ECON 1020 Practice Exams

C) the effect of a positive externality in the consumption of a good.

1) Refer to Figure 5-5. Suppose the current market equilibrium output of Q1 is not the economically efficient output because of an externality. The economically efficient output is Q2. In that case, diagram shows A) the effect of a negative externality in the consumption of a good. B) the effect of an excess demand in a market. C) the effect of a positive externality in the consumption of a good. D) the effect of a subsidy granted to producers of a good.

B. drop in the price of iPads

A decrease in the quantity supplied of iPads is caused by a(n): A)increase in taxes on the sale of iPads. B)drop in the price of iPads. C)reduction in the number of iPad producers. D)increase in labor costs to produce iPads.

D. increase in the equilibrium price and a decrease in equilibrium quantity

A decrease in the supply of a good causes a(n): A)increase in the equilibrium price and quantity. B)increase in equilibrium quantity and a decrease in the equilibrium price. C)decrease in the equilibrium price and quantity. D)increase in the equilibrium price and a decrease in equilibrium quantity.

A) you cannot keep those who did not pay for the item from enjoying its benefits.

A product is considered to be nonexcludable if 14) A) you cannot keep those who did not pay for the item from enjoying its benefits. B) you can keep those who did not pay for the item from enjoying its benefits. C) it is jointly owned by all members of a community. D) your consumption of the product reduces the quantity available for others to consume.

B. production efficiency

A society that is able to produce goods and services at the lowest possible cost is experiencing: A)scarcity. B)production efficiency. C)allocative efficiency. D)opportunity costs.

B) increase in demand; increase in quantity demanded

A(n) ________ is represented by a rightward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve. 30) A) decrease in demand; decrease in quantity demanded B) increase in demand; increase in quantity demanded C) increase in demand; decrease in demand D) increase in quantity demanded; increase in demand

B. 0.67

If a 6 percent increase in income leads to a 4 percent increase in quantity demanded for audio books, the income elasticity of demand is 38) ______ A) -0.67. B) 0.67. C) 1.5. D) 2

A. there are few close substitutes for toothpaste

According to a study of the price elasticities of products sold in supermarkets, the price elasticity of demand for toothpaste is estimated at -0.45. Which of the following could explain why the price elasticity of demand for toothpaste is so low? 25) ______ A) There are few close substitutes for toothpaste. B) Toothpaste is relatively inexpensive. C) Toothpaste is considered a luxury good. D) The toothpaste industry is highly competitive

D) independence among players

All of the following are characteristics of game theory except 28) A) strategies that players employ to attain their objectives. B) payoffs that are the results of the interaction among players' strategies. C) rules that determine what actions are allowable. D) independence among players

C) firms take market prices as given.

All of the following characteristics are common to both monopolistic competition and perfect competition except 19) A) the market demand curves are downward-sloping. B) entry barriers into the industries are low. C) firms take market prices as given. D) firms act to maximize profit.

B. False

Amit is willing to pay $330 for a new game console. The game console sells for $200 and Amit purchases it for $330. The $330 is his willingness-to-pay. A)True B)False

B. economies of scale

An advantage of Microsoft Windows is its compatibility with the widest range of hardware and software. The dominance of Windows is self-reinforcing: hardware and software manufacturers ensure that their products are compatible with Windows in order to have access to the large number of Windows users. Which situation best describes this scenario? 8) _______ A) endorsement effects B) economies of scale C) endowment effects D) network externalities

B) collusion.

An agreement among firms to charge the same price or otherwise not to compete is called 21) A) a Nash equilibrium. B) collusion. C) a payoff matrix. D) a subgame-perfect equilibrium.

B. False

An increase in population will lead to a decrease in quantity demanded in the market due to strains in resources. A)True B)False

C. movement up the supply curve for oranges

An increase in the price of oranges would lead to a(n): A)increased supply of oranges. B)reduction in the prices of inputs used in orange production. C)movement up the supply curve for oranges. D)increased demand for oranges.

