1.According to this course, what major economic principle is demonstrated by price controls (such as rent control)?

Decisions are often marginal

People face tradeoffs

Markets are usually the best way to allocate resources

None of the above

2.What is the effect of a tax?

The price buyers pay decreases

The price sellers receive decreases

The quantity increases

Consumers of this good are made happier by the tax

3.Suppose the tax per unit increases. What is the effect on the tax revenue?

Increase

Decrease

Stays the same

Unclear

4.Suppose a good has a PED of -0.4. What can be inferred from this number?

Its demand curve is flat and upward sloping

The good likely has many substitutes

The good has no complements

Buyers will buy the product even if the price rises by a large amount

5.Again, consider the market for video games in the early 1980s. As stated, due to looser licensing laws,more and more companies (firms) were producingvideo games. Also, due to a major fall in the quality of video games,people's tastes and preferences movedto other forms of entertainment.

Using the three step process, what happens to the quantity of the video games?

Decreases

Increases

Stays the same

Unclear