Exam 1

Question 1

The cost-benefit principle states that a decision should be pursued only if the _____ are _____ than the costs

a. benefits are greater than the costs.
b. costs are greater than the benefits.
c. benefits are positive.
d. costs are negative.

Answer 1

a. benefits are greater than the costs.

Question 2

Which principle tells you that the true cost of something is the next best alternative you have to give up to get it?

a. The cost-benefit principle.
b. The opportunity cost principle.
c. The marginal principle.
d. The interdependence principle.

Answer 2

b. The opportunity cost principle.

Question 3

Sunk costs are costs that

a. are potential costs associated with a particular decision.
b. are part of the opportunity costs of a decision.
c. are incurred in the past and cannot be reversed.
d. should be considered in any decision.

Answer 3

c. are incurred in the past and cannot be reversed.

Question 4

The __________ suggests, decisions about quantities are best made incrementally.

a. cost-benefit principle
b. opportunity cost principle
c. marginal principle
d. interdependence principle

Answer 4

c. marginal principle

Question 5

The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle.

a. cost-benefit
b. opportunity cost
c. marginal
d. interdependence

Answer 5

d. interdependence

Question 6

The law of demand refers to:
a. the positive relationship between price and quantity supplied.
b. the inverse relationship between price and quantity supplied.
c. the inverse relationship between price and quantity demanded.
d. the positive relationship between price and quantity demanded.

Answer 6

c. the inverse relationship between price and quantity demanded.

Question 7

Diminishing marginal benefit:
a. is when buying an additional item yields a larger marginal benefit than the previous item.
b. is when consumers do not follow the rational rule.
c. is not important in determining a consumer’s purchase decision.
d. is when buying an additional item yields a smaller marginal benefit than the previous item.

Answer 7

d. is when buying an additional item yields a smaller marginal benefit than the previous item.

Question 8

11. (Figure: Graph) Refer to the graph to answer the question.
    The movement from point M to point N represents: (graph shows M and N on same line. M is at a higher place than N)

a. a decrease in demand.
b. a decrease in quantity demanded.
c. an increase in quantity demanded.
d. an increase in demand.

Answer 8

c. an increase in quantity demanded.

Question 9

12. (Figure: Graph) Refer to the graph to answer the question. In the graph, the movement from point M to point Q represents (M & Q are on different lines) M is lower than Q

a. a decrease in demand.
b. a decrease in quantity demanded.
c. an increase in quantity demanded.
d. an increase in demand.

Answer 9

d. an increase in demand.

Question 10

Holding all else constant, if people eat out more at expensive restaurants when they earn more, then expensive restaurant meals are

a. goods with a congestion-effect.
b. goods with a network-effect.
c. inferior goods.
d. normal goods.

Answer 10

d. normal goods.

Question 11

Which of the following items is an inferior good?

Luxury SUVs
Discount stores
airline tickets
car rentals

Answer 11

Discount stores

Question 12

What is quantity supplied?

a. It is a graph that plots the quantities of an item that a seller plans to sell at different prices.
b. It is the amount of an item that a buyer is willing to buy at a particular price.
c. It is the amount of an item that a seller is willing to sell at a particular price.
d. It is a graph that plots how much a seller produces at different points in time.

Answer 12

c. It is the amount of an item that a seller is willing to sell at a particular price.

Question 13

The law of supply refers to

a. the positive relationship between price and quantity supplied.
b. the inverse relationship between price and quantity supplied.
c. the inverse relationship between price and quantity demanded.
d. the positive relationship between price and quantity demanded.

Answer 13

a. the positive relationship between price and quantity supplied.

Question 14

Due to a decline in demand and popularity, Ford Motor Company is planning to phase out traditional sedans such as ‘Fusion’ and ‘Taurus’ to focus on SUVs and trucks. Ford’s sedans and trucks/SUVs are

a. complements-in-production.
b. substitutes-in-production.
c. inputs in production.
d. products that do not follow the law of supply.

Answer 14

b. substitutes-in-production.

Question 15

A market is a

a. a place where governments decide what is sold.
b. set of demand curves for a product.
c. setting that brings together potential buyers and sellers.
d. set of supply curves for a product.

Answer 15

c. setting that brings together potential buyers and sellers.

