Question 1

Honda will sell its vehicles to anyone who wants to and can buy one.Honda is using a ________ allocation method.

Accepted Answer

A)  first-come, first-served 
B)  market price 
C)  contest 
D)  majority rule 
E)  command 
A)  first-come, first-served 
B)  market price 
C)  contest 
D)  majority rule 
E)  command

Question 2

A monopoly is

Accepted Answer

A)  the single buyer of some good or service. 
B)  a firm that has control of a market because it is the only seller. 
C)  a firm that creates enormous external costs. 
D)  a firm that faces intense competition. 
E)  a cost of producing a good or service. 
A)  the single buyer of some good or service. 
B)  a firm that has control of a market because it is the only seller. 
C)  a firm that creates enormous external costs. 
D)  a firm that faces intense competition. 
E)  a cost of producing a good or service.

Question 3

Walmart has a limited number of "Black Friday" (the day-after Thanksgiving Day)special items on sale at prices well below their typical price.Walmart opens at 10 PM on Thanksgiving.Walmart is using a ________ allocation method for these items.

Accepted Answer

A)  first-come, first-served 
B)  market price 
C)  contest 
D)  majority rule 
E)  command 
A)  first-come, first-served 
B)  market price 
C)  contest 
D)  majority rule 
E)  command

Question 4

What approach to fairness argues in favor of government policies that redistribute income so that there is more equality of income?

Accepted Answer

The general approach to fairness that ar

Question 5

Marginal cost is the opportunity cost of producing

Accepted Answer

A)  every unit possible. 
B)  zero units. 
C)  the first unit and only the first unit. 
D)  one more unit of a good or service. 
E)  None of the above answers is correct. 
A)  every unit possible. 
B)  zero units. 
C)  the first unit and only the first unit. 
D)  one more unit of a good or service. 
E)  None of the above answers is correct.

Question 6

Briefly describe the concept of the "invisible hand."

Accepted Answer

The invisible hand suggests that a compe

Question 7

In a competitive market with no externalities,

Accepted Answer

A)  the consumer surplus is equal to zero because of competition. 
B)  buyers cannot control the price, so the consumer surplus is zero. 
C)  at the equilibrium price, marginal benefit exceeds marginal cost. 
D)  at the equilibrium price, marginal benefit equals marginal cost. 
E)  at the equilibrium price, the total amount of consumer surplus equals the total amount of producer surplus. 
A)  the consumer surplus is equal to zero because of competition. 
B)  buyers cannot control the price, so the consumer surplus is zero. 
C)  at the equilibrium price, marginal benefit exceeds marginal cost. 
D)  at the equilibrium price, marginal benefit equals marginal cost. 
E)  at the equilibrium price, the total amount of consumer surplus equals the total amount of producer surplus.

Question 8

If one producer has control over an entire market and underproduces,the producer will

Accepted Answer

A)  increase producer surplus by lowering pollution costs. 
B)  increase consumer surplus by lowering producer surplus. 
C)  increase both consumer and producer surplus. 
D)  create a deadweight loss. 
E)  decrease the deadweight loss that would exist if the market were efficient. 
A)  increase producer surplus by lowering pollution costs. 
B)  increase consumer surplus by lowering producer surplus. 
C)  increase both consumer and producer surplus. 
D)  create a deadweight loss. 
E)  decrease the deadweight loss that would exist if the market were efficient.

Question 9

When a product benefits people other than the buyer of the product,the product is said to have

Accepted Answer

A)  an external cost. 
B)  an excludable cost. 
C)  an external benefit. 
D)  an excludable benefit. 
E)  a subsidized benefit. 
A)  an external cost. 
B)  an excludable cost. 
C)  an external benefit. 
D)  an excludable benefit. 
E)  a subsidized benefit.

Question 10

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 11

If a seller charges a buyer the exact price the buyer is willing to pay,then the buyer would

Accepted Answer

A)  not buy the good. 
B)  receive the maximum consumer surplus. 
C)  receive no benefit from the good. 
D)  receive no consumer surplus from that unit of the good. 
E)  suffer a deadweight loss from buying the good. 
A)  not buy the good. 
B)  receive the maximum consumer surplus. 
C)  receive no benefit from the good. 
D)  receive no consumer surplus from that unit of the good. 
E)  suffer a deadweight loss from buying the good.

Question 12

Draw and describe a marginal cost curve for slices of pizza where the opportunity cost of producing a slice of pizza is a taco.

Accepted Answer

@#IMG-DLM& A marginal cost curve is drawn as an up

Question 13

"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false? Explain your answer.

