QUESTION 15
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:
a. a negative externality.
b. private property abuse.
c. external costs.
d. a positive externality.
5 points
QUESTION 16
One of the problems created by price floors set above the equilibrium is:
a. how to cope with the shortages.
b. the creation of surplus.
c. firms don't have incentives to reduce costs.
d. the effect on firm profitability.
5 points
QUESTION 17
Exhibit 4-3 Supply and demand curves
Beginning from an equilibrium at point E2 in Exhibit 4-3, an increase in demand for good X, other things being equal, would move the equilibrium point to:
a. E2.
b. E4.
c. E3.
d. E1.
5 points
QUESTION 18
If the equilibrium price of good X is $4 and a price ceiling is imposed at $5, the result will be a(n):
a. depletion of inventories.
b. surplus.
c. shortage.
d. equilibrium.
5 points
QUESTION 19
Exhibit 4-6 Demand and supply curves
In Exhibit 4-6, 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.
a. Market supply has decreased, and market demand has decreased.
b. Market supply has decreased, and market demand has increased.
c. Market supply has increased, and market demand has decreased.
d. Market supply has increased, and market demand has increased.
5 points
QUESTION 20
The positive externality associated with education is:
a. producers can get higher prices for their goods and services.
b. less crowding in the classrooms.
c. technological progress slows as basic research increases.
d. increases in societal well-being and economic growth.