Question 16

An equilibrium price is a price where the

a. demand curve is identical to the supply curve.
b. amount that buyers are willing to buy is equal to the amount that buyers are able to buy.
c. quantity demanded no longer changes.
d. quantity supplied equals the quantity demanded.

Answer 16

d. quantity supplied equals the quantity demanded.

Question 17

When quantity demanded exceeds quantity supplied, _____ exists.

a. a shortage
b. equilibrium
c. fixed demand
d. a surplus

Answer 17

a. a shortage

Question 18

You go to Starbucks and see that the price of your favorite tall vanilla latte has gone up by 25 cents. All sizes of the vanilla lattes are now more expensive. As a result of this price increase, you would expect to see a

a. fall in the demand for vanilla lattes.
b. fall in the quantity demanded of vanilla lattes.
c. rise in the demand for vanilla lattes.
d. rise in the quantity demanded of vanilla lattes.

Answer 18

b. fall in the quantity demanded of vanilla lattes.

Question 19

Shifts in demand
a. always lead to increases in equilibrium price.
b. lead to price and quantity to move in the same direction.
c. always lead to increases in equilibrium quantity.
d. lead to price and quantity to move in opposite directions.

Answer 19

b. lead to price and quantity to move in the same direction.

Question 20

What happens to the equilibrium price and quantity when demand increases and simultaneously supply decreases, and the relative size of the shifts is not known?

a. The equilibrium price rises, and the change in the equilibrium quantity is ambiguous.
b. The equilibrium price falls, and the change in the equilibrium quantity is ambiguous.
c. The equilibrium quantity rises, and the change in the equilibrium price is ambiguous.
d. The equilibrium quantity falls, and the change in the equilibrium price is ambiguous.

Answer 20

a. The equilibrium price rises, and the change in the equilibrium quantity is ambiguous.

Question 21

If demand is _____, a higher price yields _____ total revenue.

a. inelastic; lower
b. inelastic; no change in
c. elastic; higher
d. elastic; lower

Answer 21

d. elastic; lower

Question 22

Mary loves avocados and must consume avocados every week, regardless of the price. Which of the following must be true?

a. Mary has an inelastic demand for avocados
b. Avocados are in large supply in the market
c. Mary has an elastic demand for avocados
d. All consumers in the market have a high demand for avocados

Answer 22

a. Mary has an inelastic demand for avocados

Question 23

North Carolina State University recently raised its tuition by 12%. A survey was then conducted to determine how many students would transfer to another university as a result. It was found that only about 1 in 300 responses indicated they would transfer. Based on this information, the price elasticity of demand for education at this university is:

a. 1.
b. highly elastic.
c. highly inelastic.
d. 0.

Answer 23

c. highly inelastic.

Question 24

Total revenue is:

a. total sales less total cost.
b. the price of a good times the quantity of the good sold.
c. the price effect times the quantity effect.
d. the price of a good divided by the amount of the good sold.

Answer 24

b. the price of a good times the quantity of the good sold.

Question 25

Positive analysis is based on identifying _____ and _____. a. values; judgments b. facts; relationships c. beliefs; options d. priorities; scruples

Answer 25

b. facts; relationships

Question 26

The concept of equity focuses on: a. efficiency. b. fairness. c. the level of economic surplus. d. profit.

Answer 26

b. fairness.

Question 27

A market's deadweight loss is calculated as: a. the economic loss that a firm has when it is not producing its profit-maximizing output. b. the loss to consumers when a product malfunctions or fails to meet expectations. c. the economic surplus at the efficient quantity minus the economic surplus at the actual quantity. d. the price at equilibrium minus the price at actual quantity.

Answer 27

c. the economic surplus at the efficient quantity minus the economic surplus at the actual quantity.

Question 28

Market failure occurs when market forces lead to: a. high price. b. high quantity. c. an inefficient outcome. d. a marginal benefit that is equal to marginal cost.

Answer 28

c. an inefficient outcome.

Question 29

On a market graph, producer surplus is the area that is: a. between the demand curve and the supply curve. b. above the price. c. below the demand curve. d. above the price and below the demand curve.

Answer 29

d. above the price and below the demand curve.

Question 30

To maximize production, people should a. focus on the task in which they have an absolute advantage. b. focus on the task in which they have a comparative advantage. c. learn all the skills so that they can perform any task needed. d. focus on improving their weakest skills.

Answer 30

b. focus on the task in which they have a comparative advantage.