Accepted Answer

The statement is false.Allocative effici

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

When economists use the term "big tradeoff" when discussing efficiency they are referring to the tradeoff between

Accepted Answer

A)  external costs and external benefits. 
B)  marginal cost and marginal benefits. 
C)  producer surplus and consumer surplus. 
D)  efficiency and fairness. 
E)  deadweight loss and producer/consumer surplus. 
A)  external costs and external benefits. 
B)  marginal cost and marginal benefits. 
C)  producer surplus and consumer surplus. 
D)  efficiency and fairness. 
E)  deadweight loss and producer/consumer surplus.

Question 16

Air pollution is an external cost because it

Accepted Answer

A)  is a pollution of the external environment. 
B)  is a cost not borne by the producer of the good. 
C)  benefits no one. 
D)  is not associated with resource use. 
E)  is created only when production occurs. 
A)  is a pollution of the external environment. 
B)  is a cost not borne by the producer of the good. 
C)  benefits no one. 
D)  is not associated with resource use. 
E)  is created only when production occurs.

Question 17

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 18

Allocating resources by the order of someone in authority is a ________ allocation method.

Accepted Answer

A)  first-come, first-served 
B)  market price 
C)  contest 
D)  majority rule 
E)  command 
A)  first-come, first-served 
B)  market price 
C)  contest 
D)  majority rule 
E)  command

Question 19

Samantha was willing to pay $10 for a hamburger because she was hungry but she only paid $2.50.What is the marginal benefit Samantha gained from the hamburger?

Accepted Answer

A)  $2.50 
B)  $7.50 
C)  $10.00 
D)  $12.50 
E)  None of the above answers is correct. 
A)  $2.50 
B)  $7.50 
C)  $10.00 
D)  $12.50 
E)  None of the above answers is correct.

Question 20

The phrase "decreasing marginal benefit" means that

Accepted Answer

A)  the more you consume of the product, the less total benefit you derive. 
B)  the marginal cost will be increasing as you consume more of a good. 
C)  each additional unit of a good you consume gives you less additional benefit than the previous unit. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  the more you consume of the product, the less total benefit you derive. 
B)  the marginal cost will be increasing as you consume more of a good. 
C)  each additional unit of a good you consume gives you less additional benefit than the previous unit. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Honda will sell its vehicles to anyone who wants to and can buy one.Honda is using a ________ allocation method.

A monopoly is

Walmart has a limited number of "Black Friday" (the day-after Thanksgiving Day)special items on sale at prices well below their typical price.Walmart opens at 10 PM on Thanksgiving.Walmart is using a ________ allocation method for these items.

What approach to fairness argues in favor of government policies that redistribute income so that there is more equality of income?

Marginal cost is the opportunity cost of producing

Briefly describe the concept of the "invisible hand."

In a competitive market with no externalities,

If one producer has control over an entire market and underproduces,the producer will

When a product benefits people other than the buyer of the product,the product is said to have

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.

If a seller charges a buyer the exact price the buyer is willing to pay,then the buyer would

Draw and describe a marginal cost curve for slices of pizza where the opportunity cost of producing a slice of pizza is a taco.

"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false? Explain your answer.

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

When economists use the term "big tradeoff" when discussing efficiency they are referring to the tradeoff between

Air pollution is an external cost because it

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

Allocating resources by the order of someone in authority is a ________ allocation method.

Samantha was willing to pay $10 for a hamburger because she was hungry but she only paid $2.50.What is the marginal benefit Samantha gained from the hamburger?

The phrase "decreasing marginal benefit" means that

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

Honda will sell its vehicles to anyone who wants to and can buy one.Honda is using a ________ allocation method.

A monopoly is

Walmart has a limited number of "Black Friday" (the day-after Thanksgiving Day)special items on sale at prices well below their typical price.Walmart opens at 10 PM on Thanksgiving.Walmart is using a ________ allocation method for these items.

What approach to fairness argues in favor of government policies that redistribute income so that there is more equality of income?

Marginal cost is the opportunity cost of producing

Briefly describe the concept of the "invisible hand."

In a competitive market with no externalities,

If one producer has control over an entire market and underproduces,the producer will

When a product benefits people other than the buyer of the product,the product is said to have

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.

If a seller charges a buyer the exact price the buyer is willing to pay,then the buyer would

Draw and describe a marginal cost curve for slices of pizza where the opportunity cost of producing a slice of pizza is a taco.

"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false? Explain your answer.

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

When economists use the term "big tradeoff" when discussing efficiency they are referring to the tradeoff between

Air pollution is an external cost because it

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

Allocating resources by the order of someone in authority is a ________ allocation method.

Samantha was willing to pay $10 for a hamburger because she was hungry but she only paid $2.50.What is the marginal benefit Samantha gained from the hamburger?

The phrase "decreasing marginal benefit" means that

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