1.For supplydecisions, marginal

A. benefit is measured in opportunity cost.

B. benefit is measured in dollars.

C. benefit reflects the value of the best alternative activity.

D. cost is measured in the same units as it is for demand decisions.

E. cost is measured in dollars.

2.If we observe a rise in the equilibrium price of product A, we know that either the demand for A has

A. increased or the supply of A decreased or both.

B. increased or the supply of A increased or both.

C. decreased or the supply of A decreased or both.

D. decreased or the supply of A increased or both.

E. None of the above

3.Property rights

A. providing incentives for selling

B. are not important in the market

C. are only important in the city

D. all of the above

4.The high price of diamonds relative to the price of water is due to the fact that

A. total benefits from water are relatively low.

B. marginal benefits from water are relatively low.

C. marginal benefits from diamonds are relatively low.

D. total benefits from diamonds are relatively high.

E. none of the above is true.

5.When the price is above themarket-clearing price,

A. falling inventories will cause the price to fall.

B. themarket-clearing price will rise.

C. falling inventories will cause the price to rise.

D. rising inventories will cause the price to fall.