Question 1

Which of the following is necessary for allocative efficiency to be achieved?

Accepted Answer

A)  Marginal benefit must be maximized. 
B)  Marginal cost must be minimized. 
C)  Marginal benefit must equal marginal cost. 
D)  The difference between marginal benefit and marginal cost must be maximized. 
E)  Production must be at a point inside the production possibilities frontier. 
A)  Marginal benefit must be maximized. 
B)  Marginal cost must be minimized. 
C)  Marginal benefit must equal marginal cost. 
D)  The difference between marginal benefit and marginal cost must be maximized. 
E)  Production must be at a point inside the production possibilities frontier.

Question 2

What must be true for a consumer to buy a good or service?

Accepted Answer

A)  The price must be equal to or less than the marginal benefit. 
B)  The total benefit received must equal the total spent to buy the good or service. 
C)  The consumer must be able to obtain some consumer surplus. 
D)  The consumer must not be able to produce the product. 
E)  The price must be equal to or greater than the marginal benefit. 
A)  The price must be equal to or less than the marginal benefit. 
B)  The total benefit received must equal the total spent to buy the good or service. 
C)  The consumer must be able to obtain some consumer surplus. 
D)  The consumer must not be able to produce the product. 
E)  The price must be equal to or greater than the marginal benefit.

Question 3

If an economy is producing on its PPF,then it is definitely achieving

Accepted Answer

A)  both production and allocative efficiency. 
B)  only production efficiency, but it definitely is not achieving allocative efficiency. 
C)  only allocative efficiency, but it is definitely not achieving production efficiency. 
D)  neither production nor allocative efficiency. 
E)  only production efficiency. 
A)  both production and allocative efficiency. 
B)  only production efficiency, but it definitely is not achieving allocative efficiency. 
C)  only allocative efficiency, but it is definitely not achieving production efficiency. 
D)  neither production nor allocative efficiency. 
E)  only production efficiency.

Question 4

Bill Gates is a founder of Microsoft and the world's richest individual.Suppose Microsoft sells more software and Mr.Gates acquires another billion dollars in wealth.Simultaneously,suppose a burglar whose income is well below average broke into Bill Gates' house and stole a million dollars' worth of antiques.Using the "it's not fair if the rules aren't fair" approach to fairness,is Mr.Gates' acquisition of additional wealth fair? Is the (poor)thief's acquisition fair?

Accepted Answer

In order for Mr.Gates to become richer,M

Question 5

Hester owns an ice cream shop.It costs her $2 per cone to make 10 ice cream cones.If she sells 10 cones for $4 each,her producer surplus on the 10 cones is equal to

Accepted Answer

A)  $2. 
B)  $20. 
C)  $10. 
D)  $40. 
E)  $4. 
A)  $2. 
B)  $20. 
C)  $10. 
D)  $40. 
E)  $4.

Question 6

-Which of the following government policies ensures market efficiency?

Accepted Answer

A)  subsidy 
B)  tax 
C)  price regulations 
D)  quantity regulations 
E)  None of the above answers is correct. 
A)  subsidy 
B)  tax 
C)  price regulations 
D)  quantity regulations 
E)  None of the above answers is correct.

Question 7

Which of the following situations describing a resource allocation method most resembles the force 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)  Mandy saved her allowance to buy a 12 pack of cream soda. When Mandy's brother saw the soda, he took four. 
E)  Jose works at Intel. His manager tells him what work needs to be completed each month. 
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)  Mandy saved her allowance to buy a 12 pack of cream soda. When Mandy's brother saw the soda, he took four. 
E)  Jose works at Intel. His manager tells him what work needs to be completed each month.

Question 8

A cost not borne by the producer but borne by other people is known as ________ cost.

Accepted Answer

A)  a marginal 
B)  an internal 
C)  an external 
D)  a nonessential 
E)  a subsidized 
A)  a marginal 
B)  an internal 
C)  an external 
D)  a nonessential 
E)  a subsidized

Question 9

Which of the following are the rules for finding the point of allocative efficiency?