Question 31

When a manager uses comparative advantage to assign tasks in a workplace, then each a. task is assigned to the worker who is best at doing the task. b. worker is assigned to the tasks for which he or she has the highest aptitude and efficiency. c. worker learns how to do all tasks to increase flexibility in assignments. d. task is assigned to the worker with the lowest opportunity cost for performing the task.

Answer 31

d. task is assigned to the worker with the lowest opportunity cost for performing the task.

Question 32

A trade cost is: a. the price of a good that is bought or sold abroad. b. the cost associated with producing a good that is bought or sold abroad. c. an extra cost incurred as a result of buying or selling a good abroad rather than domestically. d. the difference in price between a good that is bought or sold abroad rather than domestically.

Answer 32

c. an extra cost incurred as a result of buying or selling a good abroad rather than domestically.

Question 33

Specialization will increase output when it is based on: a. who can produce at the least comparative cost. b. absolute advantage. c. who can produce the fastest. d. comparative advantage.

Answer 33

d. comparative advantage.

Question 34

An import is a good or service: a. purchased from a foreign seller. b. purchased from a domestic seller. c. sold to a foreign buyer. d. sold to a domestic buyer.

Answer 34

a. purchased from a foreign seller.

Question 35

An export is a good or service: a. purchased from a foreign seller. b. purchased from a domestic seller. c. sold to a foreign buyer. d. sold to a domestic buyer.

Answer 35

c. sold to a foreign buyer.

Question 36

Which of the following is a source of comparative advantage? a. small-scale production b. scarce inputs c. specialized skills d. high tariff rates

Answer 36

c. specialized skills

Question 37

Which of the following is an argument for limiting international trade? An increase in international trade may: a. reduce specialization, which has national security benefits. b. reduce the amount of outsourcing by domestic firms. c. lead to anticompetitive practices, such as dumping. d. lead to economic growth, stemming from specialization.

Answer 37

c. lead to anticompetitive practices, such as dumping.

Question 38

A tariff is a: a. tax on imported products. b. limit on the quantity of a good that can be imported. c. tax on exported products. d. limit on the quantity of a good that can be exported.

Answer 38

a. tax on imported products.

Question 39

What is social insurance? a. It is the cash-assistance, goods, and services provided by the government to better the lives of those at the bottom of the income distribution. b. It is government-provided financial funding to households to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings. c. It is the government assignment of jobs to individuals based on household need and employee education and skills. d. It is a system where those with more income tend to pay a higher share of their income in taxes than those with lower incomes.

Answer 39

b. It is government-provided financial funding to households to compensate for bad outcomes such as unemployment, illness, disability, or outliving their savings.

Question 40

Intergenerational mobility is the extent to which: a. children own more personal transportation vehicles (such as cars and motorcycles) than their parents did. b. the geographic dispersion of families occurs as children pursue economic opportunities. c. the income of children in a given family varies across the children. d. the economic status of children is independent of the economic status of their parents.

Answer 40

d. the economic status of children is independent of the economic status of their parents.

Question 41

Which of the following is a social insurance program in the United States? a. Medicaid b. Social Security c. housing assistance d. earned income tax credit

Answer 41

b. Social Security

Question 42

What is the difference between microeconomics and macroeconomics? a. Microeconomics is the study of the economy as a whole, whereas macroeconomics is the study of individual decisions in specific markets. b. Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole. c. Microeconomics focuses only on the forces of individual demand and individual supply, whereas macroeconomics focuses only on policy making for the economy. d. Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of government policies.

Answer 42

b. Microeconomics is the study of individual decisions in specific markets, whereas macroeconomics is the study of the economy as a whole.

Question 43

Refer to the diagram of the circular flow of income. Based on the diagram, the arrow going FROM box 2 to box 3 must be: (refer to pic on phone) a. payments for inputs used by businesses. b. incomes earned by resources. c. spending by households. d. earnings by businesses.

Answer 43

d. earnings by businesses.

Question 44

GDP is defined as the: a. market value of all consumer goods purchased within an economy. b. market value of all final goods and services produced within a country in a given year. c. value of all intermediate goods produced within a country in a given year. d. value of all output produced by businesses within a country in a given year.

Answer 44

b. market value of all final goods and services produced within a country in a given year.

