1. For private goods allocated in markets,
a.
prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.
b.
prices guide the decisions of buyers and sellers and these decisions lead to an inefficient allocation of
resources.
c.
the government guides the decisions of buyers and sellers and these decisions lead to an efficient allocation of
resources.
d.
the government guides the decisions of buyers and sellers and these decisions lead to an inefficient allocation
of resources.
2. Government policy can potentially raise economic well-being
a.
in all markets for goods and services.
b.
in economic models, but not in reality.
c.
when a good does not have a price attached to it.
d.
never.
3. The old lyric “the best things in life are free”
a.
is not true for any goods.
b.
is even true for some goods that have a price.
c.
refers to goods provided by nature or the government.
d.
refers to goods provided by the market.
4. Governments can improve market outcomes for
a.
public goods but not common resources.
b.
common resources but not public goods.
c.
both public goods and common resources.
d.
neither public goods nor common resources.
5. For most goods in an economy, the primary signal that guides the decisions of buyers and sellers is
a.
advertising.
b.
quality.
c.
reputation.
d.
price.
6. When goods do not have a price, which of the following primarily ensures that the good is produced?
a.
buyers
b.
sellers
c.
government
d.
the market
7. If good x is available free of charge, then
a.
good x must be provided by nature.
b.
good x must be provided by the government.
c.
the private market cannot ensure an efficient allocation of resources in the market for good x.
d.
government policy is incapable of increasing total surplus in the market for good x.
8. Resources tend to be allocated inefficiently when goods
a.
are private goods.
b.
are rival in consumption and excludable.
c.
are available free of charge.
d.
are available only at very high prices.
9. Which of the following is usually true about government-provided goods?
a.
These goods have a zero opportunity cost.
b.
These goods are not scarce.
c.
People do not have to pay a fee to enjoy these goods.
d.
The invisible hand is at work to ensure these goods are provided in the market