Accepted Answer

A)  Produce on the PPF and then produce where the marginal benefit and marginal cost are as large as possible. 
B)  Produce on the PPF and then produce where marginal benefit equals marginal cost. 
C)  Produce on the PPF and then produce where marginal benefit and marginal cost are constant. 
D)  Produce on the PPF and then produce where the marginal benefit exceeds marginal cost by as much as possible. 
E)  Produce anywhere on the PPF. 
A)  Produce on the PPF and then produce where the marginal benefit and marginal cost are as large as possible. 
B)  Produce on the PPF and then produce where marginal benefit equals marginal cost. 
C)  Produce on the PPF and then produce where marginal benefit and marginal cost are constant. 
D)  Produce on the PPF and then produce where the marginal benefit exceeds marginal cost by as much as possible. 
E)  Produce anywhere on the PPF.

Question 10

If the government takes over the distribution of some scarce good in a time of a natural disaster and provides the good at no charge to users,what must also be done?

Accepted Answer

A)  The government must produce the good itself. 
B)  Some rationing mechanism must be set up to determine who gets the good. 
C)  Everyone hurt in the natural disaster must get one of the goods. 
D)  nothing 
E)  Because we live in a democracy, the government must use majority rule as the rationing mechanism. 
A)  The government must produce the good itself. 
B)  Some rationing mechanism must be set up to determine who gets the good. 
C)  Everyone hurt in the natural disaster must get one of the goods. 
D)  nothing 
E)  Because we live in a democracy, the government must use majority rule as the rationing mechanism.

Question 11

What must be true for a producer to obtain a producer surplus from the sale of a unit of a good?

Accepted Answer

The price must be gr

Question 12

-The figure above shows the market for hot dogs.
a.What is the maximum price consumers are willing to pay for the 25th hot dog?
b.What is the efficient quantity?
c.Suppose that the production was limited to 25 hot dogs.In the figure,indicate the amount of the deadweight loss.

Accepted Answer

a.Consumers are willing to pay a maximum

Question 13

Why does the marginal benefit curve have a negative slope?

Accepted Answer

Each successive increase in the consumpt

Question 14

What are some of the potential obstacles that can lead to market failure by preventing a market from reaching the efficient outcome? Briefly define each obstacle.

Accepted Answer

The obstacles basically fall into two ca

Question 15

When efficiency is attained,the sum of the total amount of consumer surplus and producer surplus is

Accepted Answer

A)  minimized. 
B)  maximized. 
C)  equal to the deadweight loss. 
D)  undefined. 
E)  equal to zero. 
A)  minimized. 
B)  maximized. 
C)  equal to the deadweight loss. 
D)  undefined. 
E)  equal to zero.

Question 16

A supply curve shows the marginal

Accepted Answer

A)  benefit consumers receive from consuming a good. 
B)  profit businesses earn from selling a good. 
C)  cost of producing the good. 
D)  price paid for a good. 
E)  benefit sellers receive from selling a good. 
A)  benefit consumers receive from consuming a good. 
B)  profit businesses earn from selling a good. 
C)  cost of producing the good. 
D)  price paid for a good. 
E)  benefit sellers receive from selling a good.

Question 17

Allocative efficiency occurs when

Accepted Answer

A)  the most highly valued goods and services are produced. 
B)  all citizens have equal access to goods and services. 
C)  the environment is protected at all cost. 
D)  goods and services are free. 
E)  production takes place at any point on the PPF. 
A)  the most highly valued goods and services are produced. 
B)  all citizens have equal access to goods and services. 
C)  the environment is protected at all cost. 
D)  goods and services are free. 
E)  production takes place at any point on the PPF.

Question 18

Lauren and Katy each bought a new bike lock for $20.Both Lauren and Katy would have paid $25 for the lock.Katy's consumer surplus equaled

Accepted Answer

A)  $10. 
B)  $40. 
C)  $5. 
D)  $20. 
E)  $50. 
A)  $10. 
B)  $40. 
C)  $5. 
D)  $20. 
E)  $50.

