Question 1

The marginal cost curve is

Accepted Answer

A)  downward sloping to reflect the bowed out PPF. 
B)  downward sloping as marginal benefits increase. 
C)  upward sloping because marginal cost falls as more of a good or service is produced. 
D)  upward sloping to reflect the increasing opportunity cost of producing one more unit. 
E)  U-shaped to reflect the bowed out PPF. 
A)  downward sloping to reflect the bowed out PPF. 
B)  downward sloping as marginal benefits increase. 
C)  upward sloping because marginal cost falls as more of a good or service is produced. 
D)  upward sloping to reflect the increasing opportunity cost of producing one more unit. 
E)  U-shaped to reflect the bowed out PPF.

Question 2

If marginal benefit is equal to marginal cost,then the

Accepted Answer

A)  producer surplus is equal to the consumer surplus. 
B)  sum of producer surplus and consumer surplus is as large as possible. 
C)  sum of producer surplus and consumer surplus equals zero. 
D)  market has squeezed out total surplus so that it equals zero. 
E)  deadweight loss is more than zero but less than its maximum. 
A)  producer surplus is equal to the consumer surplus. 
B)  sum of producer surplus and consumer surplus is as large as possible. 
C)  sum of producer surplus and consumer surplus equals zero. 
D)  market has squeezed out total surplus so that it equals zero. 
E)  deadweight loss is more than zero but less than its maximum.

Question 3

-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 are 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 are correct because it is impossible to tell whether the external cost results in underproduction or overproduction.

Question 4

Production efficiency requires that

Accepted Answer

A)  the economy be producing on the PPF but the marginal cost of a good does not need to equal its marginal benefit. 
B)  the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit. 
C)  the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF. 
D)  the society be producing at the point of allocative efficiency. 
E)  opportunity costs be minimized. 
A)  the economy be producing on the PPF but the marginal cost of a good does not need to equal its marginal benefit. 
B)  the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit. 
C)  the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF. 
D)  the society be producing at the point of allocative efficiency. 
E)  opportunity costs be minimized.

Question 5

A benefit that accrues to people other than the buyer of a good is known as ________ benefit.

Accepted Answer

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

Question 6

In order to efficiently allocate goods and services,we have to compare

Accepted Answer

A)  total cost to total benefit. 
B)  total cost to price. 
C)  marginal benefit to price. 
D)  marginal cost to marginal benefit. 
E)  price to marginal cost. 
A)  total cost to total benefit. 
B)  total cost to price. 
C)  marginal benefit to price. 
D)  marginal cost to marginal benefit. 
E)  price to marginal cost.

Question 7

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.

Question 8

-Using the values for the marginal benefit and the marginal cost of a bushel of apples given in the table above,what is the allocatively efficient quantity of apples? Suppose 10 million bushels of apples are produced.Should the quantity be increased or decreased? What if 20 million bushels are produced; should the quantity be increased or decreased?

Accepted Answer

The allocatively efficient quantity of a

Question 9

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

Accepted Answer

A)  area C. 
B)  area D + area I. 
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 C. 
B)  area D + area I. 
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 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

The fair rules approach to fairness requires

Accepted Answer

A)  consumer surplus equals producer surplus. 
B)  income transfers from rich to poor. 
C)  property rights and voluntary exchange. 
D)  that marginal cost equal marginal benefit. 
E)  consumer surplus exceed producer surplus because there are more consumers than producers. 
A)  consumer surplus equals producer surplus. 
B)  income transfers from rich to poor. 
C)  property rights and voluntary exchange. 
D)  that marginal cost equal marginal benefit. 
E)  consumer surplus exceed producer surplus because there are more consumers than producers.

Question 12

-In the figure above,suppose the market is at equilibrium.Then area B is the

Accepted Answer

A)  marginal benefit. 
B)  marginal cost. 
C)  amount of the consumer surplus. 
D)  amount of the producer surplus. 
E)  deadweight loss. 
A)  marginal benefit. 
B)  marginal cost. 
C)  amount of the consumer surplus. 
D)  amount of the producer surplus. 
E)  deadweight loss.

Question 13

Which of the following statements is correct?

