Economic Concepts Quiz

In a market with excess supply, what happens to prices over time?

• Prices increase

• Prices decrease

• Prices remain the same

• Prices fluctuate randomly

What is the function of prices when they signal that a market is oversupplied?

• Allocative

• Incentive

• Rationing

• Signalling

Which term describes the benefit producers receive when prices are higher than the minimum they are willing to accept?

• Consumer surplus

• Producer surplus

• Excess supply

• Excess demand

What problem arises when it is impossible to prevent someone from accessing a good without paying for it?

• Missing market

• Free-rider problem

• Allocative inefficiency

• Rationing issue

What happens to prices in a market with excess demand?

• Prices decrease

• Prices increase

• Prices remain constant

• Prices fluctuate randomly

Which category do fish stocks fall under in the goods matrix?

• Private goods

• Club goods

• Public goods

• Common-pool resources

In the context of insurance, what is the effect called when only high-risk individuals take out insurance?

• Adverse selection

• Moral hazard

• Positive externality

• Negative externality

In a market with negative production externalities, what is the effect of overvaluation of benefits?

• Firms continue to produce at the same quantity

• Firms reduce production

• Firms increase production

• Firms stop production

In a market with positive consumption externalities, what can fix the issue of undervaluation of benefits?

• Subsidy

• Tax

• Price control

• Quota

What is the result of a deadweight loss in a market with externalities?

• Loss of surplus

• Increase in surplus

• Equilibrium

• Perfect competition