After wearing seat belts became mandatory, drivers reacted by driving faster and less carefully. This is consistent with what Principle of Economics “

1. “After wearing seat belts became mandatory, drivers reacted by driving faster and less carefully. This is consistent with what Principle of Economics “After wearing seat belts became mandatory, drivers reacted by driving faster and less carefully. This is consistent with what Principle of Economics? (Points : 5)

trade can make everyone better off

the cost of something is what you give up to get it

governments can sometimes improve market outcomes

people respond to incentives

 

 

2. The term ‘quantity supplied’ means _____ (Points : 5)

the same things as ‘supply’.

the amount of a good that customers need.

the amount of a good that consumers ultimately desire.

the amount of a good sellers are willing to sell at a given price.

 

 

3. Economists believe that self-sufficiency (no trade) _____ (Points : 5)

is needed, in order to guarantee national security.

ensures an equitable distribution of resources.

prevents exploitation of the working class, by limiting the power of capitalists.

results in lower levels of output and consumption than would prevail under free trade.

 

 

4. Opportunity cost is _____ (Points : 5)

any lost opportunity.

the value of the next-best opportunity that one foregoes when making a choice.

used to exploit weaker parties to a transaction by stronger parties.

the aggregate value of all foregone opportunities.

 

 

5. Economists argue that rent controls carry long-run unintended consequences such as _____ (Points : 5)

a fairer price for people who can’t afford market-determined rents.

improved quality of apartment units.

fewer apartment units as landlords seek substitute uses of their property.

a higher cost to landlords who discriminate through non-price criteria.

 

 

6. Other things constant, a lower price for corn tends to decrease _____ (Points : 5)

the supply of corn.

the quantity supplied of corn.

the demand for corn.

the quantity demanded for corn.

 

 

7. Economists study _____ (Points : 5)

the choices individuals make, but not the consequences of their choices.

the costs of production of goods and services, in order to set fair prices.

the choices that individuals make under conditions of scarcity and uncertainty.

theories and ignore all the facts.

 

 

8. If a consumer pays $12 for a product but he/she is willing to pay up to $20, what is his/her consumer surplus? (Points : 5)

$20

$32

$0

$8

 

 

9. Price gouging is _____ (Points : 5)

a natural response to a sudden increase in demand.

irrational behavior that violates economic logic.

not subject to economic analysis, because it is illegal.

a precisely defined concept that leaves no room for dispute or disagreement.

 

 

10. The Production Possibilities Frontier Illustrates this Principle of Economics: (Points : 5)

People Face Trade-Offs

The Cost of Something is What You Give Up to Get It

Both 1 and 2 above are right

Neither 1 nor 2 above are right

 

 

11. A tariff is a _____ (Points : 5)

tax imposed on exports

limitation on the amount of imports allowed into a country.

tax imposed on imports

limitation on the amount of exports sent out of a country

 

 

12. A legal floor set above the market-clearing price for a good would tend to ______ (Points : 5)

protect suppliers from unfair competition and predatory pricing.

lead to a surplus of that good.

lead to a shortage of that good.

all of the above

 

 

13. Price elasticity of demand refers to: (Points : 5)

How the quantity supplied reacts to changes in the price of a product

How the quantity demanded reacts to changes in consumers’ income

How the quantity demanded reacts to changes in the price of a product

How the quantity supplied reacts to increases in the cost of production

 

 

14. All other things being equal, a decrease in supply results in a(n)_____. (Points : 5)

increase in equilibrium price and a decrease in equilibrium quantity

increase in equilibrium quantity and a decrease in equilibrium price

decrease in equilibrium quantity and a decrease in equilibrium price

decrease in demand

 

 

15. In one hour, a person can fix 4 flat tires or type 200 words. The opportunity cost of fixing ONE flat tire is _____. (Points : 5)

200 words

4 flat tires

1 word

50 words

 

 

16. All other things being equal, an increase in demand results in a(n) _____ (Points : 5)

increase in equilibrium price and a decrease in equilibrium quantity

increase in equilibrium quantity and a decrease in equilibrium price

decrease in equilibrium quantity and a decrease in equilibrium price

increase in equilibrium price and an increase in equilibrium quantity

 

 

17. In a free market, a shortage of a product always leads to: (Points : 5)

Increases in the price

Decreases in the price

No change in the price

Any of the above

 

 

18. A price imposed by the government below an equilibrium price is called a ____ (Points : 5)

price ceiling

price floor

price carpet

price surplus

 

 

19. When doing research, Economists: (Points : 5)

follow the scientific method: observation, theory, and more observation

cannot use experiments, as they are often done in areas like Physics and Chemistry

have to use whatever data the world happens to give them

all of the above.

 

 

20. Economic models_____. (Points : 5)

must completely describe every aspect of the economy in order to be useful

are simplified abstract representations of reality

avoid the use of assumptions wherever possible

are ideals that economics agents aspire to achieve

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