Question 1

Marginal benefit equals the

Accepted Answer

A)  benefit that a person receives from consuming another unit of a good. 
B)  additional efficiency from producing another unit of a good. 
C)  increase in profit from producing another unit of a good. 
D)  cost of producing another unit of a good. 
E)  total benefit from consuming all the units of the good or service. 
A)  benefit that a person receives from consuming another unit of a good. 
B)  additional efficiency from producing another unit of a good. 
C)  increase in profit from producing another unit of a good. 
D)  cost of producing another unit of a good. 
E)  total benefit from consuming all the units of the good or service.

Question 2

To a seller,the cost of a good or service is ________,and the price is ________.

Accepted Answer

A)  what must be given up to produce the good or service; what is received for the good or service 
B)  what is received for the good or service; what must be given up to produce the good or service 
C)  the producer surplus the seller receives; the consumer surplus the buyer receives 
D)  the producer surplus the buyer receives; the consumer surplus the seller receives 
E)  None of the above answers is correct. 
A)  what must be given up to produce the good or service; what is received for the good or service 
B)  what is received for the good or service; what must be given up to produce the good or service 
C)  the producer surplus the seller receives; the consumer surplus the buyer receives 
D)  the producer surplus the buyer receives; the consumer surplus the seller receives 
E)  None of the above answers is correct.

Question 3

The figure above shows the supply curve for pizza and the market price of pizza.
-In the figure above,the producer surplus is

Accepted Answer

A)  $60,000. 
B)  $100,000. 
C)  $40,000. 
D)  $80,000. 
E)  $50,000. 
A)  $60,000. 
B)  $100,000. 
C)  $40,000. 
D)  $80,000. 
E)  $50,000.

Question 4

Deadweight loss and market failure are created when a market produces

Accepted Answer

A)  either more or less than the efficient quantity. 
B)  more than the efficient quantity but not when less than the efficient quantity is produced. 
C)  less than the efficient quantity but not when more than the efficient quantity is produced. 
D)  the efficient quantity. 
E)  None of the above answers is correct because deadweight loss has nothing to do with the efficient quantity. 
A)  either more or less than the efficient quantity. 
B)  more than the efficient quantity but not when less than the efficient quantity is produced. 
C)  less than the efficient quantity but not when more than the efficient quantity is produced. 
D)  the efficient quantity. 
E)  None of the above answers is correct because deadweight loss has nothing to do with the efficient quantity.

Question 5

If the government imposes a tax on a competitive market with no externalities,then
i.resource use is not efficient.
ii.there is a deadweight loss.
iii.consumer surplus is at its maximum.

Accepted Answer

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

Question 6

-The figure above represents the competitive market for slices of key lime pie.When the price equals $3

Accepted Answer

A)  there is a shortage of slices of pie. 
B)  there is a surplus of slices of pie. 
C)  the efficient quantity of slices is being produced. 
D)  the quantity produced is inefficient. 
E)  the deadweight loss is maximized. 
A)  there is a shortage of slices of pie. 
B)  there is a surplus of slices of pie. 
C)  the efficient quantity of slices is being produced. 
D)  the quantity produced is inefficient. 
E)  the deadweight loss is maximized.

Question 7

-The figure above shows Lauren's demand curve for Barbie dolls and the market price for Barbie dolls.Using the area of the consumer surplus triangle,Lauren's total consumer surplus from purchasing 3 dolls is

Accepted Answer

A)  $5.50. 
B)  $10.00. 
C)  $22.50. 
D)  $45.00. 
E)  3 dolls. 
A)  $5.50. 
B)  $10.00. 
C)  $22.50. 
D)  $45.00. 
E)  3 dolls.

Question 8

When economists use the term "big tradeoff" when discussing efficiency they are referring to the tradeoff between

Accepted Answer

A)  external costs and external benefits. 
B)  marginal cost and marginal benefits. 
C)  producer surplus and consumer surplus. 
D)  efficiency and fairness. 
E)  deadweight loss and producer/consumer surplus. 
A)  external costs and external benefits. 
B)  marginal cost and marginal benefits. 
C)  producer surplus and consumer surplus. 
D)  efficiency and fairness. 
E)  deadweight loss and producer/consumer surplus.

