Economics Quiz

Which of the following is a characteristic of common access resources?

• Resources with no rivalrous characteristics

• Resources with limited supply

• Resources over which there is established private ownership

• Resources owned by private individuals

Answer explanation

Common access resources are characterized by having no rivalrous characteristics, meaning they can be used by multiple individuals without depletion or competition.

What is the effect of a change in price on quantity supplied in the case of inelastic supply?

• A change in price leads to a proportionally larger change in quantity supplied

• A change in quantity supplied leads to a proportionally smaller change in price

• A change in price has no effect on quantity supplied

• A change in price leads to a proportionally smaller change in quantity supplied

Answer explanation

In the case of inelastic supply, a change in price leads to a proportionally larger change in quantity supplied.

What is marginal cost?

• The average cost of producing a good

• The fixed cost of producing a good

• The additional costs of producing one more unit of output

• The total cost of producing a good

Answer explanation

Marginal cost refers to the additional costs of producing one more unit of output.

What is the meaning of market equilibrium?

• The point where quantity demanded equals quantity supplied

• The point where quantity demanded is less than quantity supplied

• The point where demand exceeds supply

• The point where supply exceeds demand

Answer explanation

Market equilibrium is the point where quantity demanded equals quantity supplied.

What is market power?

• The ability of a firm to have no control over the market

• The ability of a firm to have no impact on the market

• The ability of a firm to have no influence on the market

• The ability of a firm to control the terms and conditions of buying and selling goods

Answer explanation

Market power refers to the ability of a firm to control the terms and conditions of buying and selling goods.

Which of the following best describes monopolistic competition?

• A market structure with no competition

• A market structure with no product differentiation

• A market structure with no freedom of entry and exit

• A market structure with freedom of entry and exit and product differentiation

Answer explanation

Monopolistic competition is a market structure with freedom of entry and exit and product differentiation.

What are negative externalities of consumption?

• The negative effects enjoyed by a third party when a good or service is consumed

• The positive effects enjoyed by a third party when a good or service is consumed

• The negative effects suffered by a third party when a good or service is consumed

• The positive effects suffered by a third party when a good or service is consumed

Answer explanation

Negative externalities of consumption refer to the negative effects suffered by a third party when a good or service is consumed.

What is the purpose of Pigouvian taxes?

• To ignore the external costs of negative externalities

• To reduce the external costs of negative externalities

• To increase the external costs of negative externalities

• To eliminate the external costs of negative externalities

Answer explanation

Pigouvian taxes aim to reduce external costs of negative externalities by imposing taxes on activities causing harm.

What is a price floor?

• A price set below the equilibrium price

• A price set to eliminate the equilibrium price

• A price set at the equilibrium price

• A price set above the equilibrium price

Answer explanation

A price floor is a price set above the equilibrium price, which helps to establish a minimum price for a good or service. This creates a surplus of supply and can lead to unintended consequences.

What are quasi-public goods?

• Goods that satisfy the two public good conditions only to a certain extent or only some of the time

• Goods with no non-rivalry and non-excludability

• Goods with unlimited supply

• Goods that satisfy the two public good conditions all the time

Answer explanation

Quasi-public goods partially satisfy public good conditions, but not always. They are not unlimited in supply.