micro mcq

consumer surplus is the area 1 below the demand curve and above price 2 above the supply curve and below price 3 above the demand curve and below price 4 below the demand curve and above the supply curve

1 below the demand curve and above price

on the assumption that the rental accommodation market is represented by the basic x supply/demand diagram, the imposition of a price cap bellow the equalibrium will 1 lower price and decrease quantity of accommodation available 2 lower price and increase accommodation available 3 increase price and increase accommodation available 4 increase price decrease accommodation available

1 lower price and decrease quantity of accommodation available

a free rider is a person who 1 receives the benefit of the good but avoids paying for it 2 pays for the good but fails to receive any benefit 3 fails to produce goods but is allowed to consume goods 4 produces a good but fails to receive payment for it

1 receives the benefit of the good but avoids paying for it

as a result of price change in netflix household demand for sky movies. substitutes inferior goods complements technology improvements

1 substitutes

free market is efficient because 1 the sum of producer surplus and consumer surplus is minimized 2 the sum of producer and consumer surplus is maximized 3 externalities exist 4 government impose tax

1 sum of producer and consumer surplus is minimized

if oligopolists engage in collusion and successfully form a cartel, the market outcome is monopoly 1 is the same as if it was served by competitive frims 2 its efficient because cooperation improves efficiency 3 is the same as if it was served as monopoly 4 is known as nash equalibrium

3 is the same as if it was served as monopoly

which of the following is an example of public good 1 hot dogs at a picnic 2 whales in the ocean 3 national defence 4 apples on trees in a public park

3 national defence

the market for detergents (ariel/persil) is dominated by proctor and gamble and unilever. the market is described as 1 monopolistic competition 2 monopoly 3 oligopoly 4 perfect competition

3 oligopoly

to internalise a negative externality, an appropriate public good response would be 1 have the government take over the good take over the production of the good causing the externality 2 ban the production of all goods creating negative externality 3 tax the good 4 subsidise the good

3 tax the good

which of the following is correct? 1 advertising is rarely seen in monopolistc industry 2 advertising is a significant element of perfect competition 3 there are little or no barriers to entry in oligopoly 4 there are significant barriers to entry in monopoly

4 there are significant barriers to entry in monopoly

A situation in which oligopolists interacting with one another each choose their best strategy given the strategies that all the other oligopolists have chosen is known as a a. Nash equilibrium b. Dominant strategy c. Cartel d. Collusion solution

a nash equalibrium

Nicole wants to avoid buying a car that is a 'lemon'. She takes a car she would like to buy to her mechanic before she purchases it. This is known as a. Screening b. Signalling c. Adverse selection d. Moral hazard

a screening

When the price of a good decreases there is an incentive for a. Firms to produce less b. Consumers to buy less c. Firms to produce more d. Firms to enter the market

a. Firms to produce less

. A free rider is a person who a. Receives the benefit of a good but avoids paying for it b. Pays for a good but fails to receive any benefit from the good c. Fails to produce goods but is allowed to consume goods d. Produces a good but fails to receive payment for the good

a. Receives the benefit of a good but avoids paying for it

If the price elasticity of demand for a good is 0.5 (in absolute terms), demand for the good is a. Relatively elastic b. Perfectly inelastic c. Perfectly inelastic d. Relatively inelastic

a. Relatively elastic

An advertising campaign promotes the health benefits of using the 'Nutribullet' brand of blender. Which of the following best describes what follows? a. The demand curve for Nutribullet blenders shifts right b. The demand curve for Nutribullet blenders shifts left c. The supply curve for Nutribullet blenders shifts right d. The supply curve for Nutribullet blenders shifts right

a. The demand curve for Nutribullet blenders shifts right

9. The incidence of taxation is determined by a. The law of demand and supply b. Price elasticities of demand and supply c. Producer surplus d. Consumer surplus

a. The law of demand and supply

Which of the following products is least likely to be sold in a monopolistically competitive market? a. Breakfast cereal b. Cotton c. Video games d. Beer

b cotton

A person who regularly watches RTE television programmes in the Ireland but fails to pay their TV licence fee is known as a. Excess baggage b. Free rider c. Costly rider d. Common resource

b free rider

If a minimum price regime such as, minimum wage legislation, is implemented above the equilibrium in a perfectly competitive market then a. A shortage will result b. A surplus will result c. The price will always revert to the original equilibrium due to market forces d. The supply curve will always shift back to balance supply and demand due to the "invisible hand" theory

b surplus will result

If an increase in consumer incomes leads to a decrease in demand for camping equipment, then camping equipment is a(n) a. Normal good b. Inferior good c. Substitute good d. Complementary good

b. Inferior good

Suppose new regulations require nightclubs to hire extra security staff for events featuring live bands. We would expect this to a. Shift the supply curve for nightclub events featuring live bands to the left b. Shift the demand curve for nightclub events featuring live bands to the right c. Shift the supply curve for nightclub events featuring live bands to the right d. Shift the demand curve for nightclub events featuring live bands to the left