C) the relationship in the long run between market price and quantity supplied.

An industry's long-run supply curve shows 29) A) how the government determines the price of the product. B) greater than normal profit. C) the relationship in the long run between market price and quantity supplied. D) how average productivity is changing.

B) there are no entry barriers in perfect competition but there are entry barriers in oligopoly.

An oligopolist differs from a perfect competitor in that 4) A) firms in an oligopoly do not produce homogeneous products while firms in perfect competition do. B) there are no entry barriers in perfect competition but there are entry barriers in oligopoly. C) there is cutthroat competition in perfect competition but little competition in oligopoly because firms have significant market power. D) the market demand curve for a perfectly competitive industry is perfectly elastic but it is downward-sloping in an oligopolistic industry.

A. a Pigovian tax

Assume that production from an electric utility caused acid rain and that the government imposed a tax on the utility equal to the cost of the acid rain. This is an example of 21) ______ A) a Pigovian tax. B) a transactions cost. C) a Pigovian subsidy. D) the Coase Theorem.

D. rise because the percentage decrease in quantity sold is less than the percentage increase in price

Assume that the market for barley is in equilibrium and the demand for barley is inelastic. Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley. The drought will cause farm revenue to 14) ______ A) fall because of the decrease in the quantity of barley sold. B) rise because the percentage increase in quantity sold is greater than the percentage increase in price. C) rise because there will be a shortage of barley. D) rise because the percentage decrease in quantity sold is less than the percentage increase in price.

D. a decrease in quantity demanded of smart phones will occur

Assume the demand schedule for smart phones is downward sloping. If the price of smart phones increases from $200 to $600: A)the demand for smart phones will increase. B)an increase in quantity demanded of smart phones will occur. C)the demand for smart phones will decrease. D)a decrease in quantity demanded of smart phones will occur.

C) is earning a profit

If a perfectly competitive firm's price is above its average total cost, the firm 34) A) should shut down. B) is incurring a loss. C) is earning a profit. D) is breaking even.

C) an agreement among firms to charge the same price or otherwise not to compete.

Collusion is 16) A) common among monopoly firms. B) necessary for firms to raise money by borrowing from investors or from banks in order to fund research and development required to develop new products. C) an agreement among firms to charge the same price or otherwise not to compete. D) legal under U.S. antitrust laws if the intent is to increase competition.

C. We would expect demand to shift in each direction, but the final position will depend on which event has the bigger impact on demand

Consider the demand for olive oil. What would happen to the demand for olive oil if a study confirming its beneficial health effects is published at the same time that an investigative report finds that much of the olive oil imported into the country is actually sunflower oil that has been dyed? A)We would expect demand to shift to the left. B)We would expect demand to shift to the right. C)We would expect demand to shift in each direction, but the final position will depend on which event has the bigger impact on demand. D)We would expect demand not to change.

B. people following incentives

Employers give stock options to full-time employees who have been on the job more than three years. This is an example of: A)thinking on the margin. B)people following incentives. C)opportunity costs. D)irrational behavior.

C. an increase in the price of ostriches

Farmers can raise either goats or ostriches on their land. Which of the following would cause the supply of goats to decrease? 45) ______ A) an increase in the demand for goats B) an increase in the price of ostrich feed C) an increase in the price of ostriches D) a decrease in the price of goats

B) price makers.

Firms that face downward-sloping demand curves for their output in the product market are called 20) A) price dictators. B) price makers. C) price takers. D) monopolists.

B) marginal revenue equals marginal cost.

For a perfectly competitive firm, at profit maximization 2) A) total revenue is maximized. B) marginal revenue equals marginal cost. C) production must occur where average cost is minimized. D) market price exceeds marginal cost.

A. positive

For people who live near a bus route, a subway station, or a commuter rail line, public transportation provides a substitute to driving their own cars. So, for these people, the cross-price elasticity of demand between gasoline and public transportation is 33) ______ A) positive. B) zero. C) negative. D) infinity.