Question 45

You just bought two used textbooks for $25 each. How much does GDP change because of your purchase? a. GDP rises by $50. b. GDP falls by $50. c. GDP rises by $25. d. GDP does not change.

Answer 45

d. GDP does not change.

Question 46

The "market value" of a good or service refers to the: a. current dollar value of that good or service. b. units of that good or service that are purchased by consumers. c. units of that good or service that are produced in the current period. d. total market demand for that good or service.

Answer 46

a. current dollar value of that good or service.

Question 47

A "final" good or service is one that is: a. finished and ready for the final user. b. intermediate and ready to be used as an input. c. not for sale. d. not being produced for the market.

Answer 47

a. finished and ready for the final user.

Question 48

A production function is: a. the amount of money generated from selling outputs. b. a method through which inputs can be turned into outputs, given the available resources. c. a method by which outputs can be recycled to produce inputs. d. the sum of total production possibilities, if resources were unlimited.

Answer 48

b. a method through which inputs can be turned into outputs, given the available resources.

Question 49

Human capital refers to: a. worker skills and knowledge. b. work done by machinery. c. machines that have artificial intelligence. d. money earned by workers in businesses.

Answer 49

a. worker skills and knowledge.

Question 50

The aggregate production function is represented as: a. Y = f(L, H, K). b. K = f(L, H, Y). c. L = f(Y, H, K). d. H = f(L, Y, K).

Answer 50

a. Y = f(L, H, K).

Question 51

A government can promote the development of human capital by: a. placing caps on salaries for teachers. b. promoting programs that encourage late retirement from work. c. subsidizing secondary school education. d. providing savings tax credits.

Answer 51

c. subsidizing secondary school education.

Question 52

The law of diminishing returns states that: a. when all inputs are held constant, there is an upper limit to the amount of output that can be produced. b. when one input is held constant, while other inputs are increased, eventually output will increase by smaller and smaller amounts. c. the lower the level of human capital in an economy, the lower the economic growth rate. d. the level of capital accumulation is directly related to the level of human capital in an economy.

Answer 52

b. when one input is held constant, while other inputs are increased, eventually output will increase by smaller and smaller amounts.

Question 53

Technological advancement can be shown by which of these production functions?

Answer 53

when it shifts to the right

Question 54

The working age population includes people who are: a. age 16 or older who are not in the military or institutionalized. b. not in the military or institutionalized. c. age 16 or older. d. not retired.

Answer 54

a. age 16 or older who are not in the military or institutionalized.

Question 55

Which of the following people can be classified as "unemployed"? a. Damien, who does not have a job but has not looked for work b. Fred, who is on medical leave from his job c. Jose, who is in the military d. Laura, who has been seeking employment for two months

Answer 55

d. Laura, who has been seeking employment for two months

Question 56

The labor force participation rate is the: a. sum of the employed and the unemployed. b. percentage of the working age population that is either employed or unemployed. c. percentage of the labor force that is unemployed. d. number of unemployed divided by the number of employed.

Answer 56

b. percentage of the working age population that is either employed or unemployed.

Question 57

An underemployed person is one who is: a. employed in the underground economy. b. working but whose skills are not fully utilized. c. retired or outside of the labor force. d. cyclically unemployed.

Answer 57

b. working but whose skills are not fully utilized.

Question 58

Frictional unemployment is unemployment: a. due to a temporary downturn in the economy. b. due to the time it takes for employers to search for workers and for workers to search for jobs. c. that occurs because wages don't fall to bring labor demand and labor supply into equilibrium. d. that occurs because of seasonal changes.

Answer 58

b. due to the time it takes for employers to search for workers and for workers to search for jobs.

Question 59

The consumer price index is an index that tracks the: a. price that businesses pay over time for the inputs used in the production process. b. average price that consumers pay over time for a representative basket of goods and services. c. highest prices consumers pay over time for imported goods and services. d. price of all goods and services produced domestically.

Answer 59

b. average price that consumers pay over time for a representative basket of goods and services.

Question 60

The Producer Price Index is an index that tracks the: a. price that businesses pay over time for the inputs used in the production process. b. average price that consumers pay over time for a representative basket of goods and services. c. highest prices consumers pay over time for imported goods and services. d. price of all goods and services produced domestically.

Answer 60

a. price that businesses pay over time for the inputs used in the production process.

Question 61

Menu costs are the: a. costs of producing restaurant meals. b. variety of costs that cause producers to change their prices. c. marginal costs of adjusting prices. d. total costs of producing goods and services.

