Question 1

The point that each glass of lemonade consumed on a hot day brings lower and lower levels of satisfaction is known as the principle of

Accepted Answer

A)  total benefits. 
B)  increasing marginal cost. 
C)  decreasing marginal benefit. 
D)  increasing opportunity cost. 
E)  decreasing marginal price. 
A)  total benefits. 
B)  increasing marginal cost. 
C)  decreasing marginal benefit. 
D)  increasing opportunity cost. 
E)  decreasing marginal price.

Question 2

Which of the following is true for taxes? They

Accepted Answer

A)  are always administered fairly. 
B)  are a necessary part of living in an economy with a fair distribution of income. 
C)  are always administered without creating unfairness or inefficiency. 
D)  are an involuntary transfer of private property. 
E)  do not create a big tradeoff problem. 
A)  are always administered fairly. 
B)  are a necessary part of living in an economy with a fair distribution of income. 
C)  are always administered without creating unfairness or inefficiency. 
D)  are an involuntary transfer of private property. 
E)  do not create a big tradeoff problem.

Question 3

When a society achieves allocative efficiency,it

Accepted Answer

A)  is not achieving production efficiency. 
B)  is producing that combination of goods and services that society values most highly. 
C)  might or it might not be producing at a point on society's PPF. 
D)  is producing a combination of goods and services whose marginal cost exceeds their marginal benefit. 
E)  is producing the combination of goods and services for which marginal benefit exceeds marginal cost by as much as possible. 
A)  is not achieving production efficiency. 
B)  is producing that combination of goods and services that society values most highly. 
C)  might or it might not be producing at a point on society's PPF. 
D)  is producing a combination of goods and services whose marginal cost exceeds their marginal benefit. 
E)  is producing the combination of goods and services for which marginal benefit exceeds marginal cost by as much as possible.

Question 4

Which of the following situations describing a resource allocation method most resembles the majority rule method?

Accepted Answer

A)  Seventy percent of Austin's chess club wanted to purchase new chess sets and thirty percent did not. The club purchased the sets. 
B)  Lattes are sold at Starbucks. 
C)  Food from the Weld County Food Bank is distributed to families in need. 
D)  Jose works at Intel. His manager tells him what work needs to be completed each month. 
E)  Matt's mother had the rule that whoever cuts the cake chooses their slice last. 
A)  Seventy percent of Austin's chess club wanted to purchase new chess sets and thirty percent did not. The club purchased the sets. 
B)  Lattes are sold at Starbucks. 
C)  Food from the Weld County Food Bank is distributed to families in need. 
D)  Jose works at Intel. His manager tells him what work needs to be completed each month. 
E)  Matt's mother had the rule that whoever cuts the cake chooses their slice last.

Question 5

The "big tradeoff" refers to

Accepted Answer

A)  producing capital goods instead of consumable goods. 
B)  marginal benefit versus marginal cost. 
C)  efficiency and fairness. 
D)  taking an economics course instead of some other course. 
E)  using market prices rather than a command system to allocate resources. 
A)  producing capital goods instead of consumable goods. 
B)  marginal benefit versus marginal cost. 
C)  efficiency and fairness. 
D)  taking an economics course instead of some other course. 
E)  using market prices rather than a command system to allocate resources.

Question 6

The figure above shows the market for pizza.
-In the figure above,when the market is in equilibrium,marginal benefit ________ marginal cost,so the quantity of pizza produced is ________.

Accepted Answer

A)  equals; efficient 
B)  exceeds; efficient 
C)  is below; efficient 
D)  is below; not efficient 
E)  exceeds; not efficient 
A)  equals; efficient 
B)  exceeds; efficient 
C)  is below; efficient 
D)  is below; not efficient 
E)  exceeds; not efficient

Question 7

If an economy is allocatively efficient,it must be producing

Accepted Answer

A)  beyond its production possibilities frontier. 
B)  inside its production possibilities frontier. 
C)  on its production possibilities frontier. 
D)  the goods and services that are the most expensive. 
E)  the goods and services that are the least expensive to produce. 
A)  beyond its production possibilities frontier. 
B)  inside its production possibilities frontier. 
C)  on its production possibilities frontier. 
D)  the goods and services that are the most expensive. 
E)  the goods and services that are the least expensive to produce.

Question 8

The figure above shows the demand curve for pizza and the market price of pizza.
-In the figure above,what is the consumer surplus per day?

