A demand curve represents a(n)
A) direct relationship between price and quantity demanded.
B) direct relationship between price and demand.
C) indirect or inverse relationship between price and quantity demanded.
D) indirect or inverse relationship between price and supply.
Ques. 2When a paper producer pollutes the air, economists argue that there is
A) efficiency, if production is at its maximum level.
B) a positive externality.
C) an external cost.
D) a cost paid solely by the firm.
Ques. 3Economists assume people behave
A) instinctively.
B) rationally.
C) irrationally.
D) greedily.
Ques. 4A technological advancement has just occurred in the computer chip industry. In the computer chip market this will lead to
A) an increase in price and a decrease in quantity.
B) an increase in price and an increase in quantity.
C) a decrease in price and a decrease in quantity.
D) a decrease in price and an increase in quantity.
Ques. 5A demand curve is derived from
A) the production possibilities curve.
B) consumer's income.
C) a demand schedule.
D) an equilibrium.
Ques. 6A negative externality is a situation in which
A) there is a spillover of benefits.
B) a cost associated with an economic activity is borne by a third party.
C) a firm is paying in excess of the total costs of producing a good.
D) none of the above.
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