Suppose the government has declared beer to be an illegal substance and has imposed penalties on any person caught buying a beer. Selling a beer, however, remains legal.
Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by A) 200 quarts.
B) 300 quarts.
C) 400 quarts.
D) 500 quarts.
Ques. 2Marginal utility theory concludes that a decrease in the price of a good increases the quantity demanded and
A) increases the demand for substitutes.
B) decreases the demand for complements.
C) increases the total expenditure on the good.
D) increases total utility.
Ques. 3If in monopolistic competition in the short run, firms make ________ profits, then in the long run, new firms will enter the market. The ________ each individual firm's product will ________.
In the new long-run equilibrium firms will make ________ profit. A) economic; demand for; decrease; zero economic
B) normal; demand for; increase; zero economic
C) economic; supply of; decrease; an economic
D) economic; supply of; increase; zero economic
Ques. 4Refining gasoline for our cars requires a very specialized resource, crude oil. As a result, the
A) demand for gasoline is price elastic.
B) demand for gasoline is price inelastic.
C) supply of gasoline is price elastic.
D) supply of gasoline is price inelastic.
Ques. 5For health care, the perceived marginal benefit ________ the marginal social benefit.
A) is less than
B) is greater than
C) is equal to
D) cannot be compared to
Ques. 6The unregulated, single-price monopolist illustrated in the figure above will set a price of
A) 2.00 per unit.
B) 6.00 per unit.
C) 8.00 per unit.
D) 10.00 per unit.
Ques. 7In the above figure, if household consumption is positively related to household income, then an increase in household income will
A) shift the line rightward.
B) shift the line leftward.
C) make the line positively sloped.
D) cause a movement along the line.
Ques. 8The table above shows sales of the firms in the chocolate industry. What type of market is this?
A) perfect competition
B) monopolistic competition
C) oligopoly
D) monopoly
Ques. 9Erika's utility with 3,000 of wealth is 6,000 and her utility with 3,001 of wealth is 6,005. Her marginal utility from gaining the additional 1 of wealth is ________.
A) 6,005
B) 3,001
C) 6,000
D) 5
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