Navigation » List of Schools » Prince George Community College » Economics » Econ 1030 – Principles of Microeconomics » Summer 2021 » Test 2
Below are the questions for the exam with the choices of answers:
Question #1
A Social Security.
B national defense.
C unemployment insurance.
D Medicare.
Question #2
A state budget laws.
B voters wanting government programs but not wanting to pay taxes.
C unfunded liabilities.
D inappropriate monetary policy.
Question #3
A chronic budget deficits, misdirection of stabilization policy, and unfunded liabilities.
B chronic budget deficits.
C misdirection of stabilization policy.; and, unfunded liabilities.
Question #4
A the principal-agent problem.
B moral hazard.
C rent-seeking behavior.
D logrolling.
Question #5
A special-interest effect.
B extensive positive externalities from public and quasi-public goods.
C bureaucratic inefficiency.
D pressure by special-interest groups.
Question #6
A tends to be greater than in private firms, making government more efficient than private firms.
B is easy to monitor because of the small size and scope of government.
C is not a problem because government bureaucrats are not affected by the self-interest that affects private sector individuals.
D tends to be lacking because of civil service protections and the complexity of government.
Question #7
A improve accountability of government officials, thus leading to more efficient policies.
B better allow the invisible hand to direct government resources to their best uses.
C lead to economic inefficiencies because of difficulty aggregating and conveying information.
D enhance government’s ability make effective decisions quickly.
Question #8
A Weakening enforcement of laws and contracts.
B Coercing all firms to innovate and invest.
C Promising to cover every risk of loss for private firms.
D Taxing polluters and subsidizing firms that are creating significant positive externalities.
Question #9
A Private firms face the constraint of scarcity; government does not.
B Government focuses primarily on equity; private firms focus only on efficiency.
C Private economic activities create externalities; government activities do not.
D Government has the legal right to force people to do things; private firms do not.
Question #10
A public enterprises can produce such goods at lower cost than can private enterprises.
B private firms cannot stop consumers who are unwilling to pay for such goods from benefiting from them.
C their production seriously distorts the distribution of income.
D there is no need or demand for such goods.
Question #11
A A television set.
B A sofa.
C A weather warning system.
D A bottle of soda.
Question #12
A nonexcludability and production at rising marginal cost.
B production at constant marginal cost and rising demand.
C nonrivalry and nonexcludability.
D nonrivalry and large negative externalities.
Question #13
A Demand-side market failure, supply-side market failure and positive externality.
B Supply-side market failure.
C Demand-side market failure.
D Positive externality.
Question #14
A generates more of a benefit than it costs to produce.
B maximizes the net benefit to society.
C costs more to produce than it provides in benefits.
D produces a benefit exactly equal to the cost of producing the last unit.
Question #15
A demand-side market failure.
B negative externality.
C supply-side market failure.
D government failure.
Question #16
A Positive externalities.
B Negative externalities.
C Public goods.
D Negative externalities, positive externalities, and public goods.
Question #17
A some consumers who want a good do not obtain it because the price is higher than they are willing to pay.
B prices rise.
C government intervenes in the functioning of private markets.
D private markets do not allocate resources in the most economically desirable way.
Question #18
A Producer surplus has been maximized and consumer surplus has been minimized
B The sum of producer and consumer surplus is zero.
C Consumer surplus has been mazimized and producer surplus has been minimized.
D The sum of producer and consumer surplus has been maximized
Question #19
A Consumer surplus
B Deadweight loss
C Deadweight gain
D Producer surplus
Question #20
A It will decrease production costs and ultimately make the price of the product they produce too low.
B If it is too high, it will cause fewer workers to be demanded.
C It will cause too many workers to be demanded.
D All of the above are valid arguments against the minimum wage.
Question #21
A TRUE
B FALSE
Question #22
A Changes in the price of a substitute or complement
B The price of the item
C Consumers’ expectations about their income, wealth and/or the price of the item
D Household’s income and wealth.
Question #23
A Rent control is an example of a price floor.
B A price floor for a resource, such as the minimum wage, set above its equilibrium price, would increase the demand for that resource.
C A price ceiling on some item, set below its equilibrium price, creates rationing problems.
D A price ceiling on gasoline, set below its current equilibrium price, would assure that everyone would be able to buy gasoline at an affordable price.
Question #24
A A price floor set above the equilibrium price, in a particular market, will have no effect on that market.
B A price floor set below the equilibrium price in a particular market will cause a shortage.
C A price ceiling set above the equilibrium price, in a particular market, will cause a surplus.
D A price ceiling set below the equilibrium price in a particular market will cause a shortage.
Question #25
A Diminishing marginal utility — as you consumer more, as the result of a price decrease, the additional satisfaction received from the additional units consumed will start to go down.
B Substitution effect — that is, a price change can affect the opportunity cost of purchasing some item and your willingness to switch to (or from) another item.
C Income effect — that is, a price change can affect the amount of some item you can afford to purchase.
D When the price of an item increases, you buy more because it is more valuable.
Question #26
A When the price of an item goes down, ceteris paribus, the quantity supplied will go down, but the supply will not change.
B There is a direct (positive) relationship between price and quantity supplied.
C When the supply curve for an item shifts to the right, ceteris paribus, it will cause the price of that item to go up.
D A change in the supply of an item will cause a change in its price, but a change in the price of an item will not cause a change in its supply.