Answer 61

c. marginal costs of adjusting prices.

Question 62

If you see that the consumer price index this year is lower than the consumer price index last year, this means that: a. the consumer price index is lower than the producer price index. b. the prices of each and every good and service went down. c. economic growth also decreased. d. on average, prices went down across the economy.

Answer 62

d. on average, prices went down across the economy.

Question 63

Which of the scenarios represents consumption spending? a. A new hospital is constructed in your town. b. You take out a bank loan. c. You eat at a fancy restaurant for Valentine's Day. d. Your parents pay their income taxes.

Answer 63

c. You eat at a fancy restaurant for Valentine's Day.

Question 64

The slope of the consumption function is the: a. average level of consumption over time. b. marginal propensity to import. c. marginal propensity to consume. d. marginal propensity to invest.

Answer 64

c. marginal propensity to consume.

Question 65

Credit constraints limit the: a. amount of saving that people can make. b. interest rates that banks can charge. c. amount of money that banks can accept as deposits. d. amount of money that people can borrow.

Answer 65

d. amount of money that people can borrow.

Question 66

Hand-to-mouth consumers: a. spend more on luxuries than on necessities. b. have very high levels of consumption. c. live paycheck to paycheck. d. engage in a significant amount of spending.

Answer 66

c. live paycheck to paycheck.

Question 67

Which of the following is a smart saving strategy? (i) Use payday loans to fund consumption. (ii) Set a budget, and stick to it. (iii) Use credit cards to fund consumption. (iv) Play the lottery.

Answer 67

(ii) only

Question 68

Investment refers to: a. depreciation of capital stocks. b. spending on physical capital. c. spending on financial assets such as stocks. d. saving money in banks.

Answer 68

b. spending on physical capital.

Question 69

Depreciation refers to the: a. decline in the quality of output produced by a business. b. fall in the price of output that the business produces. c. spending by a business on new capital assets. d. decline in capital due to wear and tear, obsolescence, accidental damage, and aging.

Answer 69

d. decline in capital due to wear and tear, obsolescence, accidental damage, and aging.

Question 70

Which of the following is an investment? a. Marios builds a new house. b. Mary buys $4,000 worth of Alibaba stock. c. Cameron saves $400 in his savings account. d. Dale purchases a house that was built in 1940.

Answer 70

a. Marios builds a new house.

Question 71

Future value is the: a. sum of all present values for a portfolio of savings instruments. b. total amount of interest paid on a loan by a future date. c. amount that your money will grow into by a future date as a result of earning interest. d. equivalent of present value divided by the real interest rate.

Answer 71

c. amount that your money will grow into by a future date as a result of earning interest.

Question 72

The loanable funds market is the market for: a. funds used to buy, rent, or build capital. b. retail goods and services. c. wholesale goods and services. d. machines.

Answer 72

a. funds used to buy, rent, or build capital.

Question 73

Equilibrium in the loanable funds market determines the: a. up-front cost of capital. b. amount of inventories in an economy. c. equilibrium real interest rate. d. point where there is excess demand for loanable funds.

Answer 73

c. equilibrium real interest rate.

Question 74

The three major pillars of the financial sector are the: a. foreign exchange market, the bond market, and the government. b. stock market, the labor market, and the bond market. c. banks, the goods market, and the labor market. d. stock market, the bond market, and the banks.

Answer 74

d. stock market, the bond market, and the banks.

Question 75

A bank can make money by: a. storing and locking away all the deposits made by consumers. b. giving you a particular interest return on your savings and then loaning out the same money at a lower rate of interest. c. giving you a particular interest return on your savings and then loaning out the same money at a higher rate of interest. d. borrowing money from the government at 0% interest.

Answer 75

c. giving you a particular interest return on your savings and then loaning out the same money at a higher rate of interest.

Question 76

An initial public offering occurs when a company: a. first opens for business and offers its goods and services for sale to the public. b. first sells stock directly to the government. c. first sells stock directly to the public. d. experiences a rise in the price and demand for its stock.

Answer 76

c. first sells stock directly to the public.

Question 77

The table contains information about Pfizer's stock. How much is Pfizer, as a company, worth? current P: $36.22 Open: $35.86 High: $36.34 Low: $35.72 Div yield: 3.98% Prev close: $35.76 52 week high: $46.67 52 week low: $33.97 Mkt cap: $200.33b P/E ratio: 16.58 a. $35.86. b. $36.22. c. $36 billion. d. $200.33 billion.

