Which of the following is the clearest example (according to the lessons of Adam Smith) of when government should attempt to interfere, in some manner, with a market outcome? a. When people refuse to get vaccinated for the Covid-19 virus and therefore expose others to possible infection or when they purchase offensive tattoos. b. When market transactions create negative externalities that threaten human lives or property. c. When people engage in price gouging during hurricanes or pandemics. d. When businesses pay wages that are too low to support a family. e. When people allow crab grass to be grown in their yards, destroying property values for their neighbors. 12. Positive externalities, according to economists, often leads to ____________ while negative externalities such as _______________ leads economists to recommend ____________. a. The underproduction of valuable goods and services; second-hand cigarette smoke; taxation or regulation of a market. b. Non-market production and shortages; offensive music; banning the good or service. c. An acceleration of Say's Law; alcohol and marijuana; subsidizing production. d. The Coase Theorem; beautiful flowers planted along a highway; leaving the market alone. e. All of the above. 13. Charter schools in Florida use a lottery to determine which students get in. This means that__________________________________. An auction in this case would mean that: a. There is often a shortage of seats at charter schools; the families who place the highest value on charter school education would be more likely to get a spot. b. Families who would like to pay for the right to get into charter schools do not have the opportunity to act on that desire; the price of a seat would rise from zero to some price above zero. c. Florida charter schools are not maximizing revenue from this system; Florida charter schools would earn greater revenue over time. d. An auction would create an efficient outcome in the market for charter school seats; An arguably "unfair" market outcome could take place. e. All of the above. 14. Current research on kidney transplants (see https://www.organdonor.gov/learn/organ-donation-statistics) shows that 17 people a day die while waiting for an organ. This is because: a. Of the negative externalities that prevent the government from legalizing the buying and selling of organs. b. Because demand is greater than supply, reflecting the fact that people should be more willing to donate their organs. c. Because the rationing role of prices is not legally allowed to work in this instance. d. Because organ prices are so high, most poorer people cannot afford one. e. A and D only. 15. According to the Coase Theorem: a. It is possible for markets to achieve equilibrium without some sort of government involvement when negative externalities occur. b. If transactions costs are low enough, common property can be converted to private property and markets can be created without government. c. Say's Law, when aided by subsidies, can reduce pollution, excessive noise, and other common property problems. d. The invisible hand only works when there is symmetrical information and high transaction costs. e. A and B only 16. There is currently a ______________ of fresh water in Florida. This is because the government uses ______________ in this market. Therefore, higher prices would___________. a. Surplus; price ceilings; lead to a drop in demand b. Surplus; price floors; not impact demand c. Shortage; price ceilings; lead to a more efficient quantity demanded. d. Shortage; price floors; increase in quantity supplied. e. None of the above 17. Years ago, a certain economics professor suggested that Valencia auction off parking spaces to create more efficient outcomes. Since Valencia sometimes Valencia stupid things, no one listened to this professor. Therefore, during normal times, the ongoing system of non-price rationing means that: a. Students who place a high value on getting to class on time will not be allowed to express that value with currency. b. Valencia will earn a lower than optimal revenue from parking spots. c. Students who would like to spend their mornings on Instagram, while sitting at home in their pajamas will spend long periods of time searching for a parking spot instead. d. The best parking spots will be provided for the same price as the worst spots, suggesting that this is a stupid policy. e. All of the above. f. Not all of the above, because Valencia is simply practicing the clearly morally superior economic model that Karl Marx put forth. 18. Shortages and black markets largely came to an end in the Soviet Union because ____________: a. Ronald Reagan showed that the ideas of Jean Baptiste Say and Adam Smith were more efficient economic models than the ideas put forth by Karl Marx. b. Barack Obama sped up the rate at which the Soviet Union collapsed by making shortages there worse in the short run. c. Franklin Roosevelt worked with Hugo Chavez to implement price controls on the Soviet economy, leading to the economic collapse occurring today. d. Ronald Reagan modeled his economic policies on what Karl Marx advocated to determine how food would be supplied. e. Donald Trump imposed tariffs on the Soviet economy. 19. The October 28, 2021, edition of The Wall Street Journal points out that the demand for steel is expected to increase rapidly in 2022. This means we can expect the following: a. An increase in steel prices and a decrease in demand. b. An increase in the supply of steel over time and thus, lower prices and an increase in demand. c. Surpluses, higher steel prices and an increase in quantity supplied over time. d. Shortages and rising prices for steel over time - which leads to an increase in quantity supplied. e. An inefficient final market outcome due to higher prices. 20. The day after Thanksgiving there will likely be a surplus of canned cranberries all over the United States. This will occur because after the Thanksgiving ________________________, which will lead to ____________________. a. The quantity of cranberries demanded will fall; lower prices. b. The supply of cranberries will rise; lower prices and more demand. c. The demand for cranberries will fall; downward pressure on prices. d. The quantity of cranberries supplied will increase; lower prices e. The demand for and supply of cranberries will decrease; lower prices. 21. In 2021 a severe shortage of computer chips, combined with rising incomes has caused the supply of pickup trucks to _____ while demand has _____. If the demand effect has been smaller than the supply effect the following is now true in this market: a. Rise; fallen; prices have increased, and the equilibrium quantity has not changed. b. Fall; fallen (due to higher prices); Price ceilings need to be imposed. c. Not changed (quantity supplied has fallen; risen; prices have increased. d. Fall; Risen; the equilibrium quantity has fallen while prices have increased. 22. Suppose in 2022 consumer tastes for bread with gluten continues to fall while improved growing conditions in the Montana wheat belt leads to a huge increase in wheat supplies (wheat has gluten). The following would take place in the market for wheat bread in 2022: a. An increase in the supply, lower demand, and lower prices. b. An increase in quantity supplied, a decrease in quantity demanded and lower prices. c. No change in supply, lower demand, and lower prices. d. Higher prices. e. A decrease in demand, an increase in supply and higher prices. 23. There is a shortage of Nike shoes all over the U.S. due to cargo ships not being unloaded in California. If the demand for Nike shoes increases this holiday season the following will occur: a. The shortage will turn into a surplus as consumers have trouble finding Nike shoes. b. The shortage will grow worse, prices will likely increase and, according to the law of demand, demand will fall right before Christmas. c. The Nike shoe market will fail, leading to negative externalities for Nike and Nike customers. d. Prices will rise as the shortage intensifies. e. All of the above. 24. The October 28, 2021, Wall Street Journal explains that due to rising wages and other input costs McDonald's is raising menu prices. The chain of causation that explains this is: a. As input costs increase, the supply of burgers decreases, prices rise, and demand will fall. b. Quantity demanded will fall as prices rise and quantity supplied falls. c. Say's law will cause demand to drop as prices rise. d. Higher input costs lead to a decrease in supply, upward pressure on prices and will lead to fewer hamburgers being bought at McDonalds. e. B and C only. 25. If Joe Biden made it easier for immigrants to enter and work in the United States, we would see the following in the market for new homes: a. The price of homes would rise as supply increases. b. The quantity of homes supplied would increase due to lower input costs of building. c. The demand for new homes would not change but supply would decrease as immigrants cause higher unemployment for American workers. d. The price of homes could fall some if lower input costs of production boosts supply. e. A and C only