Accepted Answer

A)  $100,000 
B)  $50,000 
C)  $125,000 
D)  $150,000 
E)  zero 
A)  $100,000 
B)  $50,000 
C)  $125,000 
D)  $150,000 
E)  zero

Question 9

The figure above shows the supply curve for pizza and the market price of pizza.
-In the figure above,the minimum price that must be offered for the 5,000th pizza a day to be produced is

Accepted Answer

A)  $6. 
B)  $10. 
C)  $8. 
D)  $2. 
E)  $4. 
A)  $6. 
B)  $10. 
C)  $8. 
D)  $2. 
E)  $4.

Question 10

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The producer surplus from all the sodas sold is

Accepted Answer

A)  $0.00. 
B)  $15.00. 
C)  $20.00. 
D)  $1.00. 
E)  None of the above answers is correct. 
A)  $0.00. 
B)  $15.00. 
C)  $20.00. 
D)  $1.00. 
E)  None of the above answers is correct.

Question 11

-The figure above shows Diane's demand curve for soda.The price of a soda is $1.00.Diane's consumer surplus from all 15 sodas is

Accepted Answer

A)  $15.00. 
B)  $22.50. 
C)  $11.25. 
D)  $8.00. 
E)  $1.50. 
A)  $15.00. 
B)  $22.50. 
C)  $11.25. 
D)  $8.00. 
E)  $1.50.

Question 12

The marginal cost of a good or service

Accepted Answer

A)  can be calculated from the marginal benefit of that good or service. 
B)  decreases as more of the good or service is produced. 
C)  can be derived from the production possibilities frontier. 
D)  graphs as a positively sloped curve, so it cannot be derived from the production possibilities frontier, which is downward sloping. 
E)  None of the above answers is correct. 
A)  can be calculated from the marginal benefit of that good or service. 
B)  decreases as more of the good or service is produced. 
C)  can be derived from the production possibilities frontier. 
D)  graphs as a positively sloped curve, so it cannot be derived from the production possibilities frontier, which is downward sloping. 
E)  None of the above answers is correct.

Question 13

If a seller charges a buyer the exact price the buyer is willing to pay,then the buyer would

Accepted Answer

A)  not buy the good. 
B)  receive the maximum consumer surplus. 
C)  receive no benefit from the good. 
D)  receive no consumer surplus from that unit of the good. 
E)  suffer a deadweight loss from buying the good. 
A)  not buy the good. 
B)  receive the maximum consumer surplus. 
C)  receive no benefit from the good. 
D)  receive no consumer surplus from that unit of the good. 
E)  suffer a deadweight loss from buying the good.

Question 14

-In the above figure,if the quantity is equal to 2,500,000 units,the deadweight loss is equal to

Accepted Answer

A)  area B + area F. 
B)  area D + area I. 
C)  area C. 
D)  area G + area H. 
E)  None of the above answers is correct because the deadweight loss is equal to zero. 
A)  area B + area F. 
B)  area D + area I. 
C)  area C. 
D)  area G + area H. 
E)  None of the above answers is correct because the deadweight loss is equal to zero.

Question 15

What do economists call the loss society experiences when there is market failure and the production of a good is less than the efficient amount?

Accepted Answer

A)  tax 
B)  subsidy 
C)  price floor 
D)  deadweight loss 
E)  quantity restriction 
A)  tax 
B)  subsidy 
C)  price floor 
D)  deadweight loss 
E)  quantity restriction

Question 16

Why does redistribution,so that the distribution of income is equal,bring about less total output?

Accepted Answer

A)  Incentives to work are reduced. 
B)  No one can determine marginal benefit or marginal cost as a result. 
C)  Those in political power will likely receive a larger income. 
D)  Because the marginal benefit and marginal cost of work have been equally increased. 
E)  The premise of the question is incorrect because an equal distribution of income would increase rather than decrease the total amount produced. 
A)  Incentives to work are reduced. 
B)  No one can determine marginal benefit or marginal cost as a result. 
C)  Those in political power will likely receive a larger income. 
D)  Because the marginal benefit and marginal cost of work have been equally increased. 
E)  The premise of the question is incorrect because an equal distribution of income would increase rather than decrease the total amount produced.

Question 17

Marginal benefit

Accepted Answer

A)  increases as more of a good is consumed. 
B)  decreases as more of a good is consumed. 
C)  is the total benefit from all units consumed. 
D)  is constant as more of a good is consumed. 
E)  is the gain to the producer of producing and selling one more unit of a good. 
A)  increases as more of a good is consumed. 
B)  decreases as more of a good is consumed. 
C)  is the total benefit from all units consumed. 
D)  is constant as more of a good is consumed. 
E)  is the gain to the producer of producing and selling one more unit of a good.

