market Mcqs
51. A price ceiling is ?
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A. a minimum price that consumers are willing to pay for a good.

B. a minimum price usually set by government that sellers must charge for a good

C. a maximum price usually set by government that sellers may charge for a good

D. the different between the initial equilibrium price and the equilibrium price after a decrease in supply

52. A decrease (leftward shift) in the supply for a good will tend to cause ?
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A. none of these answers

B. a decrease in the equilibrium price and an increase in the equilibrium quantity

C. a decrease in the equilibrium price and quantity.

D. an increase in the equilibrium price and a decrease in the equilibrium quantity

E. an increase in the equilibrium price and quantity
53. With a positive externality ?
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A. There is over consumption in the free market

B. There is under-consumption in the free market

C. Society could be made off it less was produced

D. The government may tax to decrease production

54. Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice, What would we expect to happen to the equilibrium price and quantity in the market for orange juice ?
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A. price will decrease, quantity is ambiguous

B. The impact on both price and quantity is ambiguous.

C. Price will increase, quantity will increase

D. price will increase, quantity will decrease

E. price will increase, quantity is ambiguous.
55. Agricultural prices tend to be unstable because ?
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A. Supply is price elastic

B. Supply is stable

C. Demand is price elastic

D. Demand and supply are price inelastic
56. Satellite television subscription and television detection devices are ways in which broadcasting companies address the ________ problem?
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A. externality

B. deadweight burden

C. free rider

D. market imperfection

57. A natural monopoly has a declining _______ over a large range of output?
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A. long run marginal cost

B. long run marginal cost

C. short run marginal cost

D. long run average cost
58. A good example of a public good is ?
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A. the national health service

B. public transport

C. rail transport

D. national defence
59. An increase in income will ?
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A. Lead to a movement along the demand curve

B. Lead to an extension of demand

C. Shift the supply curve

D. Shift the demand curve
60. Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect?
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A. the equilibrium quantity to rise and the equilibrium price to remain constant

B. the change in the equilibrium quantity to be ambiguous and the equilibrium price to rise

C. the equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.

D. the equilibrium quantity to rise and the equilibrium price to fall

E. the equilibrium quantity to rise and the equilibrium price to rise

61. If the market price is below the equilibrium price ?
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A. quantity demanded will be greater than quantity supplied

B. quantity demanded will equal quantity supplied .

C. quantity demanded will be less than quantity supplied

D. demand will be less than supply.

62. Taxes creates a wedge between the sales price and purchase price that prevents the price system equating ____ and ______?
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A. demand, supply

B. marginal cost, average cost

C. marginal cost, marginal revenue

D. marginal costs, marginal benefits
63. A monopolistic market has ?
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A. firms that are price takers

B. many buyers and sellers

C. only one seller

D. none of these answers

64. If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is ?
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A. an inferior good

B. a substitute good

C. a normal good

D. none of these answers

65. If my neighbour burns garden waste causing my house to fill with smoke this is an example of ?
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A. a production externality

B. a consumption externality

C. transaction costs

D. a second-best solution

66. A public good ?
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A. Gas external costs

B. Is free

C. Has the properties of being non-excludable and non-diminishable

D. Is provided by the government

67. The prisoners Dilemma Game demonstrates that ?
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A. monopoly is better than competition

B. people will always cheat

C. players are better off if they co-operate

D. players are better of to act independently

68. If two firms doing the same thing in the same industry join together, this is known as a ?
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A. vertical merger

B. horizontal merger

C. hostile takeover

D. conglomerate merger

69. If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are ?
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A. Complements

B. normal goods

C. none of these answers

D. inferior goods

E. Substitutes
70. If the price in a market is fixed by the government below equilibrium ?
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A. There is excess supply

B. There is excess demand

C. There is equilibrium

D. There is excess equilibrium

71. In Nash equilibrium each player chooses the best strategy ?
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A. that is a credible threat

B. Assuming other players move first

C. dominated by the other players

D. given the strategies of other players
72. An increase (rightward shift) in the demand for a good will tend to cause ?
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A. an increase in the equilibrium price and quantity

B. a decrease in the equilibrium quantity.

C. an increase in the equilibrium price and a decrease in the equilibrium quantity

D. a decrease in the equilibrium price and quantity.

E. none of these answers

73. In a free market system rationing occurs when there are increases in ?
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A. quantity

B. supply

C. price

D. demand

74. A shift in supply will have more effect on price than quantity if ?
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A. The price elasticity of supply is 3

B. The price elasticity of supply is infinity

C. The price elasticity of supply is 0.2

D. The price elasticity of supply is 2

75. When supply increase in an agricultural market farmers earning might fall because ?
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A. Supply is price elastic

B. Demand is price inelastic

C. All output must be sold at a maximum price

D. The government buys up all the excess production

76. The social costs of monopoly power arises because ?
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A. price is less than marginal cost

B. marginal cost is set equal to marginal revenue

C. marginal consumer benefit is less than marginal revenue

D. there is too little output at too high a cost
77. If a government were to fix a minimum wage for adult workers, economists would predict ?
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A. fewer young workers would be employed

B. the costs and prices of firms employing cheap labour would increase

C. there would be more unemployment

D. wages in general would fall as employers tried to hold down costs

78. All of the following shift the supply of watches to the right except ?
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A. an advance in the technology used to manufacture watches

B. a decrease in the wage of workers employed to manufacture watches

C. All of these answers cause an increase in the supply of watches

D. an increase in the price of watches
79. Moral hazard means that the act of insuring ____ that the desired outcome will occur?
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A. none of the above

B. increases the likelihood

C. reduces the likelihood

D. guarantees

80. An example of an indirect tax is ?
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A. income tax

B. inheritance tax

C. VAT

D. a tax on profits

81. If the price was fixed below the equilibrium price there would be ?
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A. Excess demand

B. Excess supply

C. Downward pressure on prices

D. Equilibrium

82. If the consumption of good by one person does not reduce the quantity available by others and nobody can be easily excluded from consumption, we are referring to a ?
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A. public good

B. Private good

C. abundant good

D. merit good

83. Merit goods are ?
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A. Not provided in the free market economy

B. Over provided in the free market economy

C. Provided free

D. Under provided in the free market economy
84. A public good will ?
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A. Be under provided in the free market

B. Has no opportunity cost

C. Not be provided in the free market

D. Be over provided in the free market

85. When a market is contestable, incumbent firms must __________ to avoid the entry of new competitors?
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A. practice price discrimination

B. behave like competitive firms

C. agree to act together

D. differentiate their products

86. Economics say that there has to be some from of rationing whenever ?
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A. merit goods are produced

B. inflation occurs

C. there are externalities

D. there is excess demand
87. Markets sometimes fail to exist because of________?
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A. a and c

B. the free-rider problem

C. externalities

D. a and b
88. The problem posed by a natural monopoly is that it faces a _____ This means that _______?
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A. decreasing average cost curve, marginal cost lies below average cost

B. decreasing average cost curve marginal cost lies above average cost

C. increasing average cost curve, marginal cost lies above average cost

D. increasing average cost curve, marginal cost lies below average cost

89. An inferior good is one for which an increase in income causes a(n) ?
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A. increase in demand

B. increase in supply

C. decrease in supply

D. decrease in demand
90. If demand increase in a market this will usually lead to ?
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A. A higher equilibrium price and lower output

B. A lower equilibrium price and higher output

C. A higher equilibrium price and output

D. A lower equilibrium price and output

91. A movement along the supply curve may be caused by ?
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A. A change in technology

B. A change in costs

C. A change in the number of producers

D. A shift in demand