Question 1

-In the table above, the deadweight loss is zero when ________ umbrellas are produced and sold.

Accepted Answer

A)  20 
B)  40 
C)  60 
D)  80 
A)  20 
B)  40 
C)  60 
D)  80

Question 2

-The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then Dana's consumer surplus from the 4th gallon

Accepted Answer

A)  is greater than her consumer surplus from the 8th gallon. 
B)  is the same as her consumer surplus from the 8th gallon. 
C)  is less than her consumer surplus from the 8th gallon. 
D)  could be greater than, equal to, or less than the consumer surplus from the 8th gallon. 
A)  is greater than her consumer surplus from the 8th gallon. 
B)  is the same as her consumer surplus from the 8th gallon. 
C)  is less than her consumer surplus from the 8th gallon. 
D)  could be greater than, equal to, or less than the consumer surplus from the 8th gallon.

Question 3

-The figure above shows the market for milk. The ________ price that producers must be offered to get them to produce 250 gallons of milk per day is ________.

Accepted Answer

A)  maximum; $3.25 
B)  minimum; $3.25 
C)  maximum; $2.50 
D)  minimum; $2.50 
A)  maximum; $3.25 
B)  minimum; $3.25 
C)  maximum; $2.50 
D)  minimum; $2.50

Question 4

-The above table gives the market demand and market supply schedules for soda. There are no external benefits or external costs. What is the efficient quantity of soda?

Accepted Answer

A)  1400 
B)  1000 
C)  600 
D)  It is impossible to determine the efficient quantity without more information. 
A)  1400 
B)  1000 
C)  600 
D)  It is impossible to determine the efficient quantity without more information.

Question 5

At the beginning of World War II, a rationing system was established in the United States. Ration stamps or cards were issued for a variety of commodities such as canned milk and gasoline. To receive a gasoline ration card, a person had to certify a need for gas. The ration cards ranged from the most limited A card which only allowed 3 to 4 gallons per week to the most generous X card, which allowed the carrier to buy an unlimited amount of gasoline. A government entity, the War Price and Rationing Board, decided who received and A or an X card. Gasoline cards were allocated through:

Accepted Answer

A)  Command 
B)  Market price 
C)  Majority rule 
D)  Force 
A)  Command 
B)  Market price 
C)  Majority rule 
D)  Force

Question 6

-The schedules in the table give the marginal social benefit and marginal social cost of a DVD. If the marginal cost of producing a DVD increases by $4, then the efficient number of DVDs is ________ a week.

Accepted Answer

A)  1 
B)  2 
C)  5 
D)  4 
A)  1 
B)  2 
C)  5 
D)  4

Question 7

The resource allocation method that is used to allocate scarce resources between private use and government use is

Accepted Answer

A)  first-come, first-served. 
B)  personal characteristics. 
C)  majority rule. 
D)  lottery. 
A)  first-come, first-served. 
B)  personal characteristics. 
C)  majority rule. 
D)  lottery.

Question 8

-What area in the above figure is the producer surplus at the efficient quantity?

Accepted Answer

A)  A 
B)  A + B + C 
C)  F 
D)  D + E + F 
A)  A 
B)  A + B + C 
C)  F 
D)  D + E + F

Question 9

-The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. When marginal social benefit is equal to the marginal social cost of coffee in Kaffenia,

Accepted Answer

A)  three hundred pounds per day will be produced and consumed. 
B)  the efficient quantity of coffee is being produced and consumed. 
C)  any decrease in coffee consumption or production would result in a deadweight loss. 
D)  All of the above are correct. 
A)  three hundred pounds per day will be produced and consumed. 
B)  the efficient quantity of coffee is being produced and consumed. 
C)  any decrease in coffee consumption or production would result in a deadweight loss. 
D)  All of the above are correct.

Question 10

American Idol is a popular television program where contestants compete to win a $1 million record deal. To determine the winner, fans either dial the number or send a text message indicating their favorite contestant. The contestant with the highest number of texts and phone calls wins. What is the scarce resource in this example?

Accepted Answer

A)  $1 million record deal 
B)  television ratings 
C)  phone calls and text messages 
D)  fans 
A)  $1 million record deal 
B)  television ratings 
C)  phone calls and text messages 
D)  fans

Question 11

At the current level of output, the marginal social cost of tennis balls is greater than the marginal social benefit. Then

Accepted Answer

A)  more than the efficient quantity of tennis balls is being produced. 
B)  there is excess demand for tennis balls. 
C)  firms producing tennis balls must be earning negative profit. 
D)  too few tennis balls are being produced. 
A)  more than the efficient quantity of tennis balls is being produced. 
B)  there is excess demand for tennis balls. 
C)  firms producing tennis balls must be earning negative profit. 
D)  too few tennis balls are being produced.

Question 12

-The figure above shows the market for coffee. The ________ price that producers must be offered to get them to produce 30 million pounds of coffee per month is ________.