b. Shift the demand curve for nightclub events featuring live bands to the right

The tragedy of the commons arises due to a. Farmers being taxed too heavily b. The absence of enforceable property rights c. Government policy that results in excessive bureaucracy d. The free rider problem, where communities do not provide public goods

b. The absence of enforceable property rights

Suppose you find €20. If you choose to use the €20 to go to a football match, your opportunity cost of going to the game is a. Nothing, because you found the money b. €20 (because you could have used the €20 to buy other things) plus the value of your time spent at the game c. €20 (because you could have used the €20 to buy other things) plus the value of your time spent at the game, plus the cost of the dinner you purchased at the game d. €20 (because you could have used the €20 to buy other things)

b. €20 (because you could have used the €20 to buy other things) plus the value of your time spent at the game

Assume a 'gas-guzzler' tax is placed on new vehicles that are very fuel inefficient. This is an example a. A tradable pollution permit b. An application of the Coase theorem c. An attempt to internalize a negative externality d. An attempt to internalize a positive externality

c an attempt to internalize a negative esternality

. Pfizer pharmaceutical company is a monopolist in the production of Lyrica, a prescription pain medication because Pfizer a. Is a very large company b. Owns a key resource in the production of Lyrica c. Is a natural monopoly d. Has a legally protected exclusive right (patent) to produce the medicine

c natural monopoly

The market for shampoo (such as Dove and Pantene) is dominated by Proctor and Gamble and Unilever. This market is best described as a. Monopolistic competition b. Monopoly c. Oligopoly d. Perfectly competitive

c oligopoly

Government can correct the market failure associated with a positive externality by a. Banning the good creating the externality b. Taxing the good c. Subsidizing the good d. Introducing maximum legal limits to production of the externality creating good

c subsidizing the good

To internalise a negative externality, an appropriate public policy response would be to a. Have the government take over the production of the good causing the externality b. Ban the production of all goods creating the negative externalitiy c. Tax the good d. Subsidise the good

c tax the good

Which of the following would cause a supply curve to shift to the left? a. A decrease in the price of an input b. A decrease in the cost of labour c. An increase in production costs d. An increase in the price of the good

c. An increase in production costs

If oligopolists engage in collusion and successfully form a cartel, the market outcome a. Is the same as if it were served by competitive firms b. Is efficient because cooperation improves efficiency c. Is the same as if it were served by a monopoly d. Is known as a Nash equilibrium

c. Is the same as if it were served by a monopoly

Which of the following best demonstrates the problem of moral hazard a. Joan does not buy health insurance because it is expensive and she is healthy b. Life insurance company forces Jack to have a medical examination prior to selling him insurance c. John drives more recklessly after he buys car insurance d. Sophie chooses to attend DCU, a well-respected university

c. John drives more recklessly after he buys car insurance

Market equilibrium exists when a. Market demand is greater than market supply b. Market demand is less than market supply c. Market demand equals market supply d. None of the above

c. Market demand equals market supply

A perfectly inelastic supply curve with a downward demand curve shows a. That the quantity supplied is very responsive to price b. That there will be no market because the demand curve cannot intersect a perfectly inelastic supply curve c. That increases in demand will have no effect on quantity supplied d. That increases in demand will have no effect on equilibrium price

c. That increases in demand will have no effect on quantity supplied

Which of the following activities is most likely to produce an externality? a. A student eats a hamburger in the DCUBS Café b. A student reads a novel for pleasure c. A student sits at home and watches T.V. d. A student has a party in her room in DCU campus accommodation

d a student has a party in her room in dcu campus accommodation.

. A common resource is a. Not rival but excludable b. Both rival and excludable c. Neither rival nor excludable d. Rival but not excludable

d rival but not excludable

Which of the following would cause the demand curve for a normal good to shift to the right a. A fall in the price of substitutes b. A rise in the price of complements c. An increase in supply d. A rise in income

d. A rise in income

. If a free market is currently in a position of excess supply we would predict that a. Price will increase and quantity will drop b. Price will drop and quantity will increase c. Price will increase and quantity will increase d. Price will drop and quantity will drop

d. Price will drop and quantity will drop

If a free market is currently in a position of excess supply we would predict that a. Price will increase and quantity will drop b. Price will drop and quantity will increase c. Price will increase and quantity will increase d. Price will drop and quantity will drop

d. Price will drop and quantity will drop

. If consumers think that there are very few substitutes for a good, then a. Supply would tend to be price elastic b. Demand would tend to be price inelastic c. Demand would tend to be price elastic d. Supply would tend to be price inelastic

d. Supply would tend to be price inelastic

Cengage publishers is a monopolist in the production of your economics textbook because Cengage a. Is a very large company b. Owns a key resource in the production of textbooks c. Is a natural monopoly d. Has a legally protected exclusive right (copyright) to produce the textbook

d. has a legally protected exclusive rights to produce the textbook