Question 1

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

Accepted Answer

A) the demand for new homes has risen. 
B) the law of demand has been violated. 
C) new firms have entered the construction industry. 
D) construction firms must be facing higher costs. 
A) the demand for new homes has risen. 
B) the law of demand has been violated. 
C) new firms have entered the construction industry. 
D) construction firms must be facing higher costs.

Question 2

Consider the market for apples.Assuming that apples and oranges are substitutes,an increase in the price of oranges will:

Accepted Answer

A) decrease the demand for apples, creating a lower price and a smaller amount of apples purchased in the market. 
B) increase the demand for apples, creating a higher price and a greater amount of apples purchased in the market. 
C) decrease the supply of apples, creating a higher price and a smaller amount of apples purchased in the market. 
D) increase the supply of apples, creating a lower price and a greater amount of apples purchased in the market. 
A) decrease the demand for apples, creating a lower price and a smaller amount of apples purchased in the market. 
B) increase the demand for apples, creating a higher price and a greater amount of apples purchased in the market. 
C) decrease the supply of apples, creating a higher price and a smaller amount of apples purchased in the market. 
D) increase the supply of apples, creating a lower price and a greater amount of apples purchased in the market.

Question 3

A public good will:

Accepted Answer

A) be efficiently provided by the free market as long as its total benefits exceed its total costs. 
B) be efficiently provided by the free market as long as its marginal benefits exceed its marginal costs. 
C) be provided in less than efficient quantities by the free market. 
D) be provided in efficient quantities by voluntary contributions. 
E) not be provided by the government. 
A) be efficiently provided by the free market as long as its total benefits exceed its total costs. 
B) be efficiently provided by the free market as long as its marginal benefits exceed its marginal costs. 
C) be provided in less than efficient quantities by the free market. 
D) be provided in efficient quantities by voluntary contributions. 
E) not be provided by the government.

Question 4

Cindy discovers that when she goes to the beach,she does not have to bring her radio.She can put her blanket near someone who has a radio and listen all day (without having to carry her radio,get sand in her speakers or buy new batteries).This is an example of:

Accepted Answer

A) private property abuse. 
B) external costs. 
C) a negative externality. 
D) a positive externality. 
A) private property abuse. 
B) external costs. 
C) a negative externality. 
D) a positive externality.

Question 5

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

Accepted Answer

A) Bread. 
B) Fish in the ocean. 
C) Scrambled satellite broadcasts. 
D) National defence. 
A) Bread. 
B) Fish in the ocean. 
C) Scrambled satellite broadcasts. 
D) National defence.

Question 6

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.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an example of a pure public good?

Accepted Answer

A) A bus. 
B) A mall. 
C) A teddy bear. 
D) An army. 
E) An automobile. 
A) A bus. 
B) A mall. 
C) A teddy bear. 
D) An army. 
E) An automobile.

Question 8

Demand for a normal good will increase at existing prices if:

Accepted Answer

A) there is a decrease in the population size. 
B) there is an increase in income. 
C) there is a decrease in wealth. 
D) there is an increase in interest rates. 
A) there is a decrease in the population size. 
B) there is an increase in income. 
C) there is a decrease in wealth. 
D) there is an increase in interest rates.

Question 9

Suppose that the equilibrium price is $20 and the government sets the price floor at $30.The result of this price floor is:

Accepted Answer

A) negligible. 
B) equilibrium. 
C) surplus. 
D) shortage. 
A) negligible. 
B) equilibrium. 
C) surplus. 
D) shortage.

Question 10

Market failure because of negative externality results in:

Accepted Answer

A) marginal social cost equal to marginal private costs. 
B) marginal social cost less than marginal social benefits. 
C) marginal social cost equal to marginal social benefits. 
D) greater outputs and lower price than socially desirable. 
A) marginal social cost equal to marginal private costs. 
B) marginal social cost less than marginal social benefits. 
C) marginal social cost equal to marginal social benefits. 
D) greater outputs and lower price than socially desirable.

Question 11

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

Accepted Answer

A) Apples. 
B) Cars. 
C) Education. 
D) National defence. 
A) Apples. 
B) Cars. 
C) Education. 
D) National defence.

Question 12

Exhibit 4-4 Demand and supply curves
  
-In Exhibit 4-4,a movement from A to B is best described as a/an:

Accepted Answer

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

Question 13

Pete throws leftover bread onto his front lawn because he enjoys watching the pigeons feeding.His neighbour,John,is not happy about the pigeons,since they leave a mess on his property.This is an example of:

Accepted Answer

A) a negative externality. 
B) a public good. 
C) privatisation. 
D) third-party benefits. 
E) well-defined property rights. 
A) a negative externality. 
B) a public good. 
C) privatisation. 
D) third-party benefits. 
E) well-defined property rights.

Question 14

The government would use production taxes to remedy the problem of substantial:

Accepted Answer

A) internal benefits of production. 
B) external benefits of production. 
C) external costs of production. 
D) external benefits of consumption 
E) external costs of consumption. 
A) internal benefits of production. 
B) external benefits of production. 
C) external costs of production. 
D) external benefits of consumption 
E) external costs of consumption.

