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1An example of physical capital is:
a $100 bill.
b stock certificate.
c chainsaw.
d municipal bond.
2If the price of a good decreased,
a It would also increase the quantity exchanged if it was caused by an increase in demand.
b It would also decrease the quantity exchanged if it was caused by an increase in supply.
c We would not know how quantity would change if we didn’t know whether it was due to a change in demand or a change in supply.
d All of the above would be true.
3When demand is elastic:
a price elasticity of demand is less than one.
b consumers are relatively responsive to changes in price.
c the percentage change in quantity demanded resulting from a price change is less than the percentage change in price.
d all of the above are correct.
4 A negative externality is present whenever:
a the private marginal cost of an activity exceeds the private marginal benefit.
b the private marginal benefit of an activity exceeds the private marginal cost.
c the social marginal cost of an activity exceeds the private marginal cost.
d none of the above
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