Question 9

The marginal cost curves slope upward because of the principle of

Accepted Answer

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

Question 10

Auditors working for a large accounting firm are often away from the office.When they are in the office,they are allowed to use any desk that is available.Which method is used to allocate desks?

Accepted Answer

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

Question 11

Subsidies ________ the price paid by the buyer and ________ the price received by the seller.

Accepted Answer

A)  increase, increase 
B)  increase, decrease 
C)  decrease, increase 
D)  decrease, decrease 
E)  do not change; increase 
A)  increase, increase 
B)  increase, decrease 
C)  decrease, increase 
D)  decrease, decrease 
E)  do not change; increase

Question 12

Explain the difference between the words "value," "price," and "cost."

Accepted Answer

Value refers to the marginal benefit of

Question 13

Maria helps tutor students taking economics.The equilibrium price for tutoring is $15 per hour.Maria has determined her opportunity cost per hour to be $6 for the first,$9 for the second,$12 for the third,$15 for the fourth,and $18 for the fifth.How many hours will Maria tutor? Why this amount of hours? What,if any,is Maria's producer surplus?

Accepted Answer

Maria will tutor for 4 hours.For all of

Question 14

-The figure above shows the supply and demand for pizza.
a.What is the efficient level of output?
b.If 70,000 pizzas are produced,what area represents the deadweight loss?
c.Why does the deadweight loss in part (b)occur?
d.If 20,000 pizzas are produced,what area represents the deadweight loss?
e.Why does the deadweight loss in part (d)occur?

Accepted Answer

a.40,000 pizzas is the efficient quantit

Question 15

Value and price can be compared by noting that

Accepted Answer

A)  they are the same thing. 
B)  value is always greater than price. 
C)  value is what we must pay while price is what we are willing to pay. 
D)  price is what we must pay and value is what we are willing to pay. 
E)  value is what the seller receives when we buy a good, and price is what we must pay when we buy a good. 
A)  they are the same thing. 
B)  value is always greater than price. 
C)  value is what we must pay while price is what we are willing to pay. 
D)  price is what we must pay and value is what we are willing to pay. 
E)  value is what the seller receives when we buy a good, and price is what we must pay when we buy a good.

Question 16

When the city of Fresno holds a referendum to determine if taxes will be raised to pay for road repairs,the city is 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 17

The figure above shows the demand curve for pizza and the market price of pizza.
-In the figure above,the total benefit from pizza is ________ per day.

Accepted Answer

A)  $100,000 
B)  $50,000 
C)  $125,000 
D)  $150,000 
E)  None of the above answers is correct. 
A)  $100,000 
B)  $50,000 
C)  $125,000 
D)  $150,000 
E)  None of the above answers is correct.

Question 18

A public good

Accepted Answer

A)  is a good that is usually consumed in public, such as a restaurant meal. 
B)  is a good people can consume even if they do not pay for it. 
C)  is a good produced by government. 
D)  results in an efficient allocation of resources. 
E)  is a good for which people are willing to pay a very high price. 
A)  is a good that is usually consumed in public, such as a restaurant meal. 
B)  is a good people can consume even if they do not pay for it. 
C)  is a good produced by government. 
D)  results in an efficient allocation of resources. 
E)  is a good for which people are willing to pay a very high price.

Question 19

If the marginal benefit of a hot dog is greater than its marginal cost,then to increase efficiency,

Accepted Answer

A)  more hot dogs should be produced. 
B)  fewer hot dogs should be produced. 
C)  nothing should be done if the marginal benefit is greater than the marginal cost by the maximum amount because in this case the efficient quantity of hot dogs is being produced. 
D)  production should be halted. 
E)  More information is needed about the price of a hot dog in order to determine if production should be increased, decreased, or not changed. 
A)  more hot dogs should be produced. 
B)  fewer hot dogs should be produced. 
C)  nothing should be done if the marginal benefit is greater than the marginal cost by the maximum amount because in this case the efficient quantity of hot dogs is being produced. 
D)  production should be halted. 
E)  More information is needed about the price of a hot dog in order to determine if production should be increased, decreased, or not changed.

