Question 1

A marginal benefit curve

Accepted Answer

A)  is the same as a demand curve. 
B)  is the same as a supply curve. 
C)  slopes upwards. 
D)  is a vertical line at the efficient quantity. 
E)  is U-shaped. 
A)  is the same as a demand curve. 
B)  is the same as a supply curve. 
C)  slopes upwards. 
D)  is a vertical line at the efficient quantity. 
E)  is U-shaped.

Question 2

A supply curve shows quantities supplied at various prices.It also shows the

Accepted Answer

A)  total profit the firm earns at a given level of output. 
B)  marginal benefit of the good. 
C)  total cost of production. 
D)  marginal cost of production. 
E)  producer surplus, which is equal to the slope of the supply curve. 
A)  total profit the firm earns at a given level of output. 
B)  marginal benefit of the good. 
C)  total cost of production. 
D)  marginal cost of production. 
E)  producer surplus, which is equal to the slope of the supply curve.

Question 3

As pointed out by the "big tradeoff," government action that redistributes incomes so that everyone has the same income leads to

Accepted Answer

A)  fairness according to the "fair rules" approach. 
B)  efficient markets. 
C)  resources being allocated according to a command system. 
D)  a smaller total output. 
E)  lower taxes on the rich than on the poor so that the rich do not lose their incentive to work. 
A)  fairness according to the "fair rules" approach. 
B)  efficient markets. 
C)  resources being allocated according to a command system. 
D)  a smaller total output. 
E)  lower taxes on the rich than on the poor so that the rich do not lose their incentive to work.

Question 4

Which of the following is true regarding a demand curve?
i.The demand curve is also the marginal benefit curve.
ii.The demand curve shows the dollars' worth of other goods that people are willing to forgo to consume another unit of the good.
iii.The demand curve shows the maximum price that people are willing to pay for another unit of a good.

Accepted Answer

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

Question 5

Mandy saved her allowance to buy a 12 pack of cream soda.When Mandy's brother saw the soda,he took four.Sodas were allocated between Mandy and her brother through

Accepted Answer

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

Question 6

When there is market failure so that a market produces less than the efficient amount,

Accepted Answer

A)  consumer surplus definitely is larger than when the efficient quantity is produced. 
B)  the sum of producer surplus and consumer surplus is larger than when the efficient quantity is produced. 
C)  there is a deadweight loss. 
D)  consumers definitely lose and producers definitely gain. 
E)  consumers definitely gain and producers definitely lose. 
A)  consumer surplus definitely is larger than when the efficient quantity is produced. 
B)  the sum of producer surplus and consumer surplus is larger than when the efficient quantity is produced. 
C)  there is a deadweight loss. 
D)  consumers definitely lose and producers definitely gain. 
E)  consumers definitely gain and producers definitely lose.

Question 7

Redistributing income from the rich to the poor creates inefficiency because

Accepted Answer

A)  of wasteful expenditures by people receiving welfare grants. 
B)  of the administrative costs to operate the government redistribution agencies. 
C)  the redistribution creates an incentive to produce less output. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct. 
A)  of wasteful expenditures by people receiving welfare grants. 
B)  of the administrative costs to operate the government redistribution agencies. 
C)  the redistribution creates an incentive to produce less output. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct.

Question 8

The cost of producing one more unit of a good or service is equal to its

Accepted Answer

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

Question 9

Which of the following describes the economic meanings of cost and price?

Accepted Answer

A)  Cost is exchange worth, and price is dollar worth. 
B)  Cost is what must be given up to produce a good, and price is what a seller receives when the good is sold. 
C)  They are the same, and they both mean what is received when a good is sold. 
D)  Cost refers to what the buyers pay for the good, and price refers to what sellers receive when the good is sold. 
E)  Cost refers to the price that buyers must pay to buy the good. 
A)  Cost is exchange worth, and price is dollar worth. 
B)  Cost is what must be given up to produce a good, and price is what a seller receives when the good is sold. 
C)  They are the same, and they both mean what is received when a good is sold. 
D)  Cost refers to what the buyers pay for the good, and price refers to what sellers receive when the good is sold. 
E)  Cost refers to the price that buyers must pay to buy the good.

Question 10

What allocation method is the primary method used in the United States?

Accepted Answer

While all the different allocation metho

Question 11

What is consumer surplus?

Accepted Answer

Consumer surplus equals the difference b

Question 12

Producer surplus

Accepted Answer

A)  increases if market price rises and the supply curve does not shift. 
B)  decreases if market price rises and the supply curve does not shift. 
C)  is equal to the maximum price consumers are willing to pay. 
D)  is the same as the marginal cost. 
E)  always must equal consumer surplus. 
A)  increases if market price rises and the supply curve does not shift. 
B)  decreases if market price rises and the supply curve does not shift. 
C)  is equal to the maximum price consumers are willing to pay. 
D)  is the same as the marginal cost. 
E)  always must equal consumer surplus.

