1. Which of the following would not tend to lower the price of VCR?
a. Decreasing price of DVD players.
b. Increasing price of video cassettes.
c. Improvements in VCR production technology.
d. Reduced price of raw material used in making VCR'S
e. Increasing price of pay per view movies on cable TV.

2. At a price of $9.50/pound, people buy 45 pounds of lamb. At a price of $10.50/pound, people buy 35 pounds of lamb. What is the arc elasticity of demand for lamb in this price range?
a. 1.0
b. 2.5
c. 0.4
d. 3.0
e. none of the above

3.An unregulated negative production externality will cause a private market to

A. Produce less than is socially optimal
B. Produce more than is socially optimal
C. Produce more than market equilibrium
D. Produce less than market equilibrium
E. Produce the amount that is socially optimal

4.On the foreign exchange market, an increase in a country's exchange rate

A. Decrease the quantity demand of its currency
B. Increase the quantity demand of its currency
C. Has no effect on the quantity demand of its currency
D. Decrease the quantity supplied of its currency
E. has no effect of the quantity supplied of its currency