Question 1

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

Question 2

Competition in the presence of negative externality will result in the following outcome:

Accepted Answer

A)  the market price will be lower and output will be lower than socially desirable. 
B)  the market price will be lower and output will be higher than socially desirable. 
C)  the market price will be higher and output will be lower than socially desirable. 
D)  the market price output will be the same as socially desirable. 
A)  the market price will be lower and output will be lower than socially desirable. 
B)  the market price will be lower and output will be higher than socially desirable. 
C)  the market price will be higher and output will be lower than socially desirable. 
D)  the market price output will be the same as socially desirable.

Question 3

Economists argue that the minimum wage may result 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 4

Albert, Betty, Christine and David are all very good students. When they hold their study sessions, they often discuss very difficult concepts in great detail. Christine's roommate, Elizabeth, who takes completely different classes, still learns from the discussions of the others. This is the case of a/an _____, which _____ a _____.

Accepted Answer

A)  public good; benefits; third party 
B)  externality; imposes a cost on; free rider 
C)  market failure; results from; third party 
D) 
Externality; benefits; third party 
A)  public good; benefits; third party 
B)  externality; imposes a cost on; free rider 
C)  market failure; results from; third party 
D) 
Externality; benefits; third party

Question 5

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 6

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 centre. 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?

Accepted Answer

A)  Externalities exist. 
B)  There is mandatory recycling. 
C)  Raw materials are less expensive. 
D)  The cost of production may be lower. 
A)  Externalities exist. 
B)  There is mandatory recycling. 
C)  Raw materials are less expensive. 
D)  The cost of production may be lower.

Question 7

Narrbegin Exhibit 4.2 Supply and demand curves   
-In Exhibit 4.2, a decrease in quantity demanded would cause a move from which equilibrium point to another, other things being equal?

Accepted Answer

A)  E1 to E2. 
B)  E1 to E3. 
C)  E4 to E1. 
D)  E3 to E4. 
A)  E1 to E2. 
B)  E1 to E3. 
C)  E4 to E1. 
D)  E3 to E4.

Question 8

If each of us relied exclusively on the market to determine what to buy, we would probably end up with few, if any:

Accepted Answer

A)  cars. 
B)  bananas. 
C)  national parks. 
D)  computers. 
A)  cars. 
B)  bananas. 
C)  national parks. 
D)  computers.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

External benefits cause the market to:

Accepted Answer

A)  under-allocate resources. 
B)  be more efficient. 
C)  set excessively high prices. 
D)  have persistent shortages. 
A)  under-allocate resources. 
B)  be more efficient. 
C)  set excessively high prices. 
D)  have persistent shortages.

Question 11

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

Accepted Answer

A)  A decrease in the demand for strawberries. 
B)  An increase in the demand for strawberries. 
C)  A decrease in the supply of strawberries. 
D)  An increase in the supply of strawberries. 
A)  A decrease in the demand for strawberries. 
B)  An increase in the demand for strawberries. 
C)  A decrease in the supply of strawberries. 
D)  An increase in the supply of strawberries.

Question 12

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 13

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 14

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 15

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

Accepted Answer

A)  exceed the external costs. 
B)  are less than the external costs. 
C)  equal the external costs. 
D)  understate the true cost of producing the product. 
A)  exceed the external costs. 
B)  are less than the external costs. 
C)  equal the external costs. 
D)  understate the true cost of producing the product.

Question 16

'Safety nets', such as welfare payments, are designed to:

Accepted Answer

A)  increase income inequality. 
B)  prevent rich people from getting richer. 
C)  provide minimum income level for all citizens. 
D)  act as an incentive to work. 
A)  increase income inequality. 
B)  prevent rich people from getting richer. 
C)  provide minimum income level for all citizens. 
D)  act as an incentive to work.

Question 17

An explanation for the existence of black markets is:

Accepted Answer

A)  a price ceiling below the equilibrium price. 
B)  a price ceiling above the equilibrium price. 
C)  a price floor above the equilibrium price. 
D)  a price floor below the equilibrium price. 
A)  a price ceiling below the equilibrium price. 
B)  a price ceiling above the equilibrium price. 
C)  a price floor above the equilibrium price. 
D)  a price floor below the equilibrium price.

Question 18

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

Question 19

There are apartments in Perth whose rooftops overlook Subiaco Oval. On game day you can find free riders on the roof enjoying _____.

Accepted Answer

A)  beer 
B)  free property rights 
C)  an externality 
D)  a public good 
A)  beer 
B)  free property rights 
C)  an externality 
D)  a public good

Question 20

If it costs $2000 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 $2000. 
C)  $2000. 
D)  more than $2000 but finite. 
A)  $0. 
B)  more than $0 but less than $2000. 
C)  $2000. 
D)  more than $2000 but finite.

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

Competition in the presence of negative externality will result in the following outcome:

Economists argue that the minimum wage may result in:

Noise pollution is a problem because:

Narrbegin Exhibit 4.2 Supply and demand curves -In Exhibit 4.2, a decrease in quantity demanded would cause a move from which equilibrium point to another, other things being equal?

If each of us relied exclusively on the market to determine what to buy, we would probably end up with few, if any:

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

External benefits cause the market to:

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

Which of 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.

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:

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

'Safety nets', such as welfare payments, are designed to:

An explanation for the existence of black markets is:

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

There are apartments in Perth whose rooftops overlook Subiaco Oval. On game day you can find free riders on the roof enjoying _____.

If it costs $2000 to pick up the litter along a highway, then the cost of the externality is:

Thinking Like an Economist

Applying Graphs to Economics

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: Housing Affordability 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

Filters

Exam 5: Markets in Action

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

Competition in the presence of negative externality will result in the following outcome:

Economists argue that the minimum wage may result in:

Noise pollution is a problem because:

Narrbegin Exhibit 4.2 Supply and demand curves -In Exhibit 4.2, a decrease in quantity demanded would cause a move from which equilibrium point to another, other things being equal?

If each of us relied exclusively on the market to determine what to buy, we would probably end up with few, if any:

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

External benefits cause the market to:

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

Which of 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.

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:

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

'Safety nets', such as welfare payments, are designed to:

An explanation for the existence of black markets is:

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

There are apartments in Perth whose rooftops overlook Subiaco Oval. On game day you can find free riders on the roof enjoying _____.

If it costs $2000 to pick up the litter along a highway, then the cost of the externality is:

Thinking Like an Economist

Applying Graphs to Economics

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: Housing Affordability 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

Filters