Question

Choose one option

Question 1

The cross-price elasticity of demand for electric heaters with respect to price of electricity is most likely to be

Question 1 options:

	A) Negative, indicating they a substitute goods.
	B) Positive, indicating they a complementary goods.
	C) Zero, indicating the goods are not related.
	D) Negative, indicating they a complementary goods.

Question 2 (1.5 points)

How are 'discouraged workers' classified by the Australian Bureau of Statistics (ABS)?

Question 2 options:

	A) Not in the labour force
	B) Unemployed
	C) Employed
	D) Part of the labour force

Question 3 (1.5 points)

When real GDP in an economy grows more slowly than the population in that economy, which of the following must be occurring?

Question 3 options:

	A) Nominal GDP is falling.
	B) Real GDP per capita is rising.
	C) Real GDP is falling.
	D) Living standards are falling.

Question 4 (1.5 points)

Which of the following is NOT an example of public good?

Question 4 options:

	A) Herd immunity
	B) Unprotected fishery
	C) Knowledge
	D) National defence spending

Question 5 (1.5 points)

The price elasticity of demand for petrol will be more elastic:

Question 5 options:

	A) If there is public transport available.
	B) When considering all petrol, rather than a specific brand of petrol such as Mobil.
	C) If petrol is a necessity, rather than a luxury good.
	D) If petrol is a complementary good rather than a substitute good.

Question 6 (1.5 points)

If a doctor knows that an insurance company will pay for most of a patient's bill, the doctor has more of an incentive to require additional medical procedures and tests, even if the patient may not require them. This is an example of

Question 6 options:

	A) Adverse selection
	B) The principle-agent problem
	C) Symmetric information
	D) Moral hazard

Question 7 (1.5 points)

Which of the following is NOT a cause of market failure?

Question 7 options:

	A) Social norms
	B) Collusion
	C) Moral hazard
	D) Common resource

Question 8 (1.5 points)

If the assumptions of perfect competition are met, property rights are established and there are no externalities, then for private goods, the free market system will:

Question 8 options:

	A) Produce and allocate the socially efficient level of output.
	B) Maximise the sum of producer and consumer surplus.
	C) All of the above.
	D) None of the above.

Question 9 (1.5 points)

When Australia and Papua New Guinea voluntarily trade goods and services

Question 9 options:

	A) Neither benefit.
	B) Papua New Guinea benefits as it exports more to Australia.
	C) Both Australia and Papua New Guinea benefit.
	D) Australia benefits as it imports more from Papua New Guinea.

Answer 1

1 - D

Electricity and electric heaters are complements, so cross-elasticity is negative.

2. A

Discouraged workers are exlcuded from labor force.

3 - D

Living standards are measured by growth in real GDP per capita. If real GDP grows slower than population, real GDP per capita decreases, so living standard decreases.

4 - D

National defense is a public good, but defense spending is not.

5 - A

If substitute is available, demand is more elastic.

6 - D

7 - A

Social norms don't cause market failure.

8 - C

In absence of market failure, free market system maximizes the sum of consumer and producer surplus, maximizing efficiency.

9 -C

In general, voluntray trade ensures both parties benefit.