Accepted Answer

A)  maximum; $2.50 
B)  minimum; $2.50 
C)  maximum; $4.00 
D)  minimum; $4.00 
A)  maximum; $2.50 
B)  minimum; $2.50 
C)  maximum; $4.00 
D)  minimum; $4.00

Question 13

Which of the following can prevent markets from reaching the efficient level of production? I. a monopoly
II) taxes
III) the product is a public good

Accepted Answer

A)  I and II 
B)  II 
C)  II and III 
D)  I, II and III 
A)  I and II 
B)  II 
C)  II and III 
D)  I, II and III

Question 14

The latest model car in the dealer's showroom has a sticker price of $35,000.00. Fred, the shopper, has decided that he would pay no more than $32,000.00 for the car. After two hours of bargaining with the saleswoman, Fred actually purchases the car for $31,000.00. Fred, therefore, has obtained a consumer surplus of

Accepted Answer

A)  $35,000.00. 
B)  $32,000.00. 
C)  $4,000.00. 
D)  $1,000.00. 
A)  $35,000.00. 
B)  $32,000.00. 
C)  $4,000.00. 
D)  $1,000.00.

Question 15

According to Utilitarian principles first discussed in the nineteenth century, fairness implies

Accepted Answer

A)  equality of income. 
B)  equality of opportunity. 
C)  winner takes all. 
D)  maximizing consumption. 
A)  equality of income. 
B)  equality of opportunity. 
C)  winner takes all. 
D)  maximizing consumption.

Question 16

Marginal social cost

Accepted Answer

A)  is the additional cost to the consumer of consuming another unit of a good. 
B)  is equal to price times quantity sold. 
C)  decreases as more of a good is produced and, hence, is depicted by a downward sloping curve. 
D)  is the opportunity cost of producing one more unit of a good and, hence, is the same as the supply curve. 
A)  is the additional cost to the consumer of consuming another unit of a good. 
B)  is equal to price times quantity sold. 
C)  decreases as more of a good is produced and, hence, is depicted by a downward sloping curve. 
D)  is the opportunity cost of producing one more unit of a good and, hence, is the same as the supply curve.

Question 17

-The figure illustrates the market for bagels. If the number of bagels is increased from 20 to 30 an hour, consumer surplus plus producer surplus ________ and deadweight loss is ________.

Accepted Answer

A)  decreases; negative 
B)  decreases; positive 
C)  increases; positive 
D)  increases; negative 
A)  decreases; negative 
B)  decreases; positive 
C)  increases; positive 
D)  increases; negative

Question 18

Among the sources of economic inefficiency are all of the following EXCEPT

Accepted Answer

A)  subsidies. 
B)  taxes. 
C)  competition. 
D)  external costs. 
A)  subsidies. 
B)  taxes. 
C)  competition. 
D)  external costs.

Question 19

Consider a market that has linear supply and demand curves, and is in equilibrium. The area above the price line and below the demand curve is

Accepted Answer

A)  consumer surplus. 
B)  producer surplus. 
C)  marginal cost. 
D)  marginal benefit. 
A)  consumer surplus. 
B)  producer surplus. 
C)  marginal cost. 
D)  marginal benefit.

Question 20

-What is the efficient quantity of snowboards in the above figure?

Accepted Answer

A)  0 
B)  100 
C)  200 
D)  500 
A)  0 
B)  100 
C)  200 
D)  500

Exam 5: Efficiency and Equity

-In the table above, the deadweight loss is zero when ________ umbrellas are produced and sold.

-The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then Dana's consumer surplus from the 4th gallon

-The figure above shows the market for milk. The ________ price that producers must be offered to get them to produce 250 gallons of milk per day is ________.

-The above table gives the market demand and market supply schedules for soda. There are no external benefits or external costs. What is the efficient quantity of soda?

-The schedules in the table give the marginal social benefit and marginal social cost of a DVD. If the marginal cost of producing a DVD increases by $4, then the efficient number of DVDs is ________ a week.

The resource allocation method that is used to allocate scarce resources between private use and government use is

-What area in the above figure is the producer surplus at the efficient quantity?

-The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. When marginal social benefit is equal to the marginal social cost of coffee in Kaffenia,

At the current level of output, the marginal social cost of tennis balls is greater than the marginal social benefit. Then

-The figure above shows the market for coffee. The ________ price that producers must be offered to get them to produce 30 million pounds of coffee per month is ________.

Which of the following can prevent markets from reaching the efficient level of production? I. a monopoly II) taxes III) the product is a public good

According to Utilitarian principles first discussed in the nineteenth century, fairness implies

Marginal social cost

-The figure illustrates the market for bagels. If the number of bagels is increased from 20 to 30 an hour, consumer surplus plus producer surplus ________ and deadweight loss is ________.

Among the sources of economic inefficiency are all of the following EXCEPT

Consider a market that has linear supply and demand curves, and is in equilibrium. The area above the price line and below the demand curve is

-What is the efficient quantity of snowboards in the above figure?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

-The figure above shows the market for milk. The price that producers must be offered to get them to produce 250 gallons of milk per day is .

-The figure above shows the market for coffee. The price that producers must be offered to get them to produce 30 million pounds of coffee per month is .

-The figure illustrates the market for bagels. If the number of bagels is increased from 20 to 30 an hour, consumer surplus plus producer surplus and deadweight loss is .