1. If pollution in the in the production of fertilizer were not regulated by the government, the market outcome would be:
a) Underproduction of fertilizer and a higher price
b) Underproduction of fertilizer and a lowerprice
c) Overproduction of fertilizer and a higher price
d) Overproduction of fertilizer and a lowerprice
2. Price elasticity of demand is defined as the ratio of:
a) Percentage increase in price to an increase in quantity demanded
b) Unit change in quantity demanded to the dollar change in price.
c) Maximum amount that consumers will pay to increase quantity
d) Percentage change in quantity demanded to the percentage change in price, other things being equal
3. If demand for a good is price elastic, then the price elasticity of demand will be:
a) eqaul to one
b) equal to zero
c) greater than one
d) less than one
e) less than zero
4. the price elasticity of demand for a vertical demand curve is:
a) perfectly elastic
b) perfectly inelastic
c) unitary elastic
d) elastic
e) inelastic
5. The price elasticity pf demand for a good will be greater:
a) if it has many close substitutes
b) if it is necssity
c) if the time horizon is short-run
d) if a small portion of the budget will be spent on it.
6. Which of the following best describes a prduction function?
a. The relationship between consumer preferences and market demand
b. the relationship between the quantity of labor employed and total cost
c. The relationship between the maximum amounts of output a firm can produce and various quantities of inputs.
d. The relationship between price and quantity supplied by sellers in a market.