1. Sony has a self-imposed price control on their PlayStation 5 of $499. If demand is higher than what they are able to produce at that price, we may expect to see

A.

A cartel agreement with Nintendo.

B.

Import quotas.

C.

A shortage of PlayStation 5s and black-market transactions.

D.

A surplus of PlayStation 5s and discounts.

2. You are faced with the decision to purchase either a sports car or, your next best alternative, a family sedan. In economics, the family sedan can best be described as your

A.

Marginal cost

B.

Utility

C.

Opportunity cost

D.

Diminishing return

3. If a person knowingly chooses to pay one firm more for a homogenous product, which basic economic assumption are they violating?

A.

Rational consumer.

B.

Positive supply curve.

C.

Free entry and exit.

D.

Comparative advantage.

4. An example of a potential market failure would be

A.

An oil company that pollutes the environment as part of the refinery process.

B.

Watch makers purchasing all the sapphires in an economy, leaving none to produce lifesaving medical devices.

C.

A government policy that discourages savings.

D.

A computer company that sells products at a price where not everyone can afford to purchase one.

5. If a health and research institute found that consuming asparagus leads to heart problems, we would expect the demand curve for asparagus to

A.

Shift left and equilibrium price to be lower.

B.

Change the elasticity of the curve.

C.

Have no effect equilibrium price or quantity.

D.

Shift right and equilibrium price to be higher.