good,we can expect:

Accepted Answer

A) the private demand curve to lie above the social demand curve. 
B) the private supply curve to lie below the social supply curve. 
C) the private supply curve to lie above the social supply curve. 
D) the private demand curve to lie below the social demand curve. 
E) the private demand curve to lie below the social supply curve. 
A) the private demand curve to lie above the social demand curve. 
B) the private supply curve to lie below the social supply curve. 
C) the private supply curve to lie above the social supply curve. 
D) the private demand curve to lie below the social demand curve. 
E) the private demand curve to lie below the social supply curve.

Question 16

The presence of negative externalities that are incorporated in price results in misallocation of resources.

Accepted Answer

A) True 
 B)False

Question 17

When there is a positive externality associated with the watering of one's lawn,the free market results in:

Accepted Answer

A) not enough lawn watering. 
B) too much lawn watering. 
C) the socially optimal level of lawn watering. 
D) people watering each other's lawns. 
E) government subsidies for lawn watering. 
A) not enough lawn watering. 
B) too much lawn watering. 
C) the socially optimal level of lawn watering. 
D) people watering each other's lawns. 
E) government subsidies for lawn watering.

Question 18

Exhibit 4-4 Demand and supply curves
  
-In Exhibit 4-4,a movement from A to B in which price has decreased and quantity has increased is best explained by a/an:

Accepted Answer

A) increase in supply and demand. 
B) decrease in supply and demand. 
C) increase in supply that dominates a decrease in demand. 
D) increase in demand that dominates a decrease in supply. 
E) decrease in demand that dominates an increase in supply. 
A) increase in supply and demand. 
B) decrease in supply and demand. 
C) increase in supply that dominates a decrease in demand. 
D) increase in demand that dominates a decrease in supply. 
E) decrease in demand that dominates an increase in supply.

Question 19

Higher petrol prices would likely raise the price of large,gas-guzzling automobiles

Accepted Answer

A) True 
 B)False

Question 20

If the equilibrium price of aspirins is $5.50 for 250 tablets and the government imposes a price ceiling at $5.00 for 250 tablets,the eventual result will be:

Accepted Answer

A) a shift in the demand curve to the right. 
B) a shift in the supply curve to the right. 
C) an accumulation of inventories of unsold aspirins. 
D) a shortage of aspirin. 
A) a shift in the demand curve to the right. 
B) a shift in the supply curve to the right. 
C) an accumulation of inventories of unsold aspirins. 
D) a shortage of aspirin.

If the equilibrium price of good X is $15 and a price ceiling is imposed at $14,the result will be:

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

Noise pollution is a problem because:

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:

Suppose a new legislation is introduced and car producers have to pay higher wages to their workers.What will be the effect on the car market?

If the government imposes a price ceiling,then:

A way to reduce income inequality is:

A severe storm destroyed the banana plantations in northern Queensland.Shortly thereafter the price of bananas rose significantly.These events suggest that a/an:

Economists argue that the minimum wage results in:

John paints the exterior of his house and,as a result,his neighbour Christine is able to sell her home for $5,000 more than she could have before.John's house-painting:

Which of the following would be a social cost?

Price ceiling is:

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

If consumers expect the price of sugar to increase next month,the quantity of sugar demanded will:

When there are positive externalities associated with the consumption of a good,we can expect:

The presence of negative externalities that are incorporated in price results in misallocation of resources.

When there is a positive externality associated with the watering of one's lawn,the free market results in:

Exhibit 4-4 Demand and supply curves -In Exhibit 4-4,a movement from A to B in which price has decreased and quantity has increased is best explained by a/an:

Higher petrol prices would likely raise the price of large,gas-guzzling automobiles

If the equilibrium price of aspirins is $5.50 for 250 tablets and the government imposes a price ceiling at $5.00 for 250 tablets,the eventual result will be:

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 the equilibrium price of good X is $15 and a price ceiling is imposed at $14,the result will be:

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

Noise pollution is a problem because:

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:

Suppose a new legislation is introduced and car producers have to pay higher wages to their workers.What will be the effect on the car market?

If the government imposes a price ceiling,then:

A way to reduce income inequality is:

A severe storm destroyed the banana plantations in northern Queensland.Shortly thereafter the price of bananas rose significantly.These events suggest that a/an:

Economists argue that the minimum wage results in:

John paints the exterior of his house and,as a result,his neighbour Christine is able to sell her home for $5,000 more than she could have before.John's house-painting:

Which of the following would be a social cost?

Price ceiling is:

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

If consumers expect the price of sugar to increase next month,the quantity of sugar demanded will:

When there are positive externalities associated with the consumption of a good,we can expect:

The presence of negative externalities that are incorporated in price results in misallocation of resources.

When there is a positive externality associated with the watering of one's lawn,the free market results in:

Exhibit 4-4 Demand and supply curves -In Exhibit 4-4,a movement from A to B in which price has decreased and quantity has increased is best explained by a/an:

Higher petrol prices would likely raise the price of large,gas-guzzling automobiles

If the equilibrium price of aspirins is $5.50 for 250 tablets and the government imposes a price ceiling at $5.00 for 250 tablets,the eventual result will be:

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