Question 1

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. E

Question 2

How can a person argue that health care services in America are provided efficiently,but not fairly?

Accepted Answer

The assertion that the health market is efficient implies that competitive market forces determines the level and quality of health care.Where the demand for and supply of health care intersects,the marginal benefit and marginal cost of health care are equal.This equality means that the people who are demanding health care are willing and able to pay the price,which is equal to the marginal cost of providing health care.However,at that market price there are many people who cannot afford health care.These people,probably the poor and uninsured,are left to go to clinics,crowd emergency rooms,or else do without basic health care needs because of their lack of ability to pay the market price.This outcome could easily violate the "it's not fair if the result isn't fair" view of fairness.Thus observers who assert that the U.S.health care system might be efficient but isn't fair are using the "results" view of fairness.

Question 3

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. C

Question 4

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 5

In general,the marginal cost curve

Accepted Answer

A)  has a positive slope. 
B)  has a negative slope. 
C)  is horizontal. 
D)  is vertical. 
E)  is U-shaped. 
A)  has a positive slope. 
B)  has a negative slope. 
C)  is horizontal. 
D)  is vertical. 
E)  is U-shaped.

Question 6

The figure above shows the market for pizza.
-In the figure above,if pizza production is restricted to 5,000 pizzas a day,the deadweight loss is

Accepted Answer

A)  $45,000 per day. 
B)  $12,500 per day. 
C)  $22,500 per day. 
D)  $90,000 per day. 
E)  zero. 
A)  $45,000 per day. 
B)  $12,500 per day. 
C)  $22,500 per day. 
D)  $90,000 per day. 
E)  zero.

Question 7

Jose works at Intel.His manager tells him what work needs to be completed each month.Jose's resource,labor,is allocated with which of the following methods?

Accepted Answer

A)  command 
B)  majority rule 
C)  force 
D)  personal characteristics 
E)  lottery 
A)  command 
B)  majority rule 
C)  force 
D)  personal characteristics 
E)  lottery

Question 8

Jason wants to hire Maria to tutor him in economics.Jason is willing to pay $30 for the first hour of tutoring,$25 for the second,$20 for the third,$15 for the fourth,and $10 for the fifth.Maria has an opportunity cost per hour of $6 for the first,$9 for the second,$12 for the third,$15 for the fourth,and $18 for the fifth.The initial equilibrium price for tutoring is $15 an hour and hence Maria tutors Jason for 4 hours.Now,Maria realizes that she is the only economics tutor because all the other tutors have graduated.Because she is the only tutor,she has a monopoly and,as a monopolist,Maria decides to charge a price of $25 instead of $15 an hour.
a.At the price of $25 an hour,how many hours will Maria tutor Jason?
b.At the initial equilibrium price of $15 an hour,what was Jason's total consumer surplus and Maria's total producer surplus?
c.At the price of $25 an hour,how many hours will Jason hire Maria to tutor him? What is Jason's total consumer surplus and Maria's total producer surplus?
d.How does the sum of Jason's consumer surplus plus Maria's producer surplus compare at the initial equilibrium price of $15 an hour (part b)and at the new price of $25 an hour (part c)? Comment on any difference.

Accepted Answer

a.Maria will tutor Jason for 2 hours.
b.

Question 9

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The marginal cost of the 20,000th 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 10

When society produces the combination of goods and services on the PPF that it values the most highly,society has

Accepted Answer

A)  achieved only production efficiency and definitely not allocative efficiency. 
B)  achieved only allocative efficiency definitely not production efficiency. 
C)  achieved both production efficiency and allocative efficiency. 
D)  achieved a free lunch. 
E)  perhaps achieved production efficiency and has perhaps achieved allocative efficiency. 
A)  achieved only production efficiency and definitely not allocative efficiency. 
B)  achieved only allocative efficiency definitely not production efficiency. 
C)  achieved both production efficiency and allocative efficiency. 
D)  achieved a free lunch. 
E)  perhaps achieved production efficiency and has perhaps achieved allocative efficiency.

Question 11

-In the above figure,if the quantity is equal to 1,500,000 units,the deadweight is equal to

Accepted Answer

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

Question 12

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 13

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The producer surplus from the 20,000th 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 14

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 15

At a competitive market equilibrium,if there are no taxes,subsidies,price regulations,quantity regulations,or externalities
i.consumer surplus is minimized.
ii.marginal cost equals marginal benefit.
iii.resources are efficiently used.
iv.producer surplus is minimized.

