Economics Concepts Quiz

Lots of fans eat fast food because of the free cards of their idols. The marginal cost of the last unit of fast food will _______ and the consumer surplus _______.

• A. increase… will increase

• B. increase… may increase or decrease

• C. decrease… will increase

• D. decrease… may increase or decrease

Initially a country imposes an effective price ceiling on tablets. More schools adopt the “Bring Your Own Device” (BYOD) policy so parents need to prepare the tablets for their children. Which of the following statements about the tablet market are correct? (1) The deadweight loss will increase. (2) The quantity transacted will increase. (3) The consumer surplus will increase.

• (1) and (2) only

• (1) and (3) only

• (2) and (3) only

• (1), (2) and (3)

An increase in an effective price floor must lead to an increase in ______.

• A. deadweight loss

• B. producer surplus

• C. consumer surplus

• D. total expenditure

Refer to the following diagram. Suppose a price floor is set at P2. Which of the following statements is correct?

• A. The consumer surplus is Area VP2YW.

• B. The producer surplus is Area P0EZ.

• C. The total social surplus is Area VZYW.

• D. There is excess supply.

As certain celebrities gain fame in Hong Kong, which of the following situations represents a positive externality?

• The celebrities receive higher fees for endorsements.

• Their fan clubs generate more income from merchandise sales.

• Local tourism increases as fans visit Hong Kong to see them.

Using hand sanitizers can reduce the spread of germs. Which of the following statements is true?

• There is a positive externality, so the government should provide subsidies to increase usage.

• At the market equilibrium, the marginal private cost is less than the marginal social benefit.

• Individuals using hand sanitizers can demand compensation from others to enhance economic efficiency.

• There is an overuse of hand sanitizers in the market.

Based on the Gini coefficient table, which of the following statements are correct? (1) The GDP of Economy A is higher. (2) The living standard of people in Economy B is higher. (3) The income distribution is more uneven in Economy A. (4) The Lorenz curve of Economy B is closer to the 45-degree line.

• (1) and (2) only

• (1) and (3) only

• (2) and (4) only

• (3) and (4) only