Question

Question 12 pts

When consumers would have been willing to pay higher prices at various quantities consumed than the market clearing price, the differences are called

consumer surplus.

monopoly profits.

opportunity cost.

deadweight loss.

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Question 22 pts

A demand relationship in which the quantity demanded changes exactly in proportion to the change in price is

elastic.

unit-elastic.

inelastic.

consistent with zero elasticity.

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Question 32 pts

A demand relationship in which a given percentage change in price will result in a less than proportionate percentage change in quantity demanded is

elastic.

unit-elastic.

inelastic.

consistent with zero elasticity.

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Question 42 pts

If the price elasticity of supply of television sets is constant and equal to 3, a 10 percent increase in price will result in a change in quantity supplied equal to

3 1/3 percent.

30 percent.

1/3 percent.

-30 percent.

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Question 52 pts

Which of the following is an example of a negative externality?

There is an increase in injuries to pedestrians caused by accidents resulting from electronic billboards distracting drivers.

The opening of a new shopping mall increases the business of nearby restaurants.

A consumer pays a higher price than another consumer does for the same product.

Consumers pay a sales tax in addition to the price of a product.

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Question 62 pts

A situation in which a benefit or a cost associated with an economic activity spills over to third parties is called

a public good.

a merit good.

an externality.

the free-rider problem.

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Question 72 pts

Kathleen eats three TV dinners. The third TV dinner makes Kathleen sick. This means that for Kathleen

the third TV dinner has little utility.

the third TV dinner has negative utility

the opportunity cost of TV dinners is high.

TV dinners must be inexpensive.

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Question 82 pts

Which of the following is NOT consistent with the law of diminishing marginal utility?

Newspaper vending machines are not as secure as soft drink machines.

A student selects to eat at an all-you-can-eat restaurant rather than at a restaurant that charges for refills.

A student's enjoyment of opera increases the more she listens to it.

A symphony has free throat lozenges in their lobby.

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Question 92 pts

When there are too few or too many resources going to an economic activity,

a public good exists.

a market failure exists.

a regressive tax is in place.

a free-rider problem exists.

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Question 102 pts

If the government imposes a price floor that is higher than the market clearing price, then

consumer surplus will increase while producer surplus will decrease.

consumer surplus will decrease while producer surplus will increase.

both consumer surplus and producer surplus will decrease.

both consumer surplus and producer surplus will increase.

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Question 112 pts

Assume that the market clearing price for a shirt is $20, but that the maximum price that can be charged is $15. This is an example of

a price control that will lead to a surplus of shirts on the market.

a price floor that will lead to a shortage of shirts on the market.

markets failing to ration a fixed quantity of a good.

a price ceiling that will likely lead to a shortage of shirts on the market.

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Question 122 pts

Which of the following is a benefit of the price system?

The existence of positive externalities.

The production of public goods.

Consumers have what they want since politicians and business managers decide what is to be produced.

The freedom of consumers to decide what they want to purchase.

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Question 132 pts

If a producer is willing to receive at least $5 for a pen that she manufactures but she actually receives $7 for it. The producer surplus of the pen for that producer is

$5.

$2.

$7.

-$5.

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Question 142 pts

When the government restricts the quantity of a good to zero

an underground market develops.

there is none of the good available anywhere.

people's demand for the product evaporates.

producers stop all production.

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Question 152 pts

The City Council of Happy Village is thinking about imposing rent controls. If they put rent controls in place, which constituency are they trying to please?

Landlords

All taxpayers

Existing tenants

All voters

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Question 162 pts

Suppose that a per-unit subsidy is granted to each individual who consumes a product providing external benefits to society at large. Each individuals demand curve will shift ________, and the market demand curve for the product will shift ________.

to the right; to the right

to the right; to the left

to the left; to the left

Answer 1

1. consumer surplus.
(Consumer surplus is the difference between price consumers are willing to pay and the market clearing price.)

2. unit-elastic.
(When quantity demanded changes exactly in proportion to the change in price then it is unitary elastic.)

3. inelastic
(When percentage change in price will result in a less than proportionate percentage change in quantity demanded then demand is inelastic.)

4. 30 percent
(Percentage change in quantity demanded = Price elasticity of supply* percentage change in price = (3)*10% = 30%)

5. There is an increase in injuries to pedestrians caused by accidents resulting from electronic billboards distracting drivers.
(Billboards are causing harmful effects on pedestrians.)

(Note: Post 4 MCQs at a atime.)