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Gillespie: Foundations of Economics
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Gillespie: Foundations of Economics

Unit 7

Instructions

Choose your answers from a-d by clicking the radio button next to each choice and then press 'Submit' to get your score.

Question 1

Which best describes consumer surplus?

a) The price consumers are willing to pay for a unit

b) The cost of providing a unit

c) The profits made by a firm

d) The difference the price a consumer pays for an item and the price he/she is willing to pay

Question 2

The price mechanism does not act as a:

a) Signal

b) Incentive

c) Rationing device

d) Indicator of income

Question 3

A shift in demand will have more effect on price than quantity if:

a) The price elasticity of supply is price inelastic

b) The price elasticity of supply is price elastic

c) The price elasticity of supply is perfectly elastic

d) The price elasticity of supply is infinity

Question 4

A shift in demand will have more effect on price than quantity if:

a) The price elasticity of supply is + 3

b) The price elasticity of supply is + 0.2

c) The price elasticity of supply is + 2

d) The price elasticity of supply is infinity

Question 5

A shift in supply will have more effect on price than quantity if:

a) The price elasticity of demand is -3

b) The price elasticity of demand is -0.2

c) The price elasticity of demand is -2

d) The price elasticity of demand is infinity

Question 6

A decrease in demand for a product should:

a) Increase equilibrium price and quantity

b) Decrease equilibrium price and quantity

c) Increase equilibrium price and decrease quantity

d) Decrease equilibrium price and increase quantity

Question 7

An increase in demand for a product should:

a) Increase equilibrium price and quantity

b) Decrease equilibrium price and quantity

c) Increase equilibrium price and decrease quantity

d) Decrease equilibrium price and increase quantity

Question 8

"Income inequality can be high in the free market and should be reduced." This is an example of what?

a) Judicial economic statement

b) Positive economic statement

c) Formative economic statement

d) Normative economic statement

Question 9

A public good will:

a) Be underprovided in the free market

b) Be overprovided in the free market

c) Not be provided in the free market

d) Has no opportunity cost

Question 10

A positive externality occurs when:

a) The social marginal costs are higher than the private marginal costs

b) A product is not provided in the free market

c) The social marginal cost equals the social marginal benefit

d) The social marginal benefits are higher than the private marginal benefits

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Oxford University Press, Online Resource Centre, Unit 7.