I have some of the answers but I want to make sure I am…

 

I have some of the answers but I want to make sure I am completing them correctly! Thank you
 

1. An individual’s value for a good or service is 

a. the amount of money he or she used to pay for a good. 

b. the amount of money he or she is willing to pay for it. 

c. the amount of money he or she has to spend on goods. 

d. None of the above. 

 

2. The biggest advantage of capitalism is that 

a. it generates equality. 

b. prices assist in moving assets from high- to low-value uses. 

c. it is fair. 

d. it creates wealth by letting a person follow his or her own self-interest. 

 

3. Wealth-creating transactions are more likely to occur 

a. with private property rights. 

b. with strong contract enforcement. 

c. with black markets. 

d. All of the above. 

 

4. Government regulation 

a. provides incentives to conduct business in an illegal black market. 

b. plays no role in generating wealth. 

c. is the best way to eliminate poverty. 

d. does not enforce property rights. 

 

5. Which of the following are examples of a price floor? 

a. Minimum wages. 

b. Rent controls in New York. 

c. Both a and b. 

d. None of the above.

 

6. A price ceiling

a. is a government-set maximum price. 

b. is an implicit tax on producers and an implicit subsidy to consumers. 

c. will create a surplus. 

d. causes an increase in consumer and producer surplus. 

 

7. Taxes 

a. impede the movement of assets to higher-valued uses. 

b. reduce incentives to work. 

c. decrease the number of wealth-creating transactions. 

d. All of the above. 

 

8. A consumer values a car at $30,000 and it costs a producer $20,000 to make the same car. If the transaction is completed at $24,000, the transaction will generate 

a. no surplus. 

b. $4,000 worth of seller surplus and unknown amount of buyer surplus. 

c. $6,000 worth of buyer surplus and $4,000 of seller surplus. 

d. $6,000 worth of buyer surplus and unknown amount of seller surplus. 

 

9. A consumer values a car at $525,000 and a producer values the same car at $485,000. If sales tax is 8% and is levied on 

the seller, then the seller’s bottom-line price is (rounded to the nearest thousand) 

a. $527,000. 

b. $524,000. 

c. $525,000. 

d. $500,000. 

 

10. Efficiency implies opportunity, 

a. always. 

b. never. 

c. only if accompanied by secure property rights. 

d. none of the above.

 

11. When the market is in equilibrium, 

a. Total surplus is minimized

b. Total surplus is maximized without government intervention

c. Government maximizes total revenue

d. None of the above

 

12. The difference between the minimum price the producer is willing to accept and the price the producer actually receives for a product is referred to as: 

a. market surplus

b. market shortage

c. buyer surplus

d. seller surplus.

 

13. If you are willing to sell your lawn mower business for $355,000 and someone offers you $420,000 for it, this transaction will generate: 

a. There is no surplus created

b. $65,000 worth of seller surplus and unknown amount of buyer surplus

c. $30,000 worth of buyer surplus and $35,000 of seller surplus

d. $65,000 worth of buyer surplus and unknown amount of seller surplus

 

14. Price ceilings cause

a. Some suppliers to drop out of the market as they cannot charge the price they were earlier charging

b. A reduction in the quality of the product

c. The creation of black markets

d. All the above

 

15. A consumer values a car at $30,000 and a producer values the same car at $20,000. If the transaction is completed at $24,000, what level of tax rate will result in unconsummated transaction? 

a. 0%

b. 25%

c. 20%

d. 40%

 

16. Price ceilings are primarily targeted to help

a. No one

b. Consumers

c. Producers

d. Government

 

17. Rent controls

a. Is an example of price floors

b. Is an example of price ceilings

c. Destroy wealth by preventing the movement of apartments to higher-valued use.

d. Both b and c

 

18. A consumer values a car at $525,000 and a producer values the same car at $485,000. If the transaction is completed at $510,000, what level of tax rate will result in unconsummated transaction? 

a. 1%

b. 5%

c. 3%

d. 2%

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