Accepted Answer

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

Question 16

-In the above figure,if the quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied,then area C + area E is equal to

Accepted Answer

A)  deadweight loss. 
B)  consumer surplus. 
C)  total surplus. 
D)  producer surplus. 
E)  total revenue. 
A)  deadweight loss. 
B)  consumer surplus. 
C)  total surplus. 
D)  producer surplus. 
E)  total revenue.

Question 17

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The marginal cost of the 10,000th soda is

Accepted Answer

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

Question 18

The efficiency of competitive markets happens because

Accepted Answer

A)  of the benevolence of the butcher, the brewer, and the baker. 
B)  people make environmentally aware purchasing decisions. 
C)  prices adjust to make buying plans and selling plans compatible. 
D)  government organizes and monitors production. 
E)  the U.S. economy uses a command system to allocate resources within the competitive markets. 
A)  of the benevolence of the butcher, the brewer, and the baker. 
B)  people make environmentally aware purchasing decisions. 
C)  prices adjust to make buying plans and selling plans compatible. 
D)  government organizes and monitors production. 
E)  the U.S. economy uses a command system to allocate resources within the competitive markets.

Question 19

The marginal benefit of each additional unit of a good consumed

Accepted Answer

A)  increases as more is consumed. 
B)  is always equal to its marginal cost. 
C)  decreases as more is consumed. 
D)  will maximize consumer surplus. 
E)  is equal to the deadweight loss if the unit of the good is not produced. 
A)  increases as more is consumed. 
B)  is always equal to its marginal cost. 
C)  decreases as more is consumed. 
D)  will maximize consumer surplus. 
E)  is equal to the deadweight loss if the unit of the good is not produced.

Question 20

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

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

How can a person argue that health care services in America are provided efficiently,but not fairly?

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

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

In general,the marginal cost curve

The figure above shows the market for pizza. -In the figure above,if pizza production is restricted to 5,000 pizzas a day,the deadweight loss is

Jose works at Intel.His manager tells him what work needs to be completed each month.Jose's resource,labor,is allocated with which of the following methods?

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The marginal cost of the 20,000th soda is

When society produces the combination of goods and services on the PPF that it values the most highly,society has

-In the above figure,if the quantity is equal to 1,500,000 units,the deadweight is equal to

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

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The producer surplus from the 20,000th soda is

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

At a competitive market equilibrium,if there are no taxes,subsidies,price regulations,quantity regulations,or externalities i.consumer surplus is minimized. ii.marginal cost equals marginal benefit. iii.resources are efficiently used. iv.producer surplus is minimized.

-In the above figure,if the quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied,then area C + area E is equal to

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The marginal cost of the 10,000th soda is

The efficiency of competitive markets happens because

The marginal benefit of each additional unit of a good consumed

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.

Getting Started

The Usand 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

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

How can a person argue that health care services in America are provided efficiently,but not fairly?

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

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

In general,the marginal cost curve

The figure above shows the market for pizza. -In the figure above,if pizza production is restricted to 5,000 pizzas a day,the deadweight loss is

Jose works at Intel.His manager tells him what work needs to be completed each month.Jose's resource,labor,is allocated with which of the following methods?

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The marginal cost of the 20,000th soda is

When society produces the combination of goods and services on the PPF that it values the most highly,society has

-In the above figure,if the quantity is equal to 1,500,000 units,the deadweight is equal to

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

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The producer surplus from the 20,000th soda is

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

At a competitive market equilibrium,if there are no taxes,subsidies,price regulations,quantity regulations,or externalities i.consumer surplus is minimized. ii.marginal cost equals marginal benefit. iii.resources are efficiently used. iv.producer surplus is minimized.

-In the above figure,if the quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied,then area C + area E is equal to

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The marginal cost of the 10,000th soda is

The efficiency of competitive markets happens because

The marginal benefit of each additional unit of a good consumed

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.

Getting Started

The Usand 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,if pizza production increases to 15,000 pizzas a day,then marginal benefit marginal cost,and occurs.