Economics Quiz

What is the reward for enterprise?

• Profit

• Interest

• Rent

• Wages

What is the law of diminishing marginal utility?

• As more of a good is consumed, each additional unit provides less additional satisfaction

• As more of a good is consumed, each additional unit provides more satisfaction

• As less of a good is consumed, each additional unit provides more satisfaction

• As less of a good is consumed, each additional unit provides less satisfaction

What is the definition of a luxury good?

• Demand is very sensitive to changes in income - the % change in demand will be larger than the % change in income

• Where demand increases when incomes fall

• Goods which can be used in place of one another

• Goods that are used together

What is the term for a normal good which is not a luxury good?

• Necessity

• Luxury

• Inferior good

• Elastic

Under what circumstances would an increase in price leave revenue unchanged?

• PED elastic

• PED inelastic

• PED unit elastic

• Perfectly elastic

What is meant by 'perfectly price elastic supply'?

• Where supply is infinite at a certain price

• Where supply is zero regardless of price

• Where supply is very sensitive to price

• Where supply is not sensitive to price

What is an external cost?

• A cost to a third party outside the transaction

• A benefit to a third party outside the transaction

• The total benefit to private individuals and third parties

• A charge levied by government

On a positive production externality diagram, how do you find under/over consumption in a private market?

• Underconsumption, the difference between the quantity at social equilibrium and at private equilibrium

• Overconsumption, the difference between the quantity at social equilibrium and at private equilibrium

• Where MC (MSC) meets MSB

• Where MB (MSB) meets MPC

What are the two features of public goods?

• Non-excludability and Non-rivalry

• Excludability and Rivalry

• Non-excludability and Rivalry

• Excludability and Non-rivalry

What is consumer tax incidence?

• The portion of government revenue arising from a tax which comes from consumer surplus

• The fall in total surplus that results from a market distortion, such as a tax

• A payment made by the government to a producer

• A legal price floor where the Government buys up the surplus