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

7- In the short run, the demand for a given good or service is ------, but changes to be more ----- in the long run.

A- Unit elastic; long elastic

B- Elastic; inelastic

C- long elastic; unit elastic

D- inelastic; elastic

8- A market has two groups of workers: low-skilled workers ( $8/hr) and medium-skilled workers ( $12/hr); these workers are fully employed at equilibrium with no minimum wage. How would a minimum wage of $10/hr change this scenario?

A- All low-skilled would be displaced

B- Medium -Skilled workers are left alone

C- All workers receive a raise

D- All of the above

9- When a good is taxed, the burden of the tax falls mainly on consumers if:

A- the tax is levied on consumers

B- supply is elastic, and demand is inelastic

C- the tax is levied on producers

D- supply is inelastic, and demand is elastic

10- When prices decrease, after a new equilibrium is achieved, which of the following is not a reason for increased consumer surplus?

A- Buyers outside of the new market

B- Additional surplus to existing buyers

C- New surplus for new buyers

D- All of the above

11- What informs the price that a producer is willing to sell at?

A- Desired profits or rate or return

B- Price of raw inputs

C- Price of worker time

D- all the above

12- When a market is in equilibrium, the buyers are those with the ----- willingness to pay and sellers are those with the ----- costs

A- highest, lowest

B- highest, highest

C- lowest, highest

D- lowest, lowest

13- List two arguments often given to support trade restrictions.