1. In the context of economics, which of the following best illustrates a positive externality? A. Things that people could do to protect a common-pool resource aren't done often enough. B. When one person is seen littering a public park, others will be encouraged to litter. C. The environmental damage done by a paper mill must be paid for by taxpayers. D. As carbon emissions increase, Arctic ice melting increases.

2. In the bipartisan debate over welfare reform, conservative critics argue that welfare programs produce a culture of A. austerity. B. dependency. C. anxiety. D. degeneracy.

3. As illustrated by academic credentials, the process by which individuals or firms engage in activities with no direct value to convey intangible information to some other party is referred to as A. signaling. B. certification. C. screening. D. branding.

4. Regarding the law of supply and demand, which of the following statements is most likely to be true, all things being equal? A. As supply decreases, prices will establish an equilibrium price. B. As prices rise, demand will determine an equilibrium supply. C. As prices decline, demand will increase.