Question 1

If a perfectly competitive market is in equilibrium and then market demand increases,which of the following would happen?

Accepted Answer

A) producer surplus would definitely increase and consumer surplus may increase or decrease 
B) producer surplus would definitely decrease and consumer surplus may increase or decrease 
C) consumer surplus would definitely decrease and producer surplus may increase or decrease 
D) consumer surplus would definitely increase and producer surplus may increase or decrease 
E) producer and consumer surplus would remain unchanged 
A) producer surplus would definitely increase and consumer surplus may increase or decrease 
B) producer surplus would definitely decrease and consumer surplus may increase or decrease 
C) consumer surplus would definitely decrease and producer surplus may increase or decrease 
D) consumer surplus would definitely increase and producer surplus may increase or decrease 
E) producer and consumer surplus would remain unchanged

Question 2

Tom carries on loud cellphone conversations in public places.He values such conversations at $1 per minute.Steve prefers piece and quiet.He would pay $2 per minute to avoid overhearing Tom's conversations.In this situation

Accepted Answer

A) Tom should quit using his cellphone because that would be a Pareto improvement 
B) Tom should quit using his cellphone because that would be efficient 
C) If Steve made a side payment of $3 to Tom,that would be a Pareto improvement 
D) If Steve paid Tom 50 cents per minute to quit talking,that would be a Pareto improvement 
E) If Steve paid Tom $1.50 per minute to quit talking,that would be a Pareto improvement 
A) Tom should quit using his cellphone because that would be a Pareto improvement 
B) Tom should quit using his cellphone because that would be efficient 
C) If Steve made a side payment of $3 to Tom,that would be a Pareto improvement 
D) If Steve paid Tom 50 cents per minute to quit talking,that would be a Pareto improvement 
E) If Steve paid Tom $1.50 per minute to quit talking,that would be a Pareto improvement

Question 3

Economic efficiency requires that no more Pareto improvements are still possible.

Accepted Answer

A) True 
 B)False

Question 4

A mutually advantageous trade leads a Pareto improvement.

Accepted Answer

A) True 
 B)False

Question 5

Producer surplus for a particular unit of a good is the price the seller receives for that unit minus the largest amount the seller would accept for it.

Accepted Answer

A) True 
 B)False

Question 6

If the printed circuit board market is perfectly competitive,

Accepted Answer

A) too many printed circuit boards will be produced 
B) printed circuit boards will be allocated efficiently 
C) too few printed circuit boards will be produced 
D) economic efficiency will not be achieved 
E) printed circuit boards will be evenly distributed among consumers 
A) too many printed circuit boards will be produced 
B) printed circuit boards will be allocated efficiently 
C) too few printed circuit boards will be produced 
D) economic efficiency will not be achieved 
E) printed circuit boards will be evenly distributed among consumers

Question 7

For a given supply curve,the more inelastic the demand for a good,

Accepted Answer

A) the more of an excise tax that is paid by sellers. 
B) the less an excise tax is shifted. 
C) the smaller the burden of an excise tax. 
D) the more of an excise tax that is paid by buyers. 
E) the smaller the increase in market price following imposition of an excise tax 
A) the more of an excise tax that is paid by sellers. 
B) the less an excise tax is shifted. 
C) the smaller the burden of an excise tax. 
D) the more of an excise tax that is paid by buyers. 
E) the smaller the increase in market price following imposition of an excise tax

Question 8

-In figure 14-1,which area represents total net benefits gained in the market

Accepted Answer

A) A + B 
B) B + D 
C) A + C 
D) B + C 
E) A + E 
A) A + B 
B) B + D 
C) A + C 
D) B + C 
E) A + E

Question 9

Market consumer surplus at any price

Accepted Answer

A) is the area above the market supply curve and below the market demand curve 
B) is the area below the market supply curve and above the market demand curve 
C) is the area under the demand curve and above the market price 
D) is that price multiplied by the number of units demanded 
E) is the number of units demanded multiplied by the cost of producing them. 
A) is the area above the market supply curve and below the market demand curve 
B) is the area below the market supply curve and above the market demand curve 
C) is the area under the demand curve and above the market price 
D) is that price multiplied by the number of units demanded 
E) is the number of units demanded multiplied by the cost of producing them.

