Question 1(1 point)

Which of these strategies would NOT solve the tragedy of the commons?

Question 1 options:

a. Encourage local solutions to the tragedy of the commons.

b.Solve it through communal ownership.

c.Divide the commons and allow private ownership of each share.

d. Government takes ownership and regulates use of the commons.

Question 2(1 point)

Which of these factors does NOT affect the supply of shoes?

Question 2 options:

a. a change in the price of shoes.

b.A change in the cost of leather.

c. A government tax or subsidy on shoe production.

d. Lower costs of shoe-making equipment.

Question 3(1 point)

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The law of demand states that

Question 3 options:

a.with an increase in the price, the quantity demanded increases.

b.with an increase in the price, the quantity demanded decreases.

c.quantity demanded does not change with any increase in price.

d. with an increase in price, demand decreases.

Question 4(1 point)

An accountant describes profit as__________ while an economist describes it as _______________.

Question 4 options:

a.Total revenue minus total cost; total revenue minus total cost minus opportunity cost.

b.Total revenue minus variable cost; total revenue minus variable cost minus opportunity cost.

c.Total revenue minus fixed; total revenue minus fixed cost minus opportunity cost.

a.Total revenue minus total cost minus opportunity cost; total revenue minus total cost.

Question 5(1 point)

The amount of pollution and the cost of pollution abatement are optimal when

Question 5 options:

a.The marginal social benefit of production is less than the marginal social cost of production.

b.The marginal social benefit of production equals the marginal social cost of production.

c.The marginal social benefit of production exceeds the marginal social cost of production.

d.The marginal social benefit of production equals the marginalcost of production.

Question 6(1 point)

An oligopoly is characterized by

Question 6 options:

a. A small number of buyers who collectively set a purchase price.

b.A large number of relatively small firms who collude on supply and price.

c.A small number of relatively large firms, each with substantial control of the market.

d.A single large firm that dominates the market and determines the market price.

Question 7(1 point)

Monoplistic competition describes

Question 7 options:

a.A market structure with a large number of (either large or small) competitors.

b.Each firm has a large amount of control over supply and prices.

c. A small number of sellers coordinate products and prices.

d. A single firm dominates supply and determines prices.

Question 8(1 point)

In the long-run, firms can

Question 8 options:

a.enter or exit an industry.

b.only hire more of only one input, such as labor.

c.continue to produce at a loss, while hoping for the recession to end.

d. none of the above.

Question 9(1 point)

Opportunity cost is:

Question 9 options:

a. the money a business loses in a bad investment.

b. the value of the best foregone opportunity.

c. the price an individual pays for making a mistake.

d. the tuition costs when you pursue a college degree.

Question 10(1 point)

Which of these does NOT generate a negative externality?

Question 10 options:

a. A manufacturer buys a pollution permit and then emits carbon as a waste product.

b.A manufacturer dumps waste in a nearby river.

c. A smoker has a cigarette in a crowded restaurant.

d. Every year Mary gets a flu shot

Question 11(1 point)

Which is an example of the subsitution effect on demand?

Question 11 options:

a. the price of bread rises, so you buy less bread.

b.The price of bread rises, so you buy more bread.

c. the price of bread rises, so you buy less bread and more dinner rolls.

d. the price of bread rises, but you buy the same amount of bread.

Question 12(1 point)

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The tragedy of the commons

Question 12 options:

a. describes the gradual shift from individual to communal grazing rights.

b.can be successfully solved by allowing individuals to follow their self-interest, without a need for government intevention.

c.followed from excessive government interference in the maintenance of the commons.

d.occurred because no one person owned the commons, so no one had the incentive to take care of it.

Question 13(1 point)

Which of these conditions does NOT characterize perfect competition?

Question 13 options:

a. a large number of buyers and sellers act independently.

b. firms produce identical products and are "price takers."

c.information is "imperfect," allowing individuals or firms to pay more for products than their costs of production.

d. individuals are motivated by self-interest, not societal welfare.

Question 14(1 point)

The first stage of the production function occurs when the firm experiences

Question 14 options:

a. negative returns.

b. constant returns.

c.diminishing returns.

d. increasing returns.

Question 15(1 point)

Which of the following is an example of fixed costs for a business?

Question 15 options:

a.hourly wages.

b.cost ofbusiness license.

c. fees for customer credit card charges.

d. gasoline for company vehicle.

Question 16(1 point)

A cap and trade policy is desirable because it

Question 16 options:

a. Reward firms for reducing pollution.

b.has proven to be an inefficient way to reduce pollution

c. is not a market-based solution to pollution.

d. punishes all firms equally.

Question 17(1 point)

Which of these describes the marginal product of labor?

Question 17 options:

a. the total output of all workers.

b. the additional output after hiring one more worker and buying her the necessary tools and equipment.

c. the additional output after hiring one more worker.

d. the additional output after equipping workers with upgraded tools.

Question 18(1 point)

Which of the following is an example of a change in the quantity demanded?

Question 18 options:

a. An increase in salary leads to increased spending on clothing.

b. A sale on shoes leads to higher purchases of shoes.

c.A rise in the price of peanut butter leads to higher demand for cheese sandwiches.

d.An outbreak of e-coli in chicken leads to higher demand for beef.

Question 19(1 point)

If the supply of a product is inelastic, then

Question 19 options:

a 25 percent change in price will lead to more than 25 percent change in quantity supplied.

a 25 percent change in price will lead to a 100 percent change in quantity supplied

a 25 percent change in price will lead to less than 25 percent change in quantity supplied

a 25 percent change in price will lead to a 25 percent change in income.

Question 20(1 point)

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Markets are more efficient when information is perfect; an example is:

Question 20 options:

a. insider information on the release of a new block-buster drug.

b.CARFAX reports that reveal the accident and repair history of a used car.

c. a fortune-tellers prediction of future interest rate movements.

d. a readily available archive of historical weather reports.