Question 1

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The producer surplus from the 10,000th soda is

Accepted Answer

A)  $0.00. 
B)  $0.50. 
C)  $1.00. 
D)  more than $1.00. 
E)  None of the above answers is correct. 
A)  $0.00. 
B)  $0.50. 
C)  $1.00. 
D)  more than $1.00. 
E)  None of the above answers is correct.

Question 2

-The figure shows the demand curve for hotel rooms at a local resort.
a.If the hotel charges $120 per night,how many rooms will they rent?
b.If there are only 40 rooms available,how much are customers willing to pay for a room?
c.If 60 rooms are available,how much are customers willing to pay?
d.What do the dollars in your answer to part (c)represent?

Accepted Answer

a.At $120 a night,the hotel will rent 20

Question 3

Is the marginal benefit someone enjoys from a good or service the same as the price he or she pays? Explain your answer.

Accepted Answer

Generally the marginal benefit of a good

Question 4

At the market equilibrium,when efficiency is attained,the marginal benefit ________ the marginal cost.

Accepted Answer

A)  is equal to 
B)  is greater than 
C)  is less than 
D)  has no necessary relationship with 
E)  is equal to the marginal deadweight loss which is equal to 
A)  is equal to 
B)  is greater than 
C)  is less than 
D)  has no necessary relationship with 
E)  is equal to the marginal deadweight loss which is equal to

Question 5

Overproduction results in

Accepted Answer

A)  external costs. 
B)  external benefits. 
C)  deadweight loss. 
D)  super-efficiency. 
E)  the marginal benefit of the last unit produced being larger than the marginal cost. 
A)  external costs. 
B)  external benefits. 
C)  deadweight loss. 
D)  super-efficiency. 
E)  the marginal benefit of the last unit produced being larger than the marginal cost.

Question 6

Mark loves ice cream.At any point in time,he will buy an additional ice cream cone if

Accepted Answer

A)  the marginal benefit from it exceeds the price. 
B)  the marginal benefit from it is zero. 
C)  his willingness to pay is less than the price. 
D)  there is no deadweight loss produced by his purchase of a cone. 
E)  None of the above answers is correct. 
A)  the marginal benefit from it exceeds the price. 
B)  the marginal benefit from it is zero. 
C)  his willingness to pay is less than the price. 
D)  there is no deadweight loss produced by his purchase of a cone. 
E)  None of the above answers is correct.

Question 7

Allocative efficiency occurs

Accepted Answer

A)  anywhere inside or on the production possibilities frontier. 
B)  when the total cost of production is minimized. 
C)  at all points on the production possibilities frontier. 
D)  at only one point on the production possibilities frontier. 
E)  at the points where the production possibilities frontier crosses the horizontal or vertical axis. 
A)  anywhere inside or on the production possibilities frontier. 
B)  when the total cost of production is minimized. 
C)  at all points on the production possibilities frontier. 
D)  at only one point on the production possibilities frontier. 
E)  at the points where the production possibilities frontier crosses the horizontal or vertical axis.

Question 8

-The figure above represents the competitive market for slices of key lime pie.When 60 slices are produced,the marginal cost

Accepted Answer

A)  exceeds the marginal benefit. 
B)  is less than the marginal benefit. 
C)  equals the marginal benefit. 
D)  is not defined. 
E)  equals the deadweight loss on the 60th slice. 
A)  exceeds the marginal benefit. 
B)  is less than the marginal benefit. 
C)  equals the marginal benefit. 
D)  is not defined. 
E)  equals the deadweight loss on the 60th slice.

Question 9

When a society achieves production efficiency,it is

Accepted Answer

A)  definitely producing at a point on its PPF. 
B)  perhaps producing at a point on its PPF and perhaps producing at a point inside its PPF. 
C)  definitely producing that combination of goods and services that society values most highly. 
D)  not fully employing all of its available resources to produce goods and services. 
E)  enjoying a free lunch. 
A)  definitely producing at a point on its PPF. 
B)  perhaps producing at a point on its PPF and perhaps producing at a point inside its PPF. 
C)  definitely producing that combination of goods and services that society values most highly. 
D)  not fully employing all of its available resources to produce goods and services. 
E)  enjoying a free lunch.

Question 10

When the price of a product exceeds the marginal cost of producing it,producers have a

Accepted Answer

A)  consumer surplus. 
B)  producer surplus. 
C)  consumer shortage. 
D)  producer shortage. 
E)  deadweight surplus. 
A)  consumer surplus. 
B)  producer surplus. 
C)  consumer shortage. 
D)  producer shortage. 
E)  deadweight surplus.

