Economics Quiz

Rent control serves as an example of how a social problem can be alleviated or even solved by government.

• serves as an example of how a social problem can be alleviated or even solved by goverment

• serves as an example of a price ceiling.

• is regarded by most economists as an efficient way of helping the poor.

• is the most efficient way to allocate scarce housing resources.

Which of the following would most likely serve as an example of a monopoly?

• a bakery in a large city

• a bank in a large city

• a local cable television company

• a small group of corn farmers

A competitive firm would benefit from charging a price below the market price because the firm would achieve

• (i) higher average revenue.

• (ii) higher profits.

• (iii) lower total costs.

• None of (i), (ii), and (iii) is correct.

Goods that are not excludable include both

• private goods and public goods.

• natural monopolies and common resources.

• common resources and public goods.

• private goods and natural monopolies.

The production decisions of perfectly competitive firms follow one of the Ten Principles of Economics, which states that rational people

• consider sunk costs.

• equate prices to the average costs of production.

• will eventually leave markets that experience zero profit.

• think at the margin.

The goal of rent control is to

• facilitate controlled economic experiments in urban areas.

• help landlords by assuring them a low vacancy rate for their apartments.

• help the poor by assuring them an adequate supply of apartments.

• help the poor by making housing more affordable.

In order to reach point C, the economy would have to

• None of (i), (ii), and (iii) are correct; the economy will never be able to reach point C.

• (i) acquire more resources or experience a technological advance.

• (i) begin using its available resources more efficiently than it is currently using them.

• (iii) shift resources away from the production of ribeye steaks and toward production of books.

If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?

• $625

• $1,250

• $5,000

• $2,500

A price ceiling will only be binding if it is set

• equal to equilibrium price.

• above equilibrium price.

• below equilibrium price.

• A price ceiling is never binding in a free market system.

Indifference curves tend to be bowed inward because of diminishing

• (i) marginal rates of substitution.

• (i) demand for the good as prices rise.

• (ii) income.

• Both (i) and (i) are correct.