Old Final #11-- Because resources are scarce: (obvious)a. Questions must be answered. b. Choices must be made.c. All except the rich must make choices. d. Governments must allocate resources. e. Some individuals must be poor.2) Suppose that price falls by 10% and the quantity demanded rises by 20%. The price elasticityof demand is: (basic math)a. 2. b. 1. c. 0. d. ½. e. None of the above.3) Suppose the price of an input important in the production of insulin (a necessary medication for diabetics) doubles: (very inelastic)4) A price ceiling on insurance rates that is set below equilibrium price will: (lower price = more people want it) 5) In general, the price elasticity of demand is greater when: (more options for people to changeto) 6) Compensating differentials are wage differences resulting from: a. The fact that workers must search to find job offers and learn of alternative wages. b. The fact that employers are unlikely to make offers to workers who currently earn low wages, inferring that these workers must be less productive.
c. Differences in job or location characteristics. d. Wage differences that compensate for differences in productivity. e. A and B.7) When the social marginal cost of an activity exceeds its private marginal cost: (a negative externality) 8) In the marketable pollution permits system discussed in class: (classic example)