IB Econ Unit 2 2nd half review

Which of the following is not a non-price determinant of demand?

• Income

• The price of substitutes and compliments

• Supply

• Tastes and preferences

Which of the following is not a function of the price mechanism? 

• Incentives

• Signaling

• Rationing

• Consumer and producer surplus

 Each of the following are determinants of PES except for:

• Ability to store the product

• Time

• Whether the good is luxury or necessity

• Mobility of factors of production

Which of the following should not be a reason for government intervention in markets?

• To influence consumption

• To support the incomes of wealthy households

• To influence production

• To raise government revenue

Which of the following is not a form of government intervention in markets?

• Price controls, including price ceilings and price floors 

• Providing services

• command and control legislation

• Direct taxes, including income tax

 Market failure can be best described as:

• When the market fails to allocate resources at the point where MSB=MSC

• When the production of demerit goods produces negative externalities

• When the market produces less public and merit goods than the socially optimum level

Common access resources are those goods and services which ..............

• Produce positive externalities to third parties when consumed 

• Goods or services which are non-excludable and non-rivalrous

• Goods or services which are non-excludable

Which of the following government services would also be a public good?

• A bed in a hospital

• military protection

• fish in a pond

 Which of the following explains why public goods can only be provided by governments? 

• free rider problem

• sustainability issues

• issues with international cooperation

There is a rise in the popularity of a good or service.  At the same time the firms production costs rise.  Explain the effect on demand and supply for the product.

• a rise in supply and a fall in demand

• a rise in both supply and demand

• a fall in both supply and demand

• a fall in supply and a rise in demand