Question 18

The figure above shows the market for pizza.
-In the figure above,if pizza production increases to 15,000 pizzas a day,then marginal benefit ________ marginal cost,and ________ occurs.

Accepted Answer

A)  exceeds; overproduction 
B)  exceeds; underproduction 
C)  is below; overproduction 
D)  is below; underproduction 
E)  exceeds; efficient production 
A)  exceeds; overproduction 
B)  exceeds; underproduction 
C)  is below; overproduction 
D)  is below; underproduction 
E)  exceeds; efficient production

Question 19

Lattes at Starbucks are allocated to individuals in society through what type of method?

Accepted Answer

A)  lottery 
B)  contest 
C)  sharing equally 
D)  market price 
E)  personal characteristics 
A)  lottery 
B)  contest 
C)  sharing equally 
D)  market price 
E)  personal characteristics

Question 20

-In the figure above,for the 3,000th unit,the maximum price a consumer is willing to pay is

Accepted Answer

A)  $5. 
B)  $10. 
C)  $15. 
D)  $0. 
E)  $25. 
A)  $5. 
B)  $10. 
C)  $15. 
D)  $0. 
E)  $25.

The point that each glass of lemonade consumed on a hot day brings lower and lower levels of satisfaction is known as the principle of

Which of the following is true for taxes? They

When a society achieves allocative efficiency,it

Which of the following situations describing a resource allocation method most resembles the majority rule method?

The "big tradeoff" refers to

The figure above shows the market for pizza. -In the figure above,when the market is in equilibrium,marginal benefit marginal cost,so the quantity of pizza produced is .

If an economy is allocatively efficient,it must be producing

The figure above shows the demand curve for pizza and the market price of pizza. -In the figure above,what is the consumer surplus per day?

The figure above shows the supply curve for pizza and the market price of pizza. -In the figure above,the minimum price that must be offered for the 5,000th pizza a day to be produced is

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The producer surplus from all the sodas sold is

-The figure above shows Diane's demand curve for soda.The price of a soda is $1.00.Diane's consumer surplus from all 15 sodas is

The marginal cost of a good or service

If a seller charges a buyer the exact price the buyer is willing to pay,then the buyer would

-In the above figure,if the quantity is equal to 2,500,000 units,the deadweight loss is equal to

What do economists call the loss society experiences when there is market failure and the production of a good is less than the efficient amount?

Why does redistribution,so that the distribution of income is equal,bring about less total output?

Marginal benefit

The figure above shows the market for pizza. -In the figure above,if pizza production increases to 15,000 pizzas a day,then marginal benefit marginal cost,and occurs.

Lattes at Starbucks are allocated to individuals in society through what type of method?

-In the figure above,for the 3,000th unit,the maximum price a consumer is willing to pay is

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

The point that each glass of lemonade consumed on a hot day brings lower and lower levels of satisfaction is known as the principle of

Which of the following is true for taxes? They

When a society achieves allocative efficiency,it

Which of the following situations describing a resource allocation method most resembles the majority rule method?

The "big tradeoff" refers to

The figure above shows the market for pizza. -In the figure above,when the market is in equilibrium,marginal benefit ________ marginal cost,so the quantity of pizza produced is ________.

If an economy is allocatively efficient,it must be producing

The figure above shows the demand curve for pizza and the market price of pizza. -In the figure above,what is the consumer surplus per day?

The figure above shows the supply curve for pizza and the market price of pizza. -In the figure above,the minimum price that must be offered for the 5,000th pizza a day to be produced is

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The producer surplus from all the sodas sold is

-The figure above shows Diane's demand curve for soda.The price of a soda is $1.00.Diane's consumer surplus from all 15 sodas is

The marginal cost of a good or service

If a seller charges a buyer the exact price the buyer is willing to pay,then the buyer would

-In the above figure,if the quantity is equal to 2,500,000 units,the deadweight loss is equal to

What do economists call the loss society experiences when there is market failure and the production of a good is less than the efficient amount?

Why does redistribution,so that the distribution of income is equal,bring about less total output?

Marginal benefit

The figure above shows the market for pizza. -In the figure above,if pizza production increases to 15,000 pizzas a day,then marginal benefit ________ marginal cost,and ________ occurs.

Lattes at Starbucks are allocated to individuals in society through what type of method?

-In the figure above,for the 3,000th unit,the maximum price a consumer is willing to pay is

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

The figure above shows the market for pizza. -In the figure above,when the market is in equilibrium,marginal benefit marginal cost,so the quantity of pizza produced is .

The figure above shows the market for pizza. -In the figure above,if pizza production increases to 15,000 pizzas a day,then marginal benefit marginal cost,and occurs.