1- The supply curve illustrates

a.the various quantities of a good or service producers are willing to supply at alternative prices.

b.the difference between the current supply of a good or service and the potential supply producers are capable of producing.

c.the various quantities of a good or service consumers will purchase at alternative prices.

d.the difference between the current demand of a good or service and the potential demand consumers could purchase.

2-When a good is scarce,

a.this indicates that producers are withholding output so they can raise the price of the good.

b.some method must be used to allocate the good among users.

c.there will be a shortage of the good if it is allocated by markets.

d.there will be a surplus of the good if it is allocated by markets.

3- The equilibrium price is the price

a.all of the above.

b.where quantity supplied equals quantity demanded.

c.which the government sets.

d.where the profitability of the firms in the industry is at a maximum.

4-After the September 11, 2001 terrorist attacks on New York City destroyed resources, inventories, and disrupted supply chains, city residents continued to produce and consume a large variety of goods and services.This was because of

a.generous disaster loans from the federal government to New York City.

b.lower prices mandated by federal law.

c.lower tariffs on goods imported into New York from other states.

d.changes in market prices, profits, and wages.

5- When a college student trades labor services for income, the student is

a.made better off, or otherwise the student would not have agreed to the trade.

b.made worse off because the student is failing to consider the opportunity cost of the study time lost.

c.being exploited or coerced.

d.giving up something valuable, in exchange for something less valuable.

6- Countries are likely to reduce the ability of their citizens to achieve prosperity when they

a.interfere with voluntary exchange on a domestic level, but not internationally.

b.interfere with voluntary exchange on an international level, but not domestically.

c.interfere with voluntary exchange either domestically or internationally.

d.neither kind of interference is likely to reduce prosperity.

7- In voluntary exchange, if the seller of a product gains,

a.the buyer will generally lose an amount greater than what the seller gains.

b.the buyer must lose an amount equal to what the seller gains.

c.someone else must lose an equal amount.

d.the buyer will also gain; mutual gain provides the foundation for exchange.

8- Which of the following scenarios would most likely result in decreased transaction costs?

a.A developing country invests in a highway system that will open up trucking routes.

b.A government imposes a 5 percent tax on all foreign automobiles imported into the country.

c.A small country is landlocked and does not have access to shipping ports.

d.A business is seeking a specialized candidate to fill a new position, but does not know where to advertise to find such a candidate.

9-Which of the following scenarios would most likely result in decreased transaction costs?

a.A developing country invests in a highway system that will open up trucking routes.

b.A government imposes a 5 percent tax on all foreign automobiles imported into the country.

c.A small country is landlocked and does not have access to shipping ports.

d.A business is seeking a specialized candidate to fill a new position, but does not know where to advertise to find such a candidate.