Question 15

Assume a ceiling price is set above the equilibrium price.The final result is the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 4-1 Supply and demand data
  
-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 300 units at every price level.Assuming that demand does not change,the new equilibrium price will be:

Accepted Answer

A) $10. 
B) $15. 
C) $20. 
D) $25. 
A) $10. 
B) $15. 
C) $20. 
D) $25.

Question 17

A minimum wage results in:

Accepted Answer

A) market equilibrium. 
B) increased demand for workers. 
C) unemployment. 
D) a shortage of workers. 
A) market equilibrium. 
B) increased demand for workers. 
C) unemployment. 
D) a shortage of workers.

Question 18

Which of the following is not an example of an externality?

Accepted Answer

A) Drunk drivers raise everyone's auto insurance premiums. 
B) The price of lumber increases as lumberjacks' wages increase. 
C) The neighbour's beautiful front yard increases your home value. 
D) Someone drives a car that emits thick black smoke. 
E) People who live near a bakery enjoy the smell of baked bread. 
A) Drunk drivers raise everyone's auto insurance premiums. 
B) The price of lumber increases as lumberjacks' wages increase. 
C) The neighbour's beautiful front yard increases your home value. 
D) Someone drives a car that emits thick black smoke. 
E) People who live near a bakery enjoy the smell of baked bread.

Question 19

Exhibit 4-3 Demand and supply curves
  
-In Exhibit 4-3,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.

Accepted Answer

A) Market supply has decreased and market demand has increased. 
B) Market supply has increased and market demand has decreased. 
C) Market supply has decreased and market demand has decreased. 
D) The quantity supplied has decreased and the quantity demanded has increased. 
E) Market supply has increased and market demand has increased. 
A) Market supply has decreased and market demand has increased. 
B) Market supply has increased and market demand has decreased. 
C) Market supply has decreased and market demand has decreased. 
D) The quantity supplied has decreased and the quantity demanded has increased. 
E) Market supply has increased and market demand has increased.

Question 20

Unintended costs that are imposed on third parties as a result of an economic activity are called:

Accepted Answer

A) marginal costs. 
B) direct costs. 
C) negative externalities. 
D) positive externalities. 
E) positive costs. 
A) marginal costs. 
B) direct costs. 
C) negative externalities. 
D) positive externalities. 
E) positive costs.

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

Consider the market for apples.Assuming that apples and oranges are substitutes,an increase in the price of oranges will:

A public good will:

Cindy discovers that when she goes to the beach,she does not have to bring her radio.She can put her blanket near someone who has a radio and listen all day (without having to carry her radio,get sand in her speakers or buy new batteries).This is an example of:

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

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.

Which of the following is an example of a pure public good?

Demand for a normal good will increase at existing prices if:

Suppose that the equilibrium price is $20 and the government sets the price floor at $30.The result of this price floor is:

Market failure because of negative externality results in:

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

Exhibit 4-4 Demand and supply curves -In Exhibit 4-4,a movement from A to B is best described as a/an:

Pete throws leftover bread onto his front lawn because he enjoys watching the pigeons feeding.His neighbour,John,is not happy about the pigeons,since they leave a mess on his property.This is an example of:

The government would use production taxes to remedy the problem of substantial:

Assume a ceiling price is set above the equilibrium price.The final result is the equilibrium price.

Exhibit 4-1 Supply and demand data -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 300 units at every price level.Assuming that demand does not change,the new equilibrium price will be:

A minimum wage results in:

Which of the following is not an example of an externality?

Exhibit 4-3 Demand and supply curves -In Exhibit 4-3,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.

Unintended costs that are imposed on third parties as a result of an economic activity are called:

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

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

Consider the market for apples.Assuming that apples and oranges are substitutes,an increase in the price of oranges will:

A public good will:

Cindy discovers that when she goes to the beach,she does not have to bring her radio.She can put her blanket near someone who has a radio and listen all day (without having to carry her radio,get sand in her speakers or buy new batteries).This is an example of:

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

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.

Which of the following is an example of a pure public good?

Demand for a normal good will increase at existing prices if:

Suppose that the equilibrium price is $20 and the government sets the price floor at $30.The result of this price floor is:

Market failure because of negative externality results in:

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

Exhibit 4-4 Demand and supply curves -In Exhibit 4-4,a movement from A to B is best described as a/an:

Pete throws leftover bread onto his front lawn because he enjoys watching the pigeons feeding.His neighbour,John,is not happy about the pigeons,since they leave a mess on his property.This is an example of:

The government would use production taxes to remedy the problem of substantial:

Assume a ceiling price is set above the equilibrium price.The final result is the equilibrium price.

Exhibit 4-1 Supply and demand data -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 300 units at every price level.Assuming that demand does not change,the new equilibrium price will be:

A minimum wage results in:

Which of the following is not an example of an externality?

Exhibit 4-3 Demand and supply curves -In Exhibit 4-3,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.

Unintended costs that are imposed on third parties as a result of an economic activity are called:

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