Question 20

The "invisible hand" refers to the notion that

Accepted Answer

A)  competitive markets send resources to their highest valued uses. 
B)  government intervention is necessary to ensure efficiency. 
C)  marginal benefit decreases as more is consumed. 
D)  marginal cost increases as more is produced. 
E)  no matter what allocation method is used, the resulting production is efficient. 
A)  competitive markets send resources to their highest valued uses. 
B)  government intervention is necessary to ensure efficiency. 
C)  marginal benefit decreases as more is consumed. 
D)  marginal cost increases as more is produced. 
E)  no matter what allocation method is used, the resulting production is efficient.

Marginal benefit equals the

To a seller,the cost of a good or service is ,and the price is .

The figure above shows the supply curve for pizza and the market price of pizza. -In the figure above,the producer surplus is

Deadweight loss and market failure are created when a market produces

If the government imposes a tax on a competitive market with no externalities,then i.resource use is not efficient. ii.there is a deadweight loss. iii.consumer surplus is at its maximum.

-The figure above represents the competitive market for slices of key lime pie.When the price equals $3

-The figure above shows Lauren's demand curve for Barbie dolls and the market price for Barbie dolls.Using the area of the consumer surplus triangle,Lauren's total consumer surplus from purchasing 3 dolls is

When economists use the term "big tradeoff" when discussing efficiency they are referring to the tradeoff between

The marginal cost curves slope upward because of the principle of

Auditors working for a large accounting firm are often away from the office.When they are in the office,they are allowed to use any desk that is available.Which method is used to allocate desks?

Subsidies the price paid by the buyer and the price received by the seller.

Explain the difference between the words "value," "price," and "cost."

Value and price can be compared by noting that

When the city of Fresno holds a referendum to determine if taxes will be raised to pay for road repairs,the city is using a ________ allocation method.

The figure above shows the demand curve for pizza and the market price of pizza. -In the figure above,the total benefit from pizza is ________ per day.

A public good

If the marginal benefit of a hot dog is greater than its marginal cost,then to increase efficiency,

The "invisible hand" refers to the notion that

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

Marginal benefit equals the

To a seller,the cost of a good or service is ________,and the price is ________.

The figure above shows the supply curve for pizza and the market price of pizza. -In the figure above,the producer surplus is

Deadweight loss and market failure are created when a market produces

If the government imposes a tax on a competitive market with no externalities,then i.resource use is not efficient. ii.there is a deadweight loss. iii.consumer surplus is at its maximum.

-The figure above represents the competitive market for slices of key lime pie.When the price equals $3

-The figure above shows Lauren's demand curve for Barbie dolls and the market price for Barbie dolls.Using the area of the consumer surplus triangle,Lauren's total consumer surplus from purchasing 3 dolls is

When economists use the term "big tradeoff" when discussing efficiency they are referring to the tradeoff between

The marginal cost curves slope upward because of the principle of

Auditors working for a large accounting firm are often away from the office.When they are in the office,they are allowed to use any desk that is available.Which method is used to allocate desks?

Subsidies ________ the price paid by the buyer and ________ the price received by the seller.

Explain the difference between the words "value," "price," and "cost."

Value and price can be compared by noting that

When the city of Fresno holds a referendum to determine if taxes will be raised to pay for road repairs,the city is using a ________ allocation method.

The figure above shows the demand curve for pizza and the market price of pizza. -In the figure above,the total benefit from pizza is ________ per day.

A public good

If the marginal benefit of a hot dog is greater than its marginal cost,then to increase efficiency,

The "invisible hand" refers to the notion that

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

To a seller,the cost of a good or service is ,and the price is .

Subsidies the price paid by the buyer and the price received by the seller.