Question 11

The chair of the Department of Economics at Colorado State University decided that office space is for tenured faculty and that graduate students are required to share cubicles.What method is used to allocate office space?

Accepted Answer

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

Question 12

-The figure above shows Kaley's marginal benefit from swimming with manatees and Scott's marginal cost of providing manatee swimming tours.If Scott offers two swim tours per week,he incurs a marginal cost of

Accepted Answer

A)  more than $30. 
B)  $30. 
C)  $20. 
D)  $10. 
E)  $2. 
A)  more than $30. 
B)  $30. 
C)  $20. 
D)  $10. 
E)  $2.

Question 13

-The figure above shows the market for pants.If the production of the pants results in an external cost from pollution that is the result of the dye used,then

Accepted Answer

A)  6 million pairs is the efficient quantity. 
B)  fewer than 6 million pairs is the efficient quantity. 
C)  more than 6 million pairs is the efficient quantity. 
D)  None of the above answers is necessarily correct because more information is needed about the size of the external cost. 
E)  None of the above answers is correct because it is impossible to tell whether the external cost results in underproduction or overproduction. 
A)  6 million pairs is the efficient quantity. 
B)  fewer than 6 million pairs is the efficient quantity. 
C)  more than 6 million pairs is the efficient quantity. 
D)  None of the above answers is necessarily correct because more information is needed about the size of the external cost. 
E)  None of the above answers is correct because it is impossible to tell whether the external cost results in underproduction or overproduction.

Question 14

Adam Smith's Wealth of Nations,written in 1776,describes the market's invisible hand representing the

Accepted Answer

A)  King of England's control over the colonies. 
B)  control all governments have in organizing the market. 
C)  efficiency the market achieves without the interference of governments. 
D)  inefficiency of markets when governments do not organize them. 
E)  invisible command system that efficiently allocates resources. 
A)  King of England's control over the colonies. 
B)  control all governments have in organizing the market. 
C)  efficiency the market achieves without the interference of governments. 
D)  inefficiency of markets when governments do not organize them. 
E)  invisible command system that efficiently allocates resources.

Question 15

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

Accepted Answer

A)  $0.00. 
B)  $0.50. 
C)  $1.00. 
D)  $1.50. 
E)  $2.50. 
A)  $0.00. 
B)  $0.50. 
C)  $1.00. 
D)  $1.50. 
E)  $2.50.

Question 16

The price of a cowboy hat is $100.Willie can produce a hat at a marginal cost of $130,Waylon can produce at a marginal cost of $100,and Merle can produce at a marginal cost of $85.Which of the following statements is correct?

Accepted Answer

A)  The sum of producer surplus is $15. 
B)  All three of these sellers will gain producer surplus from selling a hat. 
C)  The sum of producer surplus is $30. 
D)  Willie's producer surplus is $30. 
E)  The sum of producer surplus is $45. 
A)  The sum of producer surplus is $15. 
B)  All three of these sellers will gain producer surplus from selling a hat. 
C)  The sum of producer surplus is $30. 
D)  Willie's producer surplus is $30. 
E)  The sum of producer surplus is $45.

Question 17

When marginal benefit exceeds marginal cost in a market,

Accepted Answer

A)  only consumer surplus is reduced. 
B)  only producer surplus is reduced. 
C)  consumer surplus and producer surplus are not affected compared to when production is such that marginal cost equals marginal benefit. 
D)  the deadweight loss is negative. 
E)  None of the above answers is correct. 
A)  only consumer surplus is reduced. 
B)  only producer surplus is reduced. 
C)  consumer surplus and producer surplus are not affected compared to when production is such that marginal cost equals marginal benefit. 
D)  the deadweight loss is negative. 
E)  None of the above answers is correct.

Question 18

When a market is efficient,the

Accepted Answer

A)  sum of consumer surplus and producer surplus is maximized. 
B)  deadweight gain is maximized. 
C)  quantity produced is maximized. 
D)  marginal benefit of the last unit produced exceeds the marginal cost by as much as possible. 
E)  total benefit equals the total cost. 
A)  sum of consumer surplus and producer surplus is maximized. 
B)  deadweight gain is maximized. 
C)  quantity produced is maximized. 
D)  marginal benefit of the last unit produced exceeds the marginal cost by as much as possible. 
E)  total benefit equals the total cost.

Question 19

Which describes the economic meanings of value and price?

