Which of the following characteristics is essential if a good is to be efficiently provided by a market economy?
a. The good should be subject to overuse.
b. The good should be subject to the free rider problem.
c. The good should be a common resource.
d. The good should be excludable and rival in consumption
Ans: d. The good should be excludable and rival in consumption
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Suppose the current price of DVDs is $16, while its base-year price is $11.50 . The value of the price index for the current year is approximately:
a. 139 b. 39 c. 25 d. 160 e. 172
If there are no unexploited opportunities for individuals in a particular market, then one can conclude that:
A. the market is in equilibrium. B. government regulation has been successful. C. a socially optimal outcome has been achieved. D. the market is not in equilibrium.
Economic growth in Lillian’s country has been very slow. Which of the following offers the most likely explanation for this?
a. The population is increasing rapidly. b. The standard of living is low. c. Too much of the nation’s resources are being invested in technology. d. People are saving too much of their income instead of consuming.
Answer the following statement(s) true (T) or false (F)
1. If the government imposed regulations on monopolistically competitive firms, the government would most likely end up subsidizing these firms. 2. Perfectly competitive firms often advertise their products. 3. Only firms with market power have an incentive to advertise. 4. People who back advertising claim that it supports freedom of expression. 5. A recognized brand name often harms consumers’ confidence in the quality of a product.