Question 1

Obstacles in achieving efficiency in a market include

Accepted Answer

A)  public goods. 
B)  the presence of an external cost or benefit. 
C)  competition. 
D)  Both answers A and C are correct. 
E)  Both answers A and B are correct. 
A)  public goods. 
B)  the presence of an external cost or benefit. 
C)  competition. 
D)  Both answers A and C are correct. 
E)  Both answers A and B are correct.

Question 2

To achieve allocative efficiency,an economy

Accepted Answer

A)  must produce on its PPF. 
B)  does not necessarily need to be production efficient. 
C)  must have increases in technology. 
D)  might leave some resources unemployed. 
E)  can produce either on or within its PPF. 
A)  must produce on its PPF. 
B)  does not necessarily need to be production efficient. 
C)  must have increases in technology. 
D)  might leave some resources unemployed. 
E)  can produce either on or within its PPF.

Question 3

John has a marginal benefit of $7 for 1 slice of pizza,$5 for a second slice,$3 for a third slice,$1 for a fourth slice,and $0.50 for a fifth slice.The price of pizza is $1.50 per slice.Which of the following statements is correct?

Accepted Answer

A)  John will purchase 3 slices of pizza and have consumer surplus of $10.50. 
B)  John will purchase 4 slices of pizza and have consumer surplus of $12.00. 
C)  John will purchase 2 slices of pizza and have consumer surplus of $1.50. 
D)  John will purchase 3 slices of pizza and have consumer surplus of $4.50. 
E)  John will purchase 2 slices of pizza and have consumer surplus of $3.00. 
A)  John will purchase 3 slices of pizza and have consumer surplus of $10.50. 
B)  John will purchase 4 slices of pizza and have consumer surplus of $12.00. 
C)  John will purchase 2 slices of pizza and have consumer surplus of $1.50. 
D)  John will purchase 3 slices of pizza and have consumer surplus of $4.50. 
E)  John will purchase 2 slices of pizza and have consumer surplus of $3.00.

Question 4

Cost

Accepted Answer

A)  is what the buyer pays to get the good. 
B)  is always equal to the marginal benefit for every unit of a good produced. 
C)  is what the seller must give up to produce the good. 
D)  is greater than market price, which results in a profit for firms. 
E)  means the same thing as price. 
A)  is what the buyer pays to get the good. 
B)  is always equal to the marginal benefit for every unit of a good produced. 
C)  is what the seller must give up to produce the good. 
D)  is greater than market price, which results in a profit for firms. 
E)  means the same thing as price.

Question 5

Value is

Accepted Answer

A)  the price we pay for a good. 
B)  the cost of resources used to produce a good. 
C)  objective so that it is determined by market forces, not preferences. 
D)  the marginal benefit we get from consuming another unit of a good or service. 
E)  the difference between the price paid for a good and the marginal cost of producing that unit of the good. 
A)  the price we pay for a good. 
B)  the cost of resources used to produce a good. 
C)  objective so that it is determined by market forces, not preferences. 
D)  the marginal benefit we get from consuming another unit of a good or service. 
E)  the difference between the price paid for a good and the marginal cost of producing that unit of the good.

Question 6

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 7

Allocative efficiency refers to

Accepted Answer

A)  producing the goods and services most highly valued. 
B)  using the least amount of labor to produce output. 
C)  producing the maximum possible amount of output. 
D)  obtaining the least output with the most inputs. 
E)  producing at any point on the PPF. 
A)  producing the goods and services most highly valued. 
B)  using the least amount of labor to produce output. 
C)  producing the maximum possible amount of output. 
D)  obtaining the least output with the most inputs. 
E)  producing at any point on the PPF.

Question 8

-In the figure above,for the 3,000th unit,the maximum price a consumer is willing to pay is

Accepted Answer

A)  $5. 
B)  $10. 
C)  $15. 
D)  $0. 
E)  $25. 
A)  $5. 
B)  $10. 
C)  $15. 
D)  $0. 
E)  $25.

