How does the imposition of an excise tax on a good affect its market equilibrium?
A) Equilibrium quantity decreases, and equilibrium price decreases.
B) Equilibrium quantity decreases, and equilibrium price increases.
C) Equilibrium quantity increases, and equilibrium price decreases.
D) Equilibrium quantity increases, and equilibrium price increases
Ques. 2Which of the following types of goods is subject to the free-rider problem?
A) a private good
B) a public good
C) a product that creates a positive externality
D) a product that creates a negative externality
Ques. 3If the price of gasoline rises sharply and the demand for sports utility vehicles falls, then the two goods are
A) complements.
B) normal goods.
C) substitutes.
D) inferior goods.
Ques. 4Which of the following is NOT true of an oligopoly?
A) They advertise their product.
B) The firms recognize their interdependence.
C) A few firm account for a large portion of the total output.
D) Firms are price takers.
Ques. 5Laws that make it difficult to start a new business lead to a
A) high rate of economic growth.
B) low rate of economic growth.
C) more political freedom.
D) laissez-faire.
Ques. 6Refer to the above figure. How do you describe what is happening as the economy moves from point A to point C?
A) The economy has acquired new resources that are well suited for producing bread.
B) Land that was once used to graze sheep is now being used to grow wheat.
C) Resources are becoming unemployed.
D) The technology for growing wheat has improved.
Ques. 7One of the basic differences between social and economic regulations is that
A) economic regulations only apply to financial institutions while social regulations apply to a greater variety of institutions.
B) social regulations only apply to non-profit organizations while economic regulations apply only to for-profit organizations.
C) economic regulations cover only particular industries while social regulations apply to all firms in the economy.
D) economic regulations focus on the banking industry while social regulations focus on monopolies.
Ques. 8A black market is a market in which
A) goods are traded at prices above their legal maximum prices.
B) sales taxes are effectively doubled.
C) goods are sold at outlet prices.
D) sales take place exclusively at outlet prices.
Ques. 9Which of the following is TRUE of an oligopoly?
A) They engage in nonprice competition.
B) They do not react to actions of their competitors.
C) Each firm produces a small portion of the total output.
D) Firms do not care what their competitors do.
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