1. If the price of a good is set higher than the equilibrium price:

A.  consumer surplus is decreased and deadweight loss is increased.

B.  consumer surplus is increased and deadweight loss is decreased.

C.  producer surplus is decreased and deadweight loss is increased.

D.  producer surplus is decreased and deadweight loss is decreased.

2. Suppose that quantity supplied of a product equals 5 and quantity demanded equals 8. In this market, there is a:

A. shortage of this product and the price should fall.
B. shortage of this product and the price should rise.
C. surplus of this product and the price should fall.
D. surplus of this product and the price should rise.

3. An external cost (or negative externality) occurs when:
A. some of the benefits derived from the production or consumption of some good or service are enjoyed by a third party.
B. the production or consumption of some good or service inflicts costs on a third party without compensation.
C. private costs exceed social costs.
D. private costs exceed private benefits.