Question 13

The producer surplus on a unit of a good is

Accepted Answer

A)  equal to the marginal benefit from the good minus its price. 
B)  equal to the price of the good minus the marginal cost of producing it. 
C)  always equal to consumer surplus. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct. 
A)  equal to the marginal benefit from the good minus its price. 
B)  equal to the price of the good minus the marginal cost of producing it. 
C)  always equal to consumer surplus. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct.

Question 14

The concept of "the invisible hand" suggests that markets

Accepted Answer

A)  do not produce the efficient quantity. 
B)  are always fair. 
C)  produce the efficient quantity. 
D)  are unfair. 
E)  allocate resources unfairly and inefficiently. 
A)  do not produce the efficient quantity. 
B)  are always fair. 
C)  produce the efficient quantity. 
D)  are unfair. 
E)  allocate resources unfairly and inefficiently.

Question 15

What are the two views of fairness? How does each view redistribution of income from the rich to the poor?

Accepted Answer

One view is that "it's not fair if the r

Question 16

If you split your dessert with your date,you are using a ________ allocation method.

Accepted Answer

A)  first-come, first-served 
B)  sharing equally 
C)  contest 
D)  personal characteristics 
E)  command 
A)  first-come, first-served 
B)  sharing equally 
C)  contest 
D)  personal characteristics 
E)  command

Question 17

The principle of decreasing marginal benefit explains why the marginal benefit curve

Accepted Answer

A)  is upward sloping. 
B)  has an infinite slope. 
C)  is vertical. 
D)  is downward sloping. 
E)  is horizontal. 
A)  is upward sloping. 
B)  has an infinite slope. 
C)  is vertical. 
D)  is downward sloping. 
E)  is horizontal.

Question 18

A point on the demand curve shows the

Accepted Answer

A)  price and the corresponding quantity demanded. 
B)  marginal benefit from that unit. 
C)  marginal cost to the seller of producing the unit. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  price and the corresponding quantity demanded. 
B)  marginal benefit from that unit. 
C)  marginal cost to the seller of producing the unit. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 19

-In the figure above,the equilibrium market price is $20.The producer surplus equals

Accepted Answer

A)  $20. 
B)  $1,500. 
C)  $3,000. 
D)  150. 
E)  $4,500. 
A)  $20. 
B)  $1,500. 
C)  $3,000. 
D)  150. 
E)  $4,500.

Question 20

A competitive market with no externalities is efficient when it is in equilibrium because

Accepted Answer

A)  total benefit equals total cost. 
B)  marginal benefit equals marginal cost. 
C)  consumer surplus equals producer surplus. 
D)  the sum of consumer surplus plus producer surplus is minimized. 
E)  the deadweight gain equals its maximum. 
A)  total benefit equals total cost. 
B)  marginal benefit equals marginal cost. 
C)  consumer surplus equals producer surplus. 
D)  the sum of consumer surplus plus producer surplus is minimized. 
E)  the deadweight gain equals its maximum.

A marginal benefit curve

A supply curve shows quantities supplied at various prices.It also shows the

As pointed out by the "big tradeoff," government action that redistributes incomes so that everyone has the same income leads to

Mandy saved her allowance to buy a 12 pack of cream soda.When Mandy's brother saw the soda,he took four.Sodas were allocated between Mandy and her brother through

When there is market failure so that a market produces less than the efficient amount,

Redistributing income from the rich to the poor creates inefficiency because

The cost of producing one more unit of a good or service is equal to its

Which of the following describes the economic meanings of cost and price?

What allocation method is the primary method used in the United States?

What is consumer surplus?

Producer surplus

The producer surplus on a unit of a good is

The concept of "the invisible hand" suggests that markets

What are the two views of fairness? How does each view redistribution of income from the rich to the poor?

If you split your dessert with your date,you are using a ________ allocation method.

The principle of decreasing marginal benefit explains why the marginal benefit curve

A point on the demand curve shows the

-In the figure above,the equilibrium market price is $20.The producer surplus equals

A competitive market with no externalities is efficient when it is in equilibrium because

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

A marginal benefit curve

A supply curve shows quantities supplied at various prices.It also shows the

As pointed out by the "big tradeoff," government action that redistributes incomes so that everyone has the same income leads to

Mandy saved her allowance to buy a 12 pack of cream soda.When Mandy's brother saw the soda,he took four.Sodas were allocated between Mandy and her brother through

When there is market failure so that a market produces less than the efficient amount,

Redistributing income from the rich to the poor creates inefficiency because

The cost of producing one more unit of a good or service is equal to its

Which of the following describes the economic meanings of cost and price?

What allocation method is the primary method used in the United States?

What is consumer surplus?

Producer surplus

The producer surplus on a unit of a good is

The concept of "the invisible hand" suggests that markets

What are the two views of fairness? How does each view redistribution of income from the rich to the poor?

If you split your dessert with your date,you are using a ________ allocation method.

The principle of decreasing marginal benefit explains why the marginal benefit curve

A point on the demand curve shows the

-In the figure above,the equilibrium market price is $20.The producer surplus equals

A competitive market with no externalities is efficient when it is in equilibrium because

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