A. True

Generally speaking, private markets are the most efficient institutions for providing goods and services. A)True B)False

D. ignores the fact that the purchase price is now a sunk cost and has no bearing on whether she should give them away or not

Grace Makutsi finally bought a pair of blue shoes that she had been coveting for a long time. In less than a week she discovered that the shoes were uncomfortable. Grace went back to wearing her old pair and stashed away the new pair. When asked by her boss, Mme. Ramotswe, why does she not simply give away the new pair, she said: "But I paid so much for them." Grace's behavior 34) ______ A) is rational because the more you pay for an item the more valuable it is. B) is rational: she should not discard a valuable item. C) supports the endowment effect which states that ownership of an item makes it more valuable. D) ignores the fact that the purchase price is now a sunk cost and has no bearing on whether she should give them away or not.

A. True

Graphically, a change in demand is represented by a shift of the demand curve. A)True B)False

B. some people are overly optimistic about their future behavior

Health clubs typically experience an increase in one-year memberships in January, but many new customers cancel their memberships before the end of the year. Which of the following is the best explanation for this behavior? 17) ______ A) Some members receive utility from activities they believe are popular. B) Some people are overly optimistic about their future behavior. C) Some people fail to treat their membership fees as sunk costs. D) Some health club members suffer minor injuries that prevent them from working out.

D. the market demand curve for a private good is determined by adding up the quantities demanded by each consumer at each price but the market demand curve for a public good is determined by adding up the price each consumer is willing to pay for each quantity for the good

How does the construction of a market demand curve for a private good differ from that for a public good? 23) ______ A) The market demand curve for a private good is determined by adding up the price each consumer is willing to pay for each quantity of the good but the market demand curve for a public good is determined by adding up the quantities demanded by each consumer at each price. B) There is no difference; in both cases the demand curve is determined by adding up the price each consumer is willing to pay for each quantity of the good. C) There is no difference; in both cases the demand curve is determined by adding up the quantities demanded by each consumer at each price. D) The market demand curve for a private good is determined by adding up the quantities demanded by each consumer at each price but the market demand curve for a public good is determined by adding up the price each consumer is willing to pay for each quantity of the good.

B. the demand curve for traditional camera film shifts to the left

How does the increasing use of digital cameras affect the market for traditional camera film? 6) _______ A) The demand curve for traditional camera film shifts to the right. B) The demand curve for traditional camera film shifts to the left. C) The quantity of traditional camera film demanded increases. D) The quantity of traditional camera film demanded decreases.

D) some firms will exit in the long run, causing market supply to decrease and market price to rise, increasing profits for the remaining firms.

If a typical firm in a perfectly competitive industry is incurring losses, then 15) A) some firms will enter in the long run, causing market supply to increase and market price to rise, increasing profit for all firms. B) some firms will exit in the long run, causing market supply to decrease and market price to fall, increasing losses for the remaining firms. C) all firms will continue to lose money. D) some firms will exit in the long run, causing market supply to decrease and market price to rise, increasing profits for the remaining firms.

B. False

If bad weather persists in a summer resort town, we can expect demand to shift left and the equilibrium price for hotels to rise. A)True B)False

A. True

If both supply and demand shift, but you don't have information about which curve shifted the most, then the direction of the change in either price or quantity (but not both) can be predicted. A)True B)False

D. right; rise

If consumers believe that an item will not be available in the future, then demand will shift _____ and the equilibrium quantity will _____. A)right; fall B)left; fall C)left; rise D)right; rise

C) less than one

If demand is inelastic, the absolute value of the price elasticity of demand is 13) A) one. B) greater than one. C) less than one. D) greater than the absolute value of the slope of the demand curve.

A) price exceeds average total cost.

If price = marginal cost at the output produced by a perfectly competitive firm and the firm is earning an economic profit, then 7) A) price exceeds average total cost. B) marginal revenue is less than price. C) average total cost is at a minimum. D) total revenue equals total cost.

