1. Which of the following statements about property rights is accurate?

1. They are necessary for a command economy to function.
2. They prevent allocative inefficiency.
3. They prevent productive inefficiency.
4. They make free exchange in product and factor markets possible.
5. They are an essential feature common to market, command, and mixed economies.

2. Which of the following draws the demand line?

1. Marginal cost
2. Marginal benefit
3. Marginal benefit per dollar
4. Diminishing marginal returns
5. Increasing opportunity costs

3. According to the law of supply, a change in the price of a product itself can be represented on a supply curve as a

1. shift in the product supply curve
2. shift in the product demand curve
3. movement along the product demand curve
4. movement along the product supply curve
5. movement along the product demand and product supply curves

4. Consider the following supply schedules for Joseph, Talia, and Shen, who are the only suppliers in the market for cogs:

Joseph

Talia

Shen

Price per Cog

Cogs Produced

$4

12

8

4

$3

11

6

3

$2

9

4

2

$1

5

2

1

$0

2

1

0

If the equilibrium price is $4 per cog, what is the market quantity supplied? Assume the market is perfectly competitive and in equilibrium.

1. 3 cogs
2. 8 cogs
3. 15 cogs
4. 20 cogs
5. 24 cogs

5. Which of the following would increase the quantity a firm would produce at every price, ceteris paribus?

1. Expectations of demand going down for their product
2. Consumer incomes going up
3. A decrease in the number of suppliers
4. A significant increase in opportunity cost
5. A decrease in the price of a factor of production

6. Widgets are known to have inelastic demand when their price increases from $2 to $4. What must be true of the change in quantity demanded over this price range?

1. It increased by exactly 100 percent.
2. It decreased by exactly 100 percent.
3. It decreased by less than 100 percent.
4. It increased by more than 100 percent.
5. It decreased by an indeterminate amount.

7. If there are few substitutes for a good, its price elasticity of demand is likely to

1. increase with each marginal unit produced
2. be relatively high
3. be relatively low
4. depend on the prices of those substitutes
5. directly impact the demand for its substitutes

8. What is the price elasticity of supply for a good that sees a 4% increase in quantity supplied for a 1% increase in price?

1. 0.25
2. 1
3. 3
4. 4
5. 5

9. The suppliers of Good A are more able to increase production in response to price increases than the suppliers of Good B. This means that the suppliers of Good A

1. have greater production costs
2. have a greater price elasticity of supply
3. should consider trading with the suppliers of Good B
4. sell inferior goods
5. have an elasticity coefficient greater than 1

10. If the income elasticity of demand for a good is 8, then

1. quantity demanded and income decrease by 8 percent
2. quantity demanded and income increase by 8 percent
3. quantity demanded increases by 8 percent while income increases by 1
4. quantity demanded decreases by 1 percent while income increases by 8 percent
5. quantity demanded and income percent changes are indeterminate

11. Given that the cross-price elasticity of goods Bee and Zee is 20 and the quantity of Bee decreases by 40 percent, which of the following statements is correct?

1. They are substitutes, and the price of Zee goes up by 2 percent.
2. They are substitutes, and the price of Zee goes down by 2 percent.
3. They are complements, and the price of Zee goes up by 2 percent.
4. They are complements, and the price of Zee goes down by 2 percent.
5. They are complements, and the price of Zee goes down by 8 percent.

12. If a consumer believes that businesses are charging a price well below equilibrium for a good he wants, what would be a rational response? Assume the good cannot be resold.

1. Not purchase any units to wait until the surplus leads to a lower price
2. Purchase more units than he wants to take advantage of the low price
3. Purchase his desired units quickly before there is a shortage
4. Purchase the closest substitute for that good
5. Purchase a complement to that good

13. Which of the following accurately describes the result if the price of a good or service is set below the equilibrium price? (2 points)

1. There will be a surplus of that good.
2. Some of the consumer surplus from equilibrium will be transferred to producers.
3. The producers will supply a lower quantity than consumers will demand.
4. The consumer surplus will decrease.
5. The price elasticity of demand will increase to reflect the lower quantity transacted.

14. Which of the following events would correctly describe the outcome in a competitive market?

1. An increase in supply, ceteris paribus, causes an increase in equilibrium price and quantity.
2. An increase in demand, ceteris paribus, causes a decrease in equilibrium price and quantity.
3. An increase in demand, ceteris paribus, causes an increase in equilibrium price and quantity.
4. An increase in supply, ceteris paribus, causes an increase in equilibrium price and a decrease in equilibrium quantity.
5. A decrease in demand, ceteris paribus, causes an increase in equilibrium price but an indeterminate change in equilibrium quantity.

15. A government imposes a per-unit tax on light bulbs in a competitive market. Afterward, the seller's after-tax price increases from the original equilibrium price of $12 to $14. The marginal cost of lightbulbs was $9 before the tax and $12 after the tax was implemented. The quantity supplied decreases from a before-tax quantity of twelve thousand bulbs per month to ten thousand bulbs per month after the tax. Based on this, which of the following is true?

1. Total expenditures on light bulbs increase after the tax.
2. The amount of deadweight loss is $20,000 after the tax.
3. Total revenue earned by light bulb producers increases after the tax
4. The total tax revenue collected by the government is $30,000 per month.
5. Consumers and producers are sharing an equal percentage of the tax burden.

16. Which of the following groups would not directly benefit from the removal of an import quota on Good X?

1. Foreign suppliers
2. Domestic suppliers
3. Domestic consumers
4. Domestic suppliers of Good Y, a complement of Good X
5. Domestic consumers of Good Y, a complement of Good X