Question 9

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

Accepted Answer

A)  $15.00. 
B)  $22.50. 
C)  $11.25. 
D)  $8.00. 
E)  $1.50. 
A)  $15.00. 
B)  $22.50. 
C)  $11.25. 
D)  $8.00. 
E)  $1.50.

Question 10

The principle of decreasing marginal benefit explains why the marginal benefit curve

Accepted Answer

A)  is upward sloping. 
B)  has an infinite slope. 
C)  is vertical. 
D)  is downward sloping. 
E)  is horizontal. 
A)  is upward sloping. 
B)  has an infinite slope. 
C)  is vertical. 
D)  is downward sloping. 
E)  is horizontal.

Question 11

-The figure above shows the demand curve for pizza.
a.What is the marginal benefit of the 20th pizza?
b.What is the maximum price the consumer is willing to pay for the 20th pizza?
c.If the price of a pizza is $6,what is the consumer surplus of the 20th pizza?
d.If the price of a pizza is $10,what is the consumer surplus on all the pizzas consumed?
e.If the price of a pizza is $6,what is the consumer surplus on all the pizzas consumed?

Accepted Answer

a.The marginal benefit of the 20th pizza

Question 12

-In the figure above,suppose that $20 is the market equilibrium price.Which area is the consumer surplus?

Accepted Answer

A)  A 
B)  B 
C)  A + B 
D)  B - A 
E)  B ÷ A 
A)  A 
B)  B 
C)  A + B 
D)  B - A 
E)  B ÷ A

Question 13

Which of the following is an example of consumer surplus?

Accepted Answer

A)  Jose buys a hamburger for $2 and tells you he would not have paid a penny more. 
B)  John believes the price he paid for his computer was too high. 
C)  Mary buys a paper tablet for $2 and finds the same good at another store for $1.50. 
D)  Sue would have paid $15 for a new compact disc but paid only $10. 
E)  Anne finds a mountain bike for which she is willing to pay a maximum of $550 and the price of the bike is $600. 
A)  Jose buys a hamburger for $2 and tells you he would not have paid a penny more. 
B)  John believes the price he paid for his computer was too high. 
C)  Mary buys a paper tablet for $2 and finds the same good at another store for $1.50. 
D)  Sue would have paid $15 for a new compact disc but paid only $10. 
E)  Anne finds a mountain bike for which she is willing to pay a maximum of $550 and the price of the bike is $600.

Question 14

Although Jack and Vanessa were equally qualified,Jack was promoted to manager instead of Vanessa because the president of the company thought that the other employees would not respect a female manager.The resource,the management position,was allocated in what manner?

Accepted Answer

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

Question 15

When the marginal benefit and marginal cost of sodas are equal,then

Accepted Answer

A)  the production of sodas might be allocatively efficient but it is definitely production inefficient. 
B)  the allocatively inefficient amount of sodas is being produced. 
C)  more sodas should be produced to reach the allocatively efficient quantity. 
D)  fewer sodas should be produced to reach the allocatively efficient quantity. 
E)  the allocatively efficient amount of sodas is being produced. 
A)  the production of sodas might be allocatively efficient but it is definitely production inefficient. 
B)  the allocatively inefficient amount of sodas is being produced. 
C)  more sodas should be produced to reach the allocatively efficient quantity. 
D)  fewer sodas should be produced to reach the allocatively efficient quantity. 
E)  the allocatively efficient amount of sodas is being produced.

Question 16

The "equality of opportunity" idea of fairness claims

Accepted Answer

A)  a society should make the poorest as well off as possible. 
B)  the results and the rules should both be fair. 
C)  it's not fair if the rules aren't fair. 
D)  private property can be transferred under government order. 
E)  only a first-come, first-served system of allocating resources is fair. 
A)  a society should make the poorest as well off as possible. 
B)  the results and the rules should both be fair. 
C)  it's not fair if the rules aren't fair. 
D)  private property can be transferred under government order. 
E)  only a first-come, first-served system of allocating resources is fair.

