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Test 1 - 1 In a free market if the price of a good is below...

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1. In a free market, if the price of a good is below the equilibrium price, then __ C. consumers, wanting to ensure that they acquire the good, will bid the price higher. 2. Which of the following is not true of a market in equilibrium? __ E. Supply equals demand. 3. If the wages paid to computer production workers increases, one would expect to see a(n) __ E. decrease in the supply of computers. 4. A “smart for one, dumb for all” situation may occur when __ D. people other than buyers or sellers of a product bear some of the costs of it. 5. The consumer’s reservation price of a good or service is a monetary measure of the __________ to the consumer. __ D. benefit of the good 6. The economic surplus of a particular action is __ C. the difference between the benefit and the cost of the action. 7. The socially optimal quantity of a good is the quantity that __ E. maximizes total economic surplus. 8. International trade increases total output, but there is often much political opposition to it because __ C. everyone does not benefit equally from trade 9. The “no-cash-on-the-table” principle says that a market in equilibrium leaves no unexploited opportunities for ________________. __ C. individuals. 10. A positively sloped production possibilities curve __ B. would violate the principle of resource scarcity. 11. The production possibilities curve shows __ D. the maximum production of one good for every possible production level of the other good. 12. An increase in the supply of champagne with no concurrent change in the demand for champagne will result in a ________ equilibrium price and a(n) ________ equilibrium quantity. __ E. lower; higher 13. Which of the following will not cause a shift in the demand for Apple computers? __ A. an increase in the price of Apple computers. 14. If the current market price of good A is below the equilibrium price, there will be a(n) _____________ of the good. __ C. shortage 15. As the price of iPods increases, firms that produce iPods will __ B. increase the quantity of iPods supplied. 16. Generally speaking, demand for a good will be more elastic __ D. when the good represents a large share of the consumer's budget. 17. Without being shown a graph, one can say definitively that if both supply and demand increase simultaneously, the new equilibrium price is ______________ and the new equilibrium quantity is ____________ . __ C. indeterminate; higher 18. The slope of any production possibilities curve is __________ because __________. __ B. negative; to produce more of one good means less production of the other 19. An inefficient point is __ D. necessarily an attainable point. 20. A graph with price on the vertical axis and quantity on the horizontal axis depicting an inverse relationship between price and quantity is a __ A. demand curve. 21. When a government reduces the ease with which international trade can occur, it is __ C. reducing the total amount of output available to domestic consumers.
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