B. decreases and equilibrium quantity is indeterminate

If supply increases and at the same time demand decreases, equilibrium price: A)is indeterminate and equilibrium quantity decreases. B)decreases and equilibrium quantity is indeterminate. C)is indeterminate and equilibrium quantity increases. D)increases and equilibrium quantity decreases.

A. of televisions fall and quantity of televisions rise

If television sellers expect the prices of televisions to fall in the future, we are likely to see the price: A)of televisions fall and quantity of televisions rise. B)of televisions rise and quantity of televisions fall. C)and quantity of televisions fall. D)and quantity of televisions rise.

B) The supply curve will shift to the right.

If the United States lifts the embargo on Cuban products, what will happen in the U.S. market for Cuban cigars? 17) A) The supply curve will shift to the left. B) The supply curve will shift to the right. C) The demand curve will shift to the right. D) The demand curve will shift to the left.

B. the percentage change in quantity demanded is less than the percentage change in price (in absolute value)

If the demand for cell phone service is inelastic, then 3) _______ A) the quantity demanded does not change in response to changes in price. B) the percentage change in quantity demanded is less than the percentage change in price (in absolute value). C) the percentage change in quantity demanded is equal to the percentage change in price. D) the percentage change in quantity demanded is greater than the percentage change in price (in absolute value).

C. a more efficient equilibrium

If the government implements a binding price ceiling on insulin, this will have all of the following effects on the market for insulin except 35) ______ A) an increase in deadweight loss. B) a decrease in economic surplus. C) a more efficient equilibrium. D) a decrease in producer surplus.

D. P=0.2QS+3

If the quantity of donuts supplied is represented by the supply equation QS = -15 + 5P, then to solve for the price of donuts, the equation would be rewritten as 47) ______ A) P = 5QS + 75. B) P = QS - 7.5. C) P = 15 - 0.5QS. D) P = 0.2QS + 3.

A. fall and quantity will rise

If the supply curve shifts rightward, and the demand curve also shifts rightward, and if demand grows relatively less than supply, then price will: A)fall and quantity will rise. B)be indeterminate and quantity will fall. C)rise and quantity will fall. D)be indeterminate and quantity will rise.

C. decreased

In 2016, Philadelphia imposed a tax of 1.5 cents per ounce on sweetened beverages, and PepsiCo indicated that its sales in Philadelphia fell by 40 percent after the tax took effect. If the price of PepsiCo's sweetened beverages in Philadelphia increased by 32 percent following the implementation of the tax, then based on these figures total revenue 20) ______ A) increased. B) did not change. C) decreased. D) There is not enough information to determine what happened to total revenue.

C) must lie above the free-market equilibrium price.

In order to be binding, a price floor 32) A) must be high enough for firms to earn a profit. B) must lie below the free-market equilibrium price. C) must lie above the free-market equilibrium price. D) must coincide with the free-market equilibrium price.

A. unknown change in the equilibrium price but a decrease in the equilibrium quantity of cable television

In the market for cable television, fewer people are subscribing to cable while the cost of providing cable television has increased. As a result, we can expect a(n): A)unknown change in the equilibrium price but a decrease in the equilibrium quantity of cable television. B)unknown change in the equilibrium quantity but a decrease in the equilibrium price of cable television. C)decrease in the equilibrium price and quantity of cable television. D)increase in the equilibrium price and quantity of cable television.

D. shift right

In the market for coffee, consumers expect the price of coffee beans to rise next week. This would make the demand for coffee this week: A)stay the same since the effects of this week and next week will cancel each other out. B)shift left. C)stay the same since demand is not affected by price changes. D)shift right.

B. False

Markets gravitate toward equilibrium levels only when government intervenes. A)True B)False

A. True

Microeconomics looks at how markets are structured. A)True B)False

B. information

One of the key ingredients in making rational choices is access to: A. a university psychology department B. information C. sufficient funds D. foreign markets

B) vertical; downward sloping

Perfectly inelastic demand is represented by a demand curve which is ________, and relatively inelastic demand is represented by a demand curve which is ________. 3) A) downward sloping; vertical B) vertical; downward sloping C) upward sloping; horizontal D) horizontal; downward sloping

A) how responsive quantity demanded is to a change in price.