Question 17

If a firm is willing to supply the 1,000th unit of a good at a price of $23 or more,we know that $23 is the

Accepted Answer

A)  highest price the seller hopes to realize for this output. 
B)  minimum price the seller must receive to produce this unit. 
C)  average price of all the prices the seller could charge. 
D)  price that sets the marginal benefit equal to the price. 
E)  only price for which the seller is willing to sell this unit of the good. 
A)  highest price the seller hopes to realize for this output. 
B)  minimum price the seller must receive to produce this unit. 
C)  average price of all the prices the seller could charge. 
D)  price that sets the marginal benefit equal to the price. 
E)  only price for which the seller is willing to sell this unit of the good.

Question 18

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 19

A quantity less than the equilibrium quantity in a competitive market is inefficient because

Accepted Answer

A)  the marginal benefit of another unit is greater than its marginal cost. 
B)  too much of the good is being produced. 
C)  the marginal cost of another unit is greater than its marginal benefit. 
D)  the marginal benefit of another unit is not equal to zero. 
E)  the marginal benefit is not maximized. 
A)  the marginal benefit of another unit is greater than its marginal cost. 
B)  too much of the good is being produced. 
C)  the marginal cost of another unit is greater than its marginal benefit. 
D)  the marginal benefit of another unit is not equal to zero. 
E)  the marginal benefit is not maximized.

Question 20

Deadweight loss and market failure is 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.

Obstacles in achieving efficiency in a market include

To achieve allocative efficiency,an economy

John has a marginal benefit of $7 for 1 slice of pizza,$5 for a second slice,$3 for a third slice,$1 for a fourth slice,and $0.50 for a fifth slice.The price of pizza is $1.50 per slice.Which of the following statements is correct?

Cost

Value is

When a society achieves production efficiency,it is

Allocative efficiency refers to

-In the figure above,for the 3,000th unit,the maximum price a consumer is willing to pay is

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

The principle of decreasing marginal benefit explains why the marginal benefit curve

-In the figure above,suppose that $20 is the market equilibrium price.Which area is the consumer surplus?

Which of the following is an example of consumer surplus?

Although Jack and Vanessa were equally qualified,Jack was promoted to manager instead of Vanessa because the president of the company thought that the other employees would not respect a female manager.The resource,the management position,was allocated in what manner?

When the marginal benefit and marginal cost of sodas are equal,then

The "equality of opportunity" idea of fairness claims

If a firm is willing to supply the 1,000th unit of a good at a price of $23 or more,we know that $23 is the

Which of the following government policies ensures market efficiency?

A quantity less than the equilibrium quantity in a competitive market is inefficient because

Deadweight loss and market failure is created when a market produces

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

Obstacles in achieving efficiency in a market include

To achieve allocative efficiency,an economy

John has a marginal benefit of $7 for 1 slice of pizza,$5 for a second slice,$3 for a third slice,$1 for a fourth slice,and $0.50 for a fifth slice.The price of pizza is $1.50 per slice.Which of the following statements is correct?

Cost

Value is

When a society achieves production efficiency,it is

Allocative efficiency refers to

-In the figure above,for the 3,000th unit,the maximum price a consumer is willing to pay is

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

The principle of decreasing marginal benefit explains why the marginal benefit curve

-In the figure above,suppose that $20 is the market equilibrium price.Which area is the consumer surplus?

Which of the following is an example of consumer surplus?

Although Jack and Vanessa were equally qualified,Jack was promoted to manager instead of Vanessa because the president of the company thought that the other employees would not respect a female manager.The resource,the management position,was allocated in what manner?

When the marginal benefit and marginal cost of sodas are equal,then

The "equality of opportunity" idea of fairness claims

If a firm is willing to supply the 1,000th unit of a good at a price of $23 or more,we know that $23 is the

Which of the following government policies ensures market efficiency?

A quantity less than the equilibrium quantity in a competitive market is inefficient because

Deadweight loss and market failure is created when a market produces

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