Multiple Choice Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. A binding price floor on wheat will: A. force otherwise profitable farmers out of business B. result in a shortage of wheat C. result in a surplus of wheat D. act as an efficient and impersonal rationing mechanism Graph 6-5 ____ 2. According to Graph 6-5, if the government imposes a binding price floor of $6.00 in this market, the result will be a: A. surplus of 15 B. shortage of 15 C. shortage of 35 D. surplus of 35 Graph 6-8 ____ 3. According to Graph 6-8, the equilibrium price in the market before the tax is imposed is: A. $5.00 B. $3.50 C. $1.00 D. $6.00 ____ 4. According to Graph 6-8, the price buyers will pay after the tax is imposed is: A. $6.00 B. $3.50 C. $5.00 D. $1.00 ____ 5. According to Graph 6-8: A. buyers and sellers share the tax equally B. Sellers pay a greater share of the tax C. Buyers pay a greater share of the tax D. Sellers pay all of the tax ____ 6. According to Graph 6-8, the amount of the tax imposed in this market is: A. $1.00 B. $1.50 C. $2.50 D. $3.50 ____ 7. Mary is willing and able to pay $300 for an iPhone but is able to buy it for $199. Mary's consumer surplus is: A. $101 B. $51 C. $199 D. $300 ____ 8. Sharon is bidding on a new camera on an internet auction. She values the camera at $900 and wins the auction with a bid of $850, therefore: A. Sharon's willingness to pay is $900 and her consumer surplus is 0 B. Sharon's willingness to pay is $900 and her consumer surplus is $50 C. Sharon's willingness to pay is $850 and her consumer surplus is $50 D. Sharon's willingness to pay is $850 and her consumer surplus is $0 ____ 9. Amy buys a new computer for her studies for $2000. She receives consumer surplus of $250 from the purchase. How much does Amy value her computer? A. $2250 B. $250 C. $2000 D. $1750 ____ 10. Negative externalities occur when one person's actions: A. cause another person to lose money in a stock-market transaction. B. cause his or her employer to lose business. C. adversely affect the wellbeing of a bystander (or bystanders) who is (are) not party to a market exchange. D. reveal his or her preference for foreign produced goods. Graph 10-1 ____ 11. Refer to Graph 10-1. This graph reflects the presence of a: A. negative consumption externality B. positive consumption externality C. negative production externality D. positive production externality ____ 12. Refer to Graph 10-1. Which price and quantity combination represents the social optimum? A. P1, Q1 B. P2, Q1 C. P1, Q2 D. P2, Q2 ____ 13. A good is excludable if: A. one person's use of the good diminishes another person's enjoyment of it B. the government regulates its availability C. it is not a normal good D. people can be prevented from using it ____ 14. Goods that are excludable and non-rival are: A. public goods B. private goods C. natural monopolies D. club goods ____ 15. Common resource goods are: A. non-rival and non-excludable B. non-rival and excludable C. rival and excludable D. rival and non-excludable Answers 1 C 6 11 2 7 12 3 8 13 4 9 14 5 10 15