Accepted Answer

A)  Value is exchange worth minus marginal benefit and price is the dollars that must be paid. 
B)  Value is the marginal benefit obtained and price is the dollars that must be paid. 
C)  Value refers to the gain the producer gets from the good or service and price refers to the gain the consumer gets from the good or service. 
D)  Value refers to the dollars that must be paid and price refers to the cost of producing the good. 
E)  They are the same and both mean the dollars that must be paid. 
A)  Value is exchange worth minus marginal benefit and price is the dollars that must be paid. 
B)  Value is the marginal benefit obtained and price is the dollars that must be paid. 
C)  Value refers to the gain the producer gets from the good or service and price refers to the gain the consumer gets from the good or service. 
D)  Value refers to the dollars that must be paid and price refers to the cost of producing the good. 
E)  They are the same and both mean the dollars that must be paid.

Question 20

-The figure above represents the competitive market for slices of key lime pie.If the production is 80 slices per day,the cost of the 80th slice is

Accepted Answer

A)  less than anyone is willing to pay for it. 
B)  more than anyone is willing to pay for it. 
C)  equal to what someone is willing to pay for it. 
D)  indeterminant. 
E)  equal to the deadweight loss from the 80th slice. 
A)  less than anyone is willing to pay for it. 
B)  more than anyone is willing to pay for it. 
C)  equal to what someone is willing to pay for it. 
D)  indeterminant. 
E)  equal to the deadweight loss from the 80th slice.

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The producer surplus from the 10,000th soda is

Is the marginal benefit someone enjoys from a good or service the same as the price he or she pays? Explain your answer.

At the market equilibrium,when efficiency is attained,the marginal benefit ________ the marginal cost.

Overproduction results in

Mark loves ice cream.At any point in time,he will buy an additional ice cream cone if

Allocative efficiency occurs

-The figure above represents the competitive market for slices of key lime pie.When 60 slices are produced,the marginal cost

When a society achieves production efficiency,it is

When the price of a product exceeds the marginal cost of producing it,producers have a

The chair of the Department of Economics at Colorado State University decided that office space is for tenured faculty and that graduate students are required to share cubicles.What method is used to allocate office space?

-The figure above shows Kaley's marginal benefit from swimming with manatees and Scott's marginal cost of providing manatee swimming tours.If Scott offers two swim tours per week,he incurs a marginal cost of

-The figure above shows the market for pants.If the production of the pants results in an external cost from pollution that is the result of the dye used,then

Adam Smith's Wealth of Nations,written in 1776,describes the market's invisible hand representing the

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

The price of a cowboy hat is $100.Willie can produce a hat at a marginal cost of $130,Waylon can produce at a marginal cost of $100,and Merle can produce at a marginal cost of $85.Which of the following statements is correct?

When marginal benefit exceeds marginal cost in a market,

When a market is efficient,the

Which describes the economic meanings of value and price?

-The figure above represents the competitive market for slices of key lime pie.If the production is 80 slices per day,the cost of the 80th slice 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 figure above shows the supply curve for soda.The market price is $1.00 per soda.The producer surplus from the 10,000th soda is

Is the marginal benefit someone enjoys from a good or service the same as the price he or she pays? Explain your answer.

At the market equilibrium,when efficiency is attained,the marginal benefit ________ the marginal cost.

Overproduction results in

Mark loves ice cream.At any point in time,he will buy an additional ice cream cone if

Allocative efficiency occurs

-The figure above represents the competitive market for slices of key lime pie.When 60 slices are produced,the marginal cost

When a society achieves production efficiency,it is

When the price of a product exceeds the marginal cost of producing it,producers have a

The chair of the Department of Economics at Colorado State University decided that office space is for tenured faculty and that graduate students are required to share cubicles.What method is used to allocate office space?

-The figure above shows Kaley's marginal benefit from swimming with manatees and Scott's marginal cost of providing manatee swimming tours.If Scott offers two swim tours per week,he incurs a marginal cost of

-The figure above shows the market for pants.If the production of the pants results in an external cost from pollution that is the result of the dye used,then

Adam Smith's Wealth of Nations,written in 1776,describes the market's invisible hand representing the

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

The price of a cowboy hat is $100.Willie can produce a hat at a marginal cost of $130,Waylon can produce at a marginal cost of $100,and Merle can produce at a marginal cost of $85.Which of the following statements is correct?

When marginal benefit exceeds marginal cost in a market,

When a market is efficient,the

Which describes the economic meanings of value and price?

-The figure above represents the competitive market for slices of key lime pie.If the production is 80 slices per day,the cost of the 80th slice 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