Question 1

Canned milk was only rationed to babies and small children during World War II.This rationing was an example of allocation by

Accepted Answer

A)  market price. 
B)  first-come, first-served. 
C)  sharing equally. 
D)  force. 
E)  personal characteristics. 
A)  market price. 
B)  first-come, first-served. 
C)  sharing equally. 
D)  force. 
E)  personal characteristics.

Question 2

Wal-Mart has a limited number of "Black Friday" (the day-after Thanksgiving Day)special items on sale at prices well below their typical price.Wal-Mart opens at 10 PM on Thanksgiving.Wal-Mart is using a ________ allocation method for these items.

Accepted Answer

A)  first-come, first-served 
B)  market price 
C)  contest 
D)  majority rule 
E)  command 
A)  first-come, first-served 
B)  market price 
C)  contest 
D)  majority rule 
E)  command

Question 3

At a competitive market equilibrium,if there are no taxes,subsidies,price regulations,quantity regulations,or externalities,
i.consumer surplus is minimized.
ii.marginal cost equals marginal benefit.
iii.resources are efficiently used.
iv.producer surplus is minimized.

Accepted Answer

A)  ii and iii 
B)  i and ii 
C)  i and iv 
D)  i, ii, iii, and iv 
E)  ii only 
A)  ii and iii 
B)  i and ii 
C)  i and iv 
D)  i, ii, iii, and iv 
E)  ii only

Question 4

Allocative efficiency refers to

Accepted Answer

A)  producing the goods and services most highly valued. 
B)  using the least amount of labor to produce output. 
C)  producing the maximum possible amount of output. 
D)  obtaining the least output with the most inputs. 
E)  producing at any point on the PPF. 
A)  producing the goods and services most highly valued. 
B)  using the least amount of labor to produce output. 
C)  producing the maximum possible amount of output. 
D)  obtaining the least output with the most inputs. 
E)  producing at any point on the PPF.

Question 5

If the price is greater than the marginal cost of producing a good,the seller has

Accepted Answer

A)  no benefit from the sale. 
B)  a loss. 
C)  some producer surplus from the sale. 
D)  some negative consumer surplus from the sale. 
E)  None of the above answers is correct. 
A)  no benefit from the sale. 
B)  a loss. 
C)  some producer surplus from the sale. 
D)  some negative consumer surplus from the sale. 
E)  None of the above answers is correct.

Question 6

Which of the following is true? When there are no externalities,public goods,common resources,taxes or subsidies,then
i.allocative efficiency occurs when marginal benefit exceeds marginal cost by as much as possible.
ii.an a competitive equilibrium,resource allocation is efficient.
iii.fair rules require income transfers from the rich to the poor.

Accepted Answer

A)  only ii 
B)  only i 
C)  only iii 
D)  i and ii 
E)  i and iii 
A)  only ii 
B)  only i 
C)  only iii 
D)  i and ii 
E)  i and iii

Question 7

Ben's cost of making an additional rocking chair is $75.

Accepted Answer

A)  If he sells it for a $100, his producer surplus is $25. 
B)  His marginal cost is equal to $75. 
C)  The marginal benefit to the consumer from the chair will be $75. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct. 
A)  If he sells it for a $100, his producer surplus is $25. 
B)  His marginal cost is equal to $75. 
C)  The marginal benefit to the consumer from the chair will be $75. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct.

Question 8

Production efficiency requires that

Accepted Answer

A)  the economy be producing on the PPF but the marginal cost of a good does not need to equal its marginal benefit. 
B)  the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit. 
C)  the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF. 
D)  the society be producing at the point of allocative efficiency. 
E)  opportunity costs be minimized. 
A)  the economy be producing on the PPF but the marginal cost of a good does not need to equal its marginal benefit. 
B)  the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit. 
C)  the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF. 
D)  the society be producing at the point of allocative efficiency. 
E)  opportunity costs be minimized.

Question 9

-In the figure above,if the market price is $12,then the total consumer surplus is

Accepted Answer

A)  $12. 
B)  $10. 
C)  minimized. 
D)  $240. 
E)  $480. 
A)  $12. 
B)  $10. 
C)  minimized. 
D)  $240. 
E)  $480.

Question 10

Value is

Accepted Answer

A)  the price we pay for a good. 
B)  the cost of resources used to produce a good. 
C)  objective so that it is determined by market forces, not preferences. 
D)  the marginal benefit we get from consuming another unit of a good or service. 
E)  the difference between the price paid for a good and the marginal cost of producing that unit of the good. 
A)  the price we pay for a good. 
B)  the cost of resources used to produce a good. 
C)  objective so that it is determined by market forces, not preferences. 
D)  the marginal benefit we get from consuming another unit of a good or service. 
E)  the difference between the price paid for a good and the marginal cost of producing that unit of the good.