Accepted Answer

A)  Consumer surplus equals the price paid for a good. 
B)  The consumer surplus from a good is always larger than the total benefit from the good. 
C)  An increase in price decreases consumer surplus. 
D)  An increase in price has no effect on consumer surplus. 
E)  The consumer surplus from a good or service must always equal producer surplus. 
A)  Consumer surplus equals the price paid for a good. 
B)  The consumer surplus from a good is always larger than the total benefit from the good. 
C)  An increase in price decreases consumer surplus. 
D)  An increase in price has no effect on consumer surplus. 
E)  The consumer surplus from a good or service must always equal producer surplus.

Question 14

Lattes at Starbucks are allocated to individuals in society through what type of method?

Accepted Answer

A)  lottery 
B)  contest 
C)  sharing equally 
D)  market price 
E)  personal characteristics 
A)  lottery 
B)  contest 
C)  sharing equally 
D)  market price 
E)  personal characteristics

Question 15

The supply curve of a good or service is the same as

Accepted Answer

A)  the demand curve. 
B)  the marginal benefit curve. 
C)  the marginal cost curve. 
D)  the total surplus curve. 
E)  None of the above answers is correct. 
A)  the demand curve. 
B)  the marginal benefit curve. 
C)  the marginal cost curve. 
D)  the total surplus curve. 
E)  None of the above answers is correct.

Question 16

To an economist,"value" is the same as

Accepted Answer

A)  marginal cost. 
B)  consumer surplus. 
C)  the minimum price that people are willing to pay for another unit of the good. 
D)  marginal benefit. 
E)  total surplus. 
A)  marginal cost. 
B)  consumer surplus. 
C)  the minimum price that people are willing to pay for another unit of the good. 
D)  marginal benefit. 
E)  total surplus.

Question 17

-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 18

Marginal benefit

Accepted Answer

A)  increases as more of a good is consumed. 
B)  decreases as more of a good is consumed. 
C)  is the total benefit from all units consumed. 
D)  is constant as more of a good is consumed. 
E)  is the gain to the producer of producing and selling one more unit of a good. 
A)  increases as more of a good is consumed. 
B)  decreases as more of a good is consumed. 
C)  is the total benefit from all units consumed. 
D)  is constant as more of a good is consumed. 
E)  is the gain to the producer of producing and selling one more unit of a good.

Question 19

If a landlord will rent an apartment only to married couples over 30 years old,the landlord is allocating resources 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 20

When allocative efficiency occurs,

Accepted Answer

A)  an economy produces the goods and services most highly valued. 
B)  marginal benefit exceeds marginal cost by some amount. 
C)  technology must be increasing. 
D)  we can simultaneously produce more of all goods. 
E)  marginal benefit exceeds marginal cost by as much as possible. 
A)  an economy produces the goods and services most highly valued. 
B)  marginal benefit exceeds marginal cost by some amount. 
C)  technology must be increasing. 
D)  we can simultaneously produce more of all goods. 
E)  marginal benefit exceeds marginal cost by as much as possible.

The marginal cost curve is

If marginal benefit is equal to marginal cost,then the

-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

Production efficiency requires that

A benefit that accrues to people other than the buyer of a good is known as ________ benefit.

In order to efficiently allocate goods and services,we have to compare

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

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

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?

The fair rules approach to fairness requires

-In the figure above,suppose the market is at equilibrium.Then area B is the

Which of the following statements is correct?

Lattes at Starbucks are allocated to individuals in society through what type of method?

The supply curve of a good or service is the same as

To an economist,"value" is the same as

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

Marginal benefit

If a landlord will rent an apartment only to married couples over 30 years old,the landlord is allocating resources using a ________ allocation method.

When allocative efficiency 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

The marginal cost curve is

If marginal benefit is equal to marginal cost,then the

-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

Production efficiency requires that

A benefit that accrues to people other than the buyer of a good is known as ________ benefit.

In order to efficiently allocate goods and services,we have to compare

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

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

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?

The fair rules approach to fairness requires

-In the figure above,suppose the market is at equilibrium.Then area B is the

Which of the following statements is correct?

Lattes at Starbucks are allocated to individuals in society through what type of method?

The supply curve of a good or service is the same as

To an economist,"value" is the same as

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

Marginal benefit

If a landlord will rent an apartment only to married couples over 30 years old,the landlord is allocating resources using a ________ allocation method.

When allocative efficiency 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