Answer 77

$200.33 billion.

Question 78

A mutual fund is a fund that: a. is owned by the government. b. buys a portfolio of stocks and bonds on your behalf. c. buys a variety of assets, including land and precious metals, for companies. d. consists of only international assets.

Answer 78

b. buys a portfolio of stocks and bonds on your behalf.

Question 79

The liquidity of an asset is defined as the: a. ability to predict the future cash flow of the asset. b. ability to index the asset's returns to the inflation rate. c. risk that if you need to sell the asset quickly, you may not be able to get a good price for it. d. ability to quickly and easily convert the asset to cash, with little or no loss in value.

Answer 79

d. ability to quickly and easily convert the asset to cash, with little or no loss in value.

Question 80

How is monetary policy different from fiscal policy? a. Monetary policy adjusts interest rates, whereas fiscal policy adjusts government spending and taxes. b. Monetary policy focuses on correcting inflation, whereas fiscal policy focuses on unemployment. c. Monetary policy is determined by the president, whereas fiscal policy is determined by the chair of the Federal Reserve. d. There is no difference between the two policies.

Answer 80

a. Monetary policy adjusts interest rates, whereas fiscal policy adjusts government spending and taxes.

Question 81

What is the Federal Reserve's mandate? a. to print as many dollars as possible without causing inflation b. to encourage inflation and raise unemployment c. to ensure maximum employment while maintaining stable prices d. to ensure that interest rates remain low all the time

Answer 81

c. to ensure maximum employment while maintaining stable prices

Question 82

In order to prepare for each meeting, the Federal Open Market Committee (FOMC) members prepare their responses to queries regarding their: a. data on historical policy choices. b. preferences about their choice of Federal Reserve chair. c. fiscal policy responses and their preferences between taxes and government spending. d. forecasts of economic growth, their suggested policy choices, and their ideas on effective communication regarding Fed plans.

Answer 82

d. forecasts of economic growth, their suggested policy choices, and their ideas on effective communication regarding Fed plans.

Question 83

The federal funds rate is the: a. interest rate the public pays on loans from banks. b. nominal interest rate that banks pay on overnight interbank loans. c. nominal interest rate minus the inflation rate. d. interest rate on loans from the Federal Reserve's discount window.

Answer 83

b. nominal interest rate that banks pay on overnight interbank loans.

Question 84

Forward guidance occurs when the Federal Reserve: a. provides information about the future course of monetary policy in order to influence expectations about future interest rates. b. follows the same future course of monetary policy that it has been following in the past. c. carries out open market operations to influence future interest rates. d. provides information about current monetary policy in order to influence expectations about future interest rates.

Answer 84

a. provides information about the future course of monetary policy in order to influence expectations about future interest rates.

Question 85

Mandatory spending is spending that: a. supports programs that do not get determined annually but instead are set in law. b. is appropriated by Congress annually. c. includes all federal government spending. d. includes all state and local government spending.

Answer 85

a. supports programs that do not get determined annually but instead are set in law.

Question 86

Discretionary spending is spending that: a. supports programs that do not get determined annually but instead are set in law. b. is appropriated by Congress annually. c. includes all federal government spending. d. includes all state and local government spending.

Answer 86

b. is appropriated by Congress annually.

Question 87

A nonexcludable good is a good in which: a. it is difficult to prevent someone from using or having access to the good. b. one person consuming or using the good cannot prevent others from using or consuming the same unit of the good. c. there is a regulation that the good must be provided to everyone. d. the good has no cost of production and so is available to consumers at no cost.

Answer 87

a. it is difficult to prevent someone from using or having access to the good.

Question 88

A nonrival good is a good: a. that someone cannot be easily excluded from using. b. where the market has only one producer, so the producer does not face any rival suppliers. c. where one person's use of the good does not reduce another person's ability to use the same unit of the good. d. in which only one version is available, so consumers do not have choices, although there are many sellers.

Answer 88

c. where one person's use of the good does not reduce another person's ability to use the same unit of the good.

Question 89

A good that is rival and nonexcludable is known as a: a. public good. b. club good. c. common resource. d. private resource.

Answer 89

c. common resource.