1. Which of these consumption activities will most likely impose an external cost?
a. a young mother exercises to an aerobics video
b. a student in a dorm plays measures the sound of her neighbours CDs in decibels late at night.
c. an executive hits a bystander with his golf ball by mistake while playing a vigorous game of golf
d. a construction worker eats a sandwich during his lunch break.
2. Suppose that a decrease in the price of x results in less of good y sold. This means that x and y are
a. substitutes
b. inferior goods
c. complements
d. normal goods
3. Theories are developed to
a. provide and interesting but not useful framework of analysis
b. help economists understand how the world works
c. provoke stimulating debate in scientific journals
d. demonstrate that they developer of the theory is capable of logical thinking.
4. Which of the following cause and effect events is in order for a seller
a. input price rises, profit rises, the supply curve shifts left
b. input price falls, profit increases, the supply curve shifts right
c. input price rises, profit falls, the suppply curve shifts right
d. techonlogy improves, profit falls, the supply curve shifts left
5. Last year, joan bought 50 pounds of hamburger when the household income was $40,000. this year, the household income was only $30,000 and joan bought 60 pounds of hamburger. all else constant joan's income elasticity of demand for hamburger is
a. negative so joan considers hamburger to be an inferior good
b. negative so joan considers hamburger to be a normal good
c. positive so joan considers hamburger to be a normal good and a necessity
d. positive so joan considers hamburger to be an inferior good.
6. for a competitive market, which of the following is true?
a. a seller who charges more than the going price can increase her profit
b. a buyer can influence the price of the product, but only when purchasing from several sellers
c. if a seller charges more than the going price, buyers will go elsewhere
d. a seller often charges less than the going price to increase sales and profit
7. Which of the following demonstartes the law of demand
a. jon buys more pretzels at $1.50 each since he got a $1 raise at work.
b. kendra buys fewer snickers at $0.60 each since the price of milky ways fell to $0.50 each.
c. melissa buys fewer muffins at $0.75 each than at $1 each.
d. dave buys more donuts at $0.25 each than at $0.50 each.
8. which of the following is the best example of an externality? the impact of
a. pollution from a factory on the health of people in the vicinity of the factory
b. the personal income tax ona peron's ability to purachse goods and services
c. bad weather on the income of farmers
d. increases in health care costs on the health of individuals in society.