Price elasticity of demand measures 31) A) how responsive quantity demanded is to a change in price. B) how responsive sales are to a change in buyers' incomes. C) how responsive suppliers are to price changes. D) how responsive sales are to changes in the price of a related good.

B. how responsive suppliers are to price changes

Price elasticity of supply is used to gauge 32) ______ A) how responsive suppliers are to changes in future prices. B) how responsive suppliers are to price changes. C) how responsive sales are to a change in input prices. D) how responsive suppliers are to a change in demand.

D. quantity that producers are willing and able to sell at a given price

Quantity supplied is the: A)quantity of points that connect to form a supply curve. B)amount that producers must sell in order to stay in business. C)supply schedule. D)quantity that producers are willing and able to sell at a given price.

D. their expectation that the price of Chia Pets will fall in the marketplace

Suppliers of Chia Pets have reduced supply since the gift-giving season has passed. Suppliers are MOST likely responding to: A)a tax placed on Chia Pets. B)a decrease in the number of suppliers of Chia Pets and similar products. C)higher prices of clay, used to make Chia Pets. D)their expectation that the price of Chia Pets will fall in the marketplace.

A. the endowment effect explains Adam's actions. people like Adam seem to value things that they

Suppose Adam Einberg pays $100 for a ticket to a new Broadway play and $100 was the maximum price he was willing to pay. On the day of the performance of the play Adam refuses to sell the ticket for $150. How would behavioral economists explain Adam's refusal to sell his ticket? 19) ______ A) The endowment effect explains Adam's actions. People like Adam seem to value things that they have more than the things they do not have. B) Adam's income probably increased between the time he bought the ticket and the day of the play's performance. C) When Adam bought the ticket he was being unrealistic about his future behavior. D) Adam's tastes had changed from the time he bought the ticket to the time of the performance of the play.

B. 0.5; The product is inelastic

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good. Calculate the price elasticity of supply and characterize the product. 39) ______ A) 50%; The product is inelastic. B) 0.5; The product is inelastic. C) 0.2; The product is inelastic. D) 2; The product is elastic.

B. the demand for tomatoes is price inelastic

Suppose a frost destroys the tomato crop in California but farmers see an increase in their revenues. Which of the following best explains this? 12) ______ A) Tomatoes are necessities. B) The demand for tomatoes is price inelastic. C) The cross-price elasticity between tomatoes and most other substitute vegetables is very low. D) The decrease in supply led to huge price increases.

D. increase in demand

Suppose it is discovered that consuming Greek yogurt leads to a longer life. This information would lead to a(n): A)increase in quantity demanded. B)decrease in demand. C)decrease in quantity demanded. D)increase in demand.

B. fall because farmers will shift

Suppose that the price of pork rises. We would expect that the supply of beef will: A)fall because pork is a resource used in beef production. B)fall because farmers will shift resources from beef production to pork production. C)rise because pork is a resource used in beef production. D)rise because farmers will shift resources from beef production to pork production.

C. the quantity of DVDs demanded on Rakuten.com will decrease by 35 percent

Suppose the cross-price elasticity of demand between DVDs at Amazon.com and DVDs at Rakuten.com is 3.5. Based on this information, predict what happens when Amazon.com lowers its DVD prices by 10 percent. 1) _______ A) The quantity of DVDs demanded on Amazon.com will decrease by 35 percent. B) The quantity of DVDs demanded on Amazon.com will increase by 35 percent. C) The quantity of DVDs demanded on Rakuten.com will decrease by 35 percent. D) The quantity of DVDs demanded on Rakuten.com will increase by 35 percent.

A) The demand curve for digital photo printing paper shifts to the right

Technological advancements have led to lower prices and an increase in the sale of digital cameras. How does this affect the digital photo printing paper market? 26) A) The demand curve for digital photo printing paper shifts to the right. B) The supply curve for digital photo printing paper shifts to the right. C) The demand curve for digital photo printing paper shifts to the left. D) The supply curve for digital photo printing paper shifts to the left.