Question 11

If a landlord will rent an apartment only to married couples over 30 years old,the landlord is allocating resources using a ________ allocation method.

Accepted Answer

A)  majority rule 
B)  market price 
C)  contest 
D)  personal characteristics 
E)  command 
A)  majority rule 
B)  market price 
C)  contest 
D)  personal characteristics 
E)  command

Question 12

-In the figure above,when 2,000 pizzas are produced,the marginal benefit of a pizza ________ its marginal cost,which means ________ pizza is being produced.

Accepted Answer

A)  exceeds; too little 
B)  exceeds; too much 
C)  is below; too much 
D)  is below; too little 
E)  equals; the efficient quantity of 
A)  exceeds; too little 
B)  exceeds; too much 
C)  is below; too much 
D)  is below; too little 
E)  equals; the efficient quantity of

Question 13

Samantha was willing to pay $10 for a hamburger because she was hungry but she only paid $2.50.What is the marginal benefit Samantha gained from the hamburger?

Accepted Answer

A)  $2.50 
B)  $7.50 
C)  $10.00 
D)  $12.50 
E)  None of the above answers is correct. 
A)  $2.50 
B)  $7.50 
C)  $10.00 
D)  $12.50 
E)  None of the above answers is correct.

Question 14

Jake just bought a new hockey stick.When he was leaving the shop,he thought that he such a great deal and would have paid $50 more dollars for the stick.Jake received

Accepted Answer

A)  producer surplus. 
B)  equilibrium. 
C)  marginal cost. 
D)  total surplus. 
E)  consumer surplus. 
A)  producer surplus. 
B)  equilibrium. 
C)  marginal cost. 
D)  total surplus. 
E)  consumer surplus.

Question 15

The concept of "the invisible hand" suggests that to attain efficiency,the government should

Accepted Answer

A)  guide economic activity. 
B)  set prices. 
C)  leave prices and output decisions to the competitive market. 
D)  regulate all production decisions, but not price decisions. 
E)  make sure that a command system is used to allocate resources. 
A)  guide economic activity. 
B)  set prices. 
C)  leave prices and output decisions to the competitive market. 
D)  regulate all production decisions, but not price decisions. 
E)  make sure that a command system is used to allocate resources.

Question 16

When less than the efficient amount of a good is produced,how does the marginal benefit of the last unit produced compare to its marginal cost?

Accepted Answer

When less than the efficient amount of a

Question 17

The "equality of opportunity" idea of fairness claims

Accepted Answer

A)  a society should make the poorest as well off as possible. 
B)  the results and the rules should both be fair. 
C)  it's not fair if the rules aren't fair. 
D)  private property can be transferred under government order. 
E)  only a first-come, first-served system of allocating resources is fair. 
A)  a society should make the poorest as well off as possible. 
B)  the results and the rules should both be fair. 
C)  it's not fair if the rules aren't fair. 
D)  private property can be transferred under government order. 
E)  only a first-come, first-served system of allocating resources is fair.

Question 18

When the price rises and the supply curve does not shift,the firms' producer surplus ________.When the price falls and the supply curve does not shift,the firms' producer surplus ________.

Accepted Answer

A)  increases; decreases 
B)  decreases; increases 
C)  decreases; decreases 
D)  increases; increases 
E)  does not change; does not change 
A)  increases; decreases 
B)  decreases; increases 
C)  decreases; decreases 
D)  increases; increases 
E)  does not change; does not change

Question 19

Suppose the price of a scooter is $200 and Cora Lee is willing to pay $250.Cora Lee's

Accepted Answer

A)  consumer surplus from that scooter is $200. 
B)  consumer surplus from that scooter is $50. 
C)  marginal benefit from that scooter is $100. 
D)  consumer surplus from that scooter is $150. 
E)  consumer surplus from that scooter is $250. 
A)  consumer surplus from that scooter is $200. 
B)  consumer surplus from that scooter is $50. 
C)  marginal benefit from that scooter is $100. 
D)  consumer surplus from that scooter is $150. 
E)  consumer surplus from that scooter is $250.

