Choose the correct answer and explain why that answer is correct.

1- People driving more recklessly after a seat-belt law is introduced is an example of:

A. Diamond/Water Paradox

B. The Peltzman Effect

C. Accounting versus economic costs

D. TANSTAAFL

2- Which of the following is NOT a topic in microeconomics?

A- Relationship of inflation and monetary policy

B- Monopolistic competition

C- How large companies price services

D- How policymakers behave

3-In an hour, Abner can make 5 pizzas or build 3 sandcastles, and Bailey can make 9 pizzas or build 3 sandcastles. Who has an absolute advantage in making pizzas, and who has an absolute advantage in building sandcastles?

A- Abner in pizzas, Bailey in sandcastles

B- Bailey in pizzas, neither in sandcastles

C- Bailey in pizzas, Abner in sandcastles

D- Abner in pizzas, neither in sandcastles

4- Which of these is not a necessary condition for a function competitive market place?

A- Thick market of buyers and sellers

B- Profit/loss motive ( incentives)

C- Equivalent goods or services

D- Coordination between producers

5- What is the point at which supply equals demand?

6- A rise in the price of a substitute good will:

A- Raise the demand for the related good

B- Raise the number of buyers in the market

C- Raise the price for the related good

D- Lower the supply for the related good