B) game theory.

The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called 23) A) the prisoner's dilemma. B) game theory. C) Nash equilibrium. D) dominant strategy equilibrium.

B) because previously owned diamonds would be a close substitute to newly mined diamonds and would therefore reduce De Beers' market power

The De Beers Company, one of the longest-lived monopolies, is facing increasing competition. One source of competition comes from people who might resell their previously owned diamonds. Why is De Beers worried that people might resell their previously owned diamonds? 22) A) because De Beers will not be able to guarantee the quality of previously owned diamonds and fears that its reputation might be harmed B) because previously owned diamonds would be a close substitute to newly mined diamonds and would therefore reduce De Beers' market power C) because the availability of previously owned diamonds would make the market demand curve for diamonds more inelastic and force De Beers to lower its price D) because the availability of previously owned diamonds would increase the market demand for diamonds and dilute De Beers' monopoly

B. the supply curve for animal-fur clothing shifts to the left

The decline in the popularity of clothing made from animal fur has enticed large department stores like J. C. Penney and Sears to discontinue sales of animal-fur products. How does discontinuing sales of these products by J.C. Penney and Sears affect the animal-fur clothing market? 11) ______ A) The demand curve for animal-fur clothing shifts to the right. B) The supply curve for animal-fur clothing shifts to the left. C) The demand curve for animal-fur clothing shifts to the left. D) The supply curve for animal-fur clothing shifts to the right.

B. marginal social benefit from consuming paper is equal to the marginal social cost of production

The efficient level of paper production will occur where the 15) ______ A) economically efficient level of the output of paper is equal to the economically efficient level of inputs. B) marginal social benefit from consuming paper is equal to the marginal social cost of production. C) production of paper no longer produces negative externalities. D) marginal private benefit from consuming paper is equal to the marginal social cost of production.

C. demand curve for halogen bulbs is horizontal

The government proposes a tax on halogen light bulbs. Sellers will bear the entire burden of the tax if the 5) _______ A) demand curve for halogen bulbs is vertical. B) demand curve is downward sloping and the supply curve is upward sloping. C) demand curve for halogen bulbs is horizontal. D) supply curve of halogen bulbs is horizontal.

B) many small (relative to the total market) sellers acting independently.

The key characteristics of a monopolistically competitive market structure include 18) A) sellers have no incentive to advertise their products. B) many small (relative to the total market) sellers acting independently. C) barriers to entry are strong. D) all sellers sell a homogeneous product.

A. True

The law of demand states that as the price of a good increases, the quantity demanded decreases. A)True B)False

D. rise; supplied rises

The law of supply states that as prices _____, the quantity _____. A)fall; supplied rises B)rise; demanded falls C)fall; demanded rises D)rise; supplied rises

B. False

The law of supply states that as the price of a good increases, quantity supplied decreases, ceteris paribus. A)True B)False

A. True

The law of supply states that if prices fall, producers will offer fewer products to the market. A)True B)False

D) is the same as its demand curve.

The marginal revenue curve for a perfectly competitive firm 5) A) is the same as its marginal cost curve. B) is downward-sloping. C) is perfectly inelastic. D) is the same as its demand curve.

D. endowment effect

The observation that people tend to value something more highly when they own it than when they don't is called the 41) ______ A) wealth effect. B) endorsement effect. C) path-dependent effect. D) endowment effect.

B. the expenditures for food

The opportunity costs of attending college do NOT include: A)the forgone wages that could have been earned working. B)the expenditures for food. C)the costs of textbooks or eBooks. D)required student activity fees.

C. quantity supplied increases

The price of automobiles is rising because more people want to purchase cars. As a result, A)supply shifts to the left. B)quantity demanded decreases. C)quantity supplied increases. D)supply shifts to the right.

