When the government makes the people creating an externality, pay for it, the externality is said to be internalized.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2When a freely functioning market is in disequilibrium:
a. the government must set a price ceiling.
b. the government must set a price floor.
c. the price and quantities demanded and/or supplied change until equilibrium is established.
d. it will continue to remain in disequilibrium.
e. it will reach equilibrium at a very high/low price.
QUESTION 3The major problem with common ownership is that too much of the commonly owned resource is consumed, and not enough is produced.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4A market survey conducted by an electronics manufacturer reported a year on year growth in the sale of television sets, along with an increase in the selling price. Which of the following could be a likely cause for this situation?
a. A decrease in supply
b. An increase in demand
c. A decrease in demand
d. An exception to the law of demand
e. An increase in supply
QUESTION 5Private property rights help to ensure an efficient use of resources, because owners of the resources must bear the costs of inefficient use.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6Assume that at the current market price of 4 per unit of a good, you are willing and able to buy 20 units. Last year at a price of 4 per unit, you would have purchased 30 units. What is most likely to have happened over the last year?
a. Demand has increased
b. Demand has decreased
c. Supply has increased
d. Supply has decreased
e. Quantity supplied has decreased
QUESTION 7When resources are commonly owned, there are incentives in place to ensure that the resources are used efficiently.
a. True
b. False
Indicate whether the statement is true or false
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