Question

Which of the following is a destroyer of potential wealth? a. Subsidies b. Price Controls c. Taxes d. All of the above.

If the results of an action are good or favorable, then the action must be good. This is the moral approach known as:

	a.	consequentialism.
	b.	deontology.
	c.	virtue ethics.
	d.	scripture ethics.

Which of the following are examples of a price ceiling?

Maximum Wages.

Maximum Prices

Both a. and b.

None of the above.

When a bad decision is made that harms and organization, which of the following questions should be asked to help arrive at a solution?

	a.	Can any part of the decision be blamed on the competition?
	b.	Did the person who made the decision have enough information to make a good decision?
	c.	Was a good decision impossible to make?
	d.	How can we avoid any legal problems arising from the decision?

Wealth is created when assets move from:

a.

higher-valued to lower-valued assets.

b.

lower-valued to higher-valued assets.

c.

private organizations to government entities.

d.

higher-valued assets to government entities.

A consumer is willing to purchase a product for $1,000, but the price is only $800. What is the consumer or buyer surplus?

a.

10%

b.

$200

c.

$800

d.

80%

Governments play a most important role in the creation of wealth by:

	a.	creating minority groups.
	b.	creating majority groups.
	c.	enforcing creativity
	d.	enforcing contracts.

Answer 1

1.  d. All of the above - taxes,subsidies and price controls all distort the equilibrium prices and quantities.

2. a. Consequentialism-only consequences matter- better the consequences an act produces, the more right that act or action.

3. b. Maximum Prices- the maximum price a supplier is allowed to set for a product or service.imposed generally by the government.

5. b. lower-valued to higher-valued assets. - An asset moving from a lower use value to a higher use value generates wealth

6. $200- Maximum willingness to pay for product is $1,000, but the price is only $800. (MWT- price=CS)

7. enforcing contracts- Government is an important institution that aids in the creation of wealth be ensuring private property rights and legal resolution of disputes.