Supply & Demand
Holding everything else constant, an increase in the price of MP3 players will result in...
a. a decrease in the quantity of MP3 players demanded
b. an increase in the supply of MP3 players
c. a decrease in the quantity of MP3 players supplied
d. a decrease in demand for MP3 players
a. a decrease in the quantity of MP3 players demanded
Absolute advantage is...
a. the ability to produce a good or service at a higher opportunity cost than one's competitors
b. the ability to produce more of a good or service than competitors that have fewer resources.
c. the ability to produce more of a good or service than competitors when using the same amount of resources.
d. the ability to produce higher quality goods compared to one's competitors.
c. the ability to produce more of a good or service than competitors when using the same amount of resources.
Q1. On Word Doc
$250,000
Which of the following is an example of a positive externality?
a. permitting smoking on commercial airplanes
b. raising the speed limit to 60 mph in school zones
c. planting trees along a sidewalk which add beauty and create shade
d. a police department stops enforcing DUI laws
c. planting trees along a sidewalk which add beauty and create shade
When ________ in a market, the total net benefit to society is maximized.
a. deadweight loss is maximized
b. consumer surplus is minimized
c. a competitive equilibrium is achieved
d. producer surplus is minimized
c. a competitive equilibrium is achieved
Harvey Rabbitt pays for monthly cable TV service. Last week, the cable company informed Harvey that his monthly cable price would go down because the city council has granted approval for three new cable companies to service his area. How is the market for cable TV services affected by this?
a. There is a decrease in the quantity of cable TV service supplied.
b. There is an increase in the supply of cable TV service.
c. There is a decrease in the demand for cable TV service.
d. There is a decrease in the supply of cable TV service.
b. There is an increase in the supply of cable TV service.
________ is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.
a. comparative advantage
b. specialization
c. autarky
d. absolute advantage
a. comparative advantage
Q2. On Word Doc
$100,000
A positive externality causes...
a. the marginal social benefit to exceed the marginal private cost at the market equilibrium
b. the marginal social benefit to be equal to the marginal private cost at the market equilibrium.
c. the marginal social benefit to be less than the marginal private cost at the market equilibrium.
d. the marginal private benefit to exceed the marginal social cost at the market equilibrium.
a. the marginal social benefit to exceed the marginal private cost at the market equilibrium
Economists assume that individuals...
a. behave in unpredictable ways.
b. prefer to live in a society that values fairness above all else.
c. will never take actions to help others.
d. are rational and respond to incentives
d. are rational and respond to incentives
An increase in population would be represented by a movement from...
a. demand curve shift right
b. demand curve shift left
c. supply curve shift right
d. supply curve slide right
a. demand curve shift right
Morgan can produce 3 exams and 10 quizzes, while Walt can produce 5 exams and 15 quizzes.
Who has the absolute advantage of exams?
Walt
5 > 3
Q3. On Word Doc
B
Getting an annual flu shot is a way to reduce the chances of not only contracting influenza, but also spreading it to other people. In this sense, getting an annual flu shot is reducing ________ of spreading a contagious disease.
a. negative externalities
b. positive externalities
c. the social benefit
d. the private benefit
a. negative externalities
How are the fundamental economic questions answered in a market economy?
a. Individuals, firms, and the government interact in markets to decide the answers to these questions.
b. Large corporations alone decide the answers.
c. Households and firms interact in markets to decide the answers to these questions.
d. The government alone decides the answers.
c. Households and firms interact in markets to decide the answers to these questions.
Technological advances have resulted in lower prices for digital cameras. What is the impact of this on the market for traditional (non-digital) cameras?
a. the demand curve for traditional cameras shifts to the left
b. The supply curve for traditional cameras shifts to the left.
c. The demand curve for traditional cameras shifts to the right.
d. The supply curve for traditional cameras shifts to the right.
a. the demand curve for traditional cameras shifts to the left
Morgan can produce 3 exams and 10 quizzes, while Walt can produce 5 exams and 15 quizzes.
Who has the comparative advantage of exams?
Walt
3 < 3.333
Q4. On Word Doc
C+D
When a negative externality exists, the private market produces...
a. more than the economically efficient output level.
b. products at a high opportunity cost.
c. products at a low opportunity cost
d. less than the economically efficient output level.
a. more than the economically efficient output level.
When production reflects consumer preferences, ________ occurs.
a. efficient central planning
b. allocative efficiency
c. equity
d. productive efficiency
b. allocative efficiency
If in the market for peaches the supply curve has shifted to the left...
a. the quantity of peaches supplied has decreased.
b. the quantity of peaches supplied has increased.
c. the supply of peaches has decreased
d. the supply of peaches has increased.
c. the supply of peaches has decreased
Morgan can produce 3 exams and 10 quizzes, while Walt can produce 5 exams and 15 quizzes.
Who has the comparative advantages of quizzes?
Morgan
0.3 < 0.5
Suppose a binding price floor on vapes is proposed by the Health Minister of the country of Vape Nation. What will be the likely effect on the market for vapes in Vape Nation?
a. Quantity demanded will decrease, quantity supplied will increase, and a shortage will result.
b. Quantity demanded will increase, quantity supplied will decrease, and a surplus will result.
c. Quantity demanded will increase, quantity supplied will decrease, and a shortage will result.
d. Quantity demanded will decrease, quantity supplied will increase, and a surplus will result.
d. Quantity demanded will decrease, quantity supplied will increase, and a surplus will result.
A negative externality exists if...
a. the marginal private cost of producing a good or service exceeds the social cost.
b. the marginal social cost of producing a good or service exceeds the private cost
c. there are quantity controls in a market.
d. there are price controls in a market.
b. the marginal social cost of producing a good or service exceeds the private cost
What is a "social cost" of production?
a. the cost of the natural resources used up in production
b. the total costs of producing a product, both implicit and explicit costs
c. the cost of the environmental damage created by production
d. the sum of all costs to individuals in society, regardless of whether the costs are borne by those who produce the products or consume the product
d. the sum of all costs to individuals in society, regardless of whether the costs are borne by those who produce the products or consume the product