7. Corn flakes are

A) a rival good because many firms produce them.

B) a rival good because if another person wants some corn flakes society has to use additional resources to produce corn flakes for that person.

C) a non-rival good because there are only a few firms in the industry.

D) a non-rival good because even if another person wants some corn flakes so many corn flakes are produced that no additional resources are used to satisfy this new customer's needs.

E) a public good.

8. Karen'scatcausesDannytosneeze.Karenvalueshercat'scompanionshipat$300peryear.ThecosttoDannyoftissuesandherallergymedicationis$350peryear.BasedontheCoasetheorem,

a.KarenshouldpayDanny$400sothatshemaykeephercat.

b.KarenshouldpayDanny$350fortissuesandallergymedication.

c.DannyshouldpayKaren$325togiveawayhercat.

d.Dannyshouldmove.

e. none of the above.

9. Supposethatpneumonia vaccination createsapositiveexternality.Whatcanthegovernmentdotoequatetheequilibriumquantityofvaccinesandthesociallyoptimalquantityofvaccines?

a.imposeataxonvaccines thatisequaltotheper-unitexternality

b.offerasubsidyonvaccinesthatisequaltotheper-unitexternality

c.imposearegulationlimitingtheamountofvaccinesthateachconsumercanpurchase

d.nothing

e. none of the above.

10.Goodsthatareexcludableincludeboth

a.clubgoodsandpublicgoods.

b.publicgoodsandcommonresources.

c.commonresourcesandprivategoods.

d.privategoodsandclubgoods.

e. none of the above.

11.Toachievetheoptimalprovisionofpublicgoods,the

a.marketshouldbeallowedtoarriveatanequilibriumwithoutgovernmentintervention.

b.governmentmustlimittheprovisionofthegoods.

c.governmentmusttaxproducersofthegoods.

d.governmentmusteitherprovidethegoodsorsubsidizetheirproduction.

e. none of the above.

12.Eachofthefollowingwouldbeconsideredacommonresourceexcepta

a.waterreservoir.

b.streetlight.

c.acongestedroad.

d.bookfromapubliclibrary.

e.none of the above.

13. Ifthevalueofthemarginalproductoflaborislessthanthewage,thenthefirmcould

a.a. increaseprofitbyhiringadditionallabor.

b.b. increaseprofitbyreducingtheamountoflaborhired.

c.c. increaserevenuebyloweringoutput.

d.d. reducetotalcostbyhiringadditionalworkers.

e.e. none of the above.

14. Whichofthefollowingwouldincreasethedemandforlabor?

(i)(i) adecreaseintheoutputprice

(ii)(ii) anincreaseintheoutputprice

(iii)(iii) alabor-savingtechnologicaladvance

(iv)(iv) alabor-augmentingtechnologicaladvance

a.a. (i)only

b.b. (i)and(iii)only

c.c. (ii)only

d.d. (ii)and(iv)only

e. none of the above.

15.Supposethattechnologicalprogressincreasestheproductivityofteachers.Whichofthefollowingaccuratelydescribesthelabormarketforteachersafterthetechnologicalchange?Equilibriumwageswill

a.a. rise,andtheequilibriumquantityofteachersemployedwillfall.

b.b. rise,andtheequilibriumquantityofteachersemployedwillrise.

c.c. fall,andtheequilibriumquantityofteachersemployedwillfall.

d.d. fall,andtheequilibriumquantityofteachersemployedwillrise.

e.none of the above.

16.Fiona'shourlywagedecreasesfrom$10to$8.WhichofthefollowingdescribesaconsequenceofthedecreaseinFiona'swage?

a.a. TheopportunitycostofFiona'sleisuretimehasincreased.

b.b. Fionamaychoosetoworkmorehoursduetothedecreaseinherwage.

c.c. Fionamaychoosetoworkfewerhoursduetothedecreaseinherwage.

d.d. Bothbandcarecorrect.

e. none of the above.