Question

The following are assumptions behind the Free Market Model of Demand and Supply, EXCEPT:

Question 17 options:

	Individuals are rational.
	Individuals have initially equal amount of economic resources available.
	Market contracts can be self-enforced
	There are no externalities.

The following are some of the key functions of the Government in a Free Market system, EXCEPT:

Question 18 options:

	Enforce laws and regulations.
	Protect property rights.
	Provide free education for all.
	Regulate externalities.

The following are correct statements about the effects coming from a Price Ceiling regulation on certain market, EXCEPT:

Question 20 options:

	The quantity produced will decrease
	A Deadweight loss will be generated
	If the regulated price prevails, producers will be worse off, but the effect on consumers will be uncertain.
	If a black market emerges, both consumers and producers will end up being worse off.

Answer 1

Answer for 17 is option 2, Individuals have initially equal amount of economic resources.

Because this is not the assumption of behind the free market model of Demand and Supply, whereas all other are the assumptions which are correct.

Answer for 18 is option 3, provide free education for all.

Provoding free education is not the key function of government in a free market system.

Answer for 20 is option 3, if the regulated price prevails, producers will be worse off, but the effect on consumers will be uncertain.

Price ceiling creates shortage, and also dead weight loss is created too. Due to shortage, black market emerge. But the regulated price not only affect producers badly but also consumers, the effect is not uncertain in the long run.