Question 19

University of Colorado reserves 5,000 free tickets to each home football game for students.Students must stand in line to receive their ticket.Football tickets are allocated through which method?

Accepted Answer

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

Question 20

Suppose Jennifer derives $100 in marginal benefits from her first skiing trip and $80 from her third trip.Her marginal benefit from her second trip is likely to be

Accepted Answer

A)  more than $100. 
B)  between $100 and $80. 
C)  between $79 and $51. 
D)  less than $51. 
E)  some amount that cannot be calculated without additional information. 
A)  more than $100. 
B)  between $100 and $80. 
C)  between $79 and $51. 
D)  less than $51. 
E)  some amount that cannot be calculated without additional information.

Which of the following is necessary for allocative efficiency to be achieved?

What must be true for a consumer to buy a good or service?

If an economy is producing on its PPF,then it is definitely achieving

Hester owns an ice cream shop.It costs her $2 per cone to make 10 ice cream cones.If she sells 10 cones for $4 each,her producer surplus on the 10 cones is equal to

-Which of the following government policies ensures market efficiency?

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

A cost not borne by the producer but borne by other people is known as ________ cost.

Which of the following are the rules for finding the point of allocative efficiency?

If the government takes over the distribution of some scarce good in a time of a natural disaster and provides the good at no charge to users,what must also be done?

What must be true for a producer to obtain a producer surplus from the sale of a unit of a good?

-The figure above shows the market for hot dogs. a.What is the maximum price consumers are willing to pay for the 25th hot dog? b.What is the efficient quantity? c.Suppose that the production was limited to 25 hot dogs.In the figure,indicate the amount of the deadweight loss.

Why does the marginal benefit curve have a negative slope?

What are some of the potential obstacles that can lead to market failure by preventing a market from reaching the efficient outcome? Briefly define each obstacle.

When efficiency is attained,the sum of the total amount of consumer surplus and producer surplus is

A supply curve shows the marginal

Allocative efficiency occurs when

Lauren and Katy each bought a new bike lock for $20.Both Lauren and Katy would have paid $25 for the lock.Katy's consumer surplus equaled

University of Colorado reserves 5,000 free tickets to each home football game for students.Students must stand in line to receive their ticket.Football tickets are allocated through which method?

Suppose Jennifer derives $100 in marginal benefits from her first skiing trip and $80 from her third trip.Her marginal benefit from her second trip is likely to be

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

Which of the following is necessary for allocative efficiency to be achieved?

What must be true for a consumer to buy a good or service?

If an economy is producing on its PPF,then it is definitely achieving

Hester owns an ice cream shop.It costs her $2 per cone to make 10 ice cream cones.If she sells 10 cones for $4 each,her producer surplus on the 10 cones is equal to

-Which of the following government policies ensures market efficiency?

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

A cost not borne by the producer but borne by other people is known as ________ cost.

Which of the following are the rules for finding the point of allocative efficiency?

If the government takes over the distribution of some scarce good in a time of a natural disaster and provides the good at no charge to users,what must also be done?

What must be true for a producer to obtain a producer surplus from the sale of a unit of a good?

-The figure above shows the market for hot dogs. a.What is the maximum price consumers are willing to pay for the 25th hot dog? b.What is the efficient quantity? c.Suppose that the production was limited to 25 hot dogs.In the figure,indicate the amount of the deadweight loss.

Why does the marginal benefit curve have a negative slope?

What are some of the potential obstacles that can lead to market failure by preventing a market from reaching the efficient outcome? Briefly define each obstacle.

When efficiency is attained,the sum of the total amount of consumer surplus and producer surplus is

A supply curve shows the marginal

Allocative efficiency occurs when

Lauren and Katy each bought a new bike lock for $20.Both Lauren and Katy would have paid $25 for the lock.Katy's consumer surplus equaled

University of Colorado reserves 5,000 free tickets to each home football game for students.Students must stand in line to receive their ticket.Football tickets are allocated through which method?

Suppose Jennifer derives $100 in marginal benefits from her first skiing trip and $80 from her third trip.Her marginal benefit from her second trip is likely to be

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