Question 20

Jason wants to hire Maria to tutor him in economics.Jason is willing to pay $30 for the first hour of tutoring,$25 for the second,$20 for the third,$15 for the fourth,and $10 for the fifth.Maria has an opportunity cost per hour of $6 for the first,$9 for the second,$12 for the third,$15 for the fourth,and $18 for the fifth.The initial equilibrium price for tutoring is $15 an hour and hence Maria tutors Jason for 4 hours.Now,Maria realizes that she is the only economics tutor because all the other tutors have graduated.Because she is the only tutor,she has a monopoly and,as a monopolist,Maria decides to charge a price of $25 instead of $15 an hour.
a.At the price of $25 an hour,how many hours will Maria tutor Jason?
b.At the initial equilibrium price of $15 an hour,what was Jason's total consumer surplus and Maria's total producer surplus?
c.At the price of $25 an hour,how many hours will Jason hire Maria to tutor him? What is Jason's total consumer surplus and Maria's total producer surplus?
d.How does the sum of Jason's consumer surplus plus Maria's producer surplus compare at the initial equilibrium price of $15 an hour (part b)and at the new price of $25 an hour (part c)? Comment on any difference.

Accepted Answer

a.Maria will tutor Jason for 2 hours.
b.

Canned milk was only rationed to babies and small children during World War II.This rationing was an example of allocation by

Wal-Mart has a limited number of "Black Friday" (the day-after Thanksgiving Day)special items on sale at prices well below their typical price.Wal-Mart opens at 10 PM on Thanksgiving.Wal-Mart is using a ________ allocation method for these items.

At a competitive market equilibrium,if there are no taxes,subsidies,price regulations,quantity regulations,or externalities, i.consumer surplus is minimized. ii.marginal cost equals marginal benefit. iii.resources are efficiently used. iv.producer surplus is minimized.

Allocative efficiency refers to

If the price is greater than the marginal cost of producing a good,the seller has

Ben's cost of making an additional rocking chair is $75.

Production efficiency requires that

-In the figure above,if the market price is $12,then the total consumer surplus is

Value is

If a landlord will rent an apartment only to married couples over 30 years old,the landlord is allocating resources using a ________ allocation method.

-In the figure above,when 2,000 pizzas are produced,the marginal benefit of a pizza its marginal cost,which means pizza is being produced.

Samantha was willing to pay $10 for a hamburger because she was hungry but she only paid $2.50.What is the marginal benefit Samantha gained from the hamburger?

Jake just bought a new hockey stick.When he was leaving the shop,he thought that he such a great deal and would have paid $50 more dollars for the stick.Jake received

The concept of "the invisible hand" suggests that to attain efficiency,the government should

When less than the efficient amount of a good is produced,how does the marginal benefit of the last unit produced compare to its marginal cost?

The "equality of opportunity" idea of fairness claims

When the price rises and the supply curve does not shift,the firms' producer surplus .When the price falls and the supply curve does not shift,the firms' producer surplus .

Suppose the price of a scooter is $200 and Cora Lee is willing to pay $250.Cora Lee's

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 6: Efficiency and Fairness of Markets

Canned milk was only rationed to babies and small children during World War II.This rationing was an example of allocation by

Wal-Mart has a limited number of "Black Friday" (the day-after Thanksgiving Day)special items on sale at prices well below their typical price.Wal-Mart opens at 10 PM on Thanksgiving.Wal-Mart is using a ________ allocation method for these items.

At a competitive market equilibrium,if there are no taxes,subsidies,price regulations,quantity regulations,or externalities, i.consumer surplus is minimized. ii.marginal cost equals marginal benefit. iii.resources are efficiently used. iv.producer surplus is minimized.

Allocative efficiency refers to

If the price is greater than the marginal cost of producing a good,the seller has

Ben's cost of making an additional rocking chair is $75.

Production efficiency requires that

-In the figure above,if the market price is $12,then the total consumer surplus is

Value is

If a landlord will rent an apartment only to married couples over 30 years old,the landlord is allocating resources using a ________ allocation method.

-In the figure above,when 2,000 pizzas are produced,the marginal benefit of a pizza ________ its marginal cost,which means ________ pizza is being produced.

Samantha was willing to pay $10 for a hamburger because she was hungry but she only paid $2.50.What is the marginal benefit Samantha gained from the hamburger?

Jake just bought a new hockey stick.When he was leaving the shop,he thought that he such a great deal and would have paid $50 more dollars for the stick.Jake received

The concept of "the invisible hand" suggests that to attain efficiency,the government should

When less than the efficient amount of a good is produced,how does the marginal benefit of the last unit produced compare to its marginal cost?

The "equality of opportunity" idea of fairness claims

When the price rises and the supply curve does not shift,the firms' producer surplus ________.When the price falls and the supply curve does not shift,the firms' producer surplus ________.

Suppose the price of a scooter is $200 and Cora Lee is willing to pay $250.Cora Lee's

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

-In the figure above,when 2,000 pizzas are produced,the marginal benefit of a pizza its marginal cost,which means pizza is being produced.

When the price rises and the supply curve does not shift,the firms' producer surplus .When the price falls and the supply curve does not shift,the firms' producer surplus .