1)The marginal benefit of a glass of water is large, as it is essential for sustaining life. An example of an action with both a monetary and nonmonetary opportunity cost is going to the movies. A person may have to choose between spending money on a movie ticket or spending time with family and friends.

2)The “invisible hand” of the marketplace is a term coined by economist Adam Smith to describe the self–regulating nature of the free market economy. It refers to the idea that when consumers and producers are free to pursue their own interests, the overall welfare of society is improved. The two main reasons of market failure are externalities and imperfect information. An example of an externality is pollution, which causes harm to the environment and can have a negative impact on public health. An example of imperfect information is when buyers are unaware of the true quality of a product, which can lead to a misallocation of resources.

3)A price ceiling set below the equilibrium level will result in a decrease in quantity supplied and an increase in quantity demanded. This will create a shortage in the market and lead to an increase in prices.

4)The impact of imposing a price floor below the equilibrium price will be a decrease in quantity demanded and an increase in quantity supplied. This will create a surplus in the market and lead to a decrease in prices. The price floor benefits producers by providing them with a minimum price they can charge for their goods. However, it reduces social surplus because it leads to an inefficient allocation of resources. Consumers are paying more for goods than they would in a free market, and producers are receiving less than they could in a free market, resulting in losses for both parties.