D. the measurement of slope is sensitive to the units chosen for price and quantity

The slope of a demand curve is not used to measure the price elasticity of demand because 13) ______ A) the slope of a linear demand curve is not constant. B) the slope of a line cannot have a negative value. C) the slope of the demand curve does not tell us how much quantity changes as price changes. D) the measurement of slope is sensitive to the units chosen for price and quantity.

D. decrease in equilibrium price, but equilibrium quantity increases

The supply of coffee has increased twice as much as the demand for coffee. As a result, we can predict a(n): A)decrease in equilibrium price, but equilibrium quantity is indeterminate. B)increase in equilibrium price, but equilibrium quantity decreases. C)decrease in equilibrium price and equilibrium quantity. D)decrease in equilibrium price, but equilibrium quantity increases.

C) have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms.

To be a natural monopoly, a firm must 8) A) control a key resource input. B) have significant network externalities. C) have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms. D) be in a government-regulated market.

B. respond to incentives

To say that economics is a way of thinking about how people make rational decisions means that people: A. consider only monetary terms in their decisions B. respond to incentives C. don't consider the cost of their decisions D. are irrational

B) price per unit times quantity sold.

Total revenue equals 45) A) price per unit times change in quantity sold. B) price per unit times quantity sold. C) change in price per unit times quantity sold. D) price per unit times quantity supplied.

C. shortage; up

When quantity demanded exceeds quantity supplied, a _____ occurs and prices are pushed _____ toward equilibrium. A)surplus; up B)surplus; down C)shortage; up D)shortage; down

B. decrease

When the supply curve shifts out (to the right) and the demand curve shifts in (to the left), the equilibrium price will: A)remain unchanged. B)decrease. C)increase. D)be indeterminate.

D. a decrease in the product price

Which event will NOT lead to a decrease in supply? A)an increase in resource costs B)a decrease in the number of sellers in the market C)an increase in taxes D)a decrease in the product price

A. a decrease in the price of a sea kayak tour

Which factor would NOT change the demand for sea kayak tours? A)a decrease in the price of a sea kayak tour B)the onset of sunny, summer beach weather C)an increase in the price of bicycle tours, a substitute activity D)news reports of whales in the harbor

B. private goods

Which of the following displays rivalry and excludability in consumption? 22) ______ A) public goods B) private goods C) quasi-public goods D) common resources

A. a common resource

Which of the following displays these two characteristics: rivalry and nonexcludability? 28) ______ A) a common resource B) a public good C) a quasi-public good D) a private good

B. a decrease in the number of firms that produce energy drinks

Which of the following would shift the supply curve for energy drinks to the left? 2) _______ A) a decrease in the expected future price of energy drinks B) a decrease in the number of firms that produce energy drinks C) a decrease in the price of an input used to produce energy drinks D) an increase in consumer income (assuming that energy drinks are normal goods)

C. Lindsay offers to buy more sticks of chewing gum at $1 than at $2

Which statement illustrates the law of demand? A)Marcus offers to sell more sticks of chewing gum at $1 than at $2. B)Marcus offers to sell more sticks of chewing gum at $2 than at $1. C)Lindsay offers to buy more sticks of chewing gum at $1 than at $2. D)Lindsay offers to buy more sticks of chewing gum at $2 than at $1.

A. highest value that a consumer believes a good or service is worth

Willingness to pay is the: A)highest value that a consumer believes a good or service is worth. B)price that all the consumers in a market pay for a good or service. C)highest value that a producer believes consumers will pay for his product. D)price a consumer pays for a good or service.

A. True

Willingness-to-pay is the maximum amount one would be willing to pay for a good or service. A)True B)False

A. economic efficiency

________ is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which the sum of consumer surplus and producer surplus is at a maximum. 10) ______ A) Economic efficiency B) Deadweight efficiency C) Producer efficiency D) Consumer efficiency

B. shift the supply of used cars to the right; lower

increase the quantity supplied of used cars; lower B)shift the supply of used cars to the right; lower C)shift the supply of used cars to the right; raise D)shift the supply of used cars to the left; raise