Question 10

If the market supply curve slopes upward

Accepted Answer

A) each unit of the good costs more to produce than previously produced units did 
B) each unit of the good is worth more than the market price 
C) each unit of the good is worth the market price paid for it. 
D) the market is efficient 
E) the market must be imperfectly competitive 
A) each unit of the good costs more to produce than previously produced units did 
B) each unit of the good is worth more than the market price 
C) each unit of the good is worth the market price paid for it. 
D) the market is efficient 
E) the market must be imperfectly competitive

Question 11

At any quantity at which the demand curve lies above the supply curve,

Accepted Answer

A) economic efficiency is achieved 
B) the cost of producing the last unit exceeds its value to some consumer 
C) marginal cost exceeds the market price 
D) the market is Pareto efficient 
E) the value of the last unit to some consumer exceeds the cost of producing it 
A) economic efficiency is achieved 
B) the cost of producing the last unit exceeds its value to some consumer 
C) marginal cost exceeds the market price 
D) the market is Pareto efficient 
E) the value of the last unit to some consumer exceeds the cost of producing it

Question 12

Instead of throwing away a worn-out pair of jeans,a cowboy trades them in for $12.The jeans are resold for $45 to someone who likes to project a rugged image.These transactions are Pareto improvements.

Accepted Answer

A) True 
 B)False

Question 13

A price floor in a perfectly competitive market

Accepted Answer

A) creates more harm for sellers than gain for buyers 
B) is effective only it is set at the equilibrium price 
C) is a Pareto improvement 
D) can turn an inefficient outcome into an efficient outcome 
E) creates more harm for buyers than gain for sellers 
A) creates more harm for sellers than gain for buyers 
B) is effective only it is set at the equilibrium price 
C) is a Pareto improvement 
D) can turn an inefficient outcome into an efficient outcome 
E) creates more harm for buyers than gain for sellers

Question 14

A buyer's consumer surplus on a unit of a good is its value to that buyer minus what the buyer actually pays for it.

Accepted Answer

A) True 
 B)False

Question 15

If a firm changed its fringe benefit program so that no employee suffered a loss in benefits and some employees enjoyed an increase in benefits,then

Accepted Answer

A) this could not be a Pareto improvement 
B) the firm's policies are economically efficient 
C) this could be a Pareto improvement 
D) the firm's policies are fair 
E) the firm is losing money 
A) this could not be a Pareto improvement 
B) the firm's policies are economically efficient 
C) this could be a Pareto improvement 
D) the firm's policies are fair 
E) the firm is losing money

Question 16

A Pareto improvement is

Accepted Answer

A) an action in which the gains to the gainers outweigh the losses to the losers 
B) any action that does not harm a third party 
C) an action that makes at least one person better off,and no one worse off 
D) any action that involves a side payment to a third party 
E) the typical outcome of government action 
A) an action in which the gains to the gainers outweigh the losses to the losers 
B) any action that does not harm a third party 
C) an action that makes at least one person better off,and no one worse off 
D) any action that involves a side payment to a third party 
E) the typical outcome of government action

Question 17

Competitive pricing

Accepted Answer

A) ensures that goods will be allocated evenly 
B) ensures that goods will be allocated efficiently 
C) guarantees a fair distribution of goods 
D) only occurs in an oligopolistic market 
E) occurs at any quantity at which the demand curve is higher than the supply 
A) ensures that goods will be allocated evenly 
B) ensures that goods will be allocated efficiently 
C) guarantees a fair distribution of goods 
D) only occurs in an oligopolistic market 
E) occurs at any quantity at which the demand curve is higher than the supply

Question 18

If the supply curve is perfectly inelastic and an excise tax is imposed

Accepted Answer

A) all of the tax is paid by buyers 
B) all of the tax is paid by sellers 
C) the market price will rise by the amount of the tax 
D) the market price will fall by the amount of the tax 
E) the tax is divided equally between buyers and sellers 
A) all of the tax is paid by buyers 
B) all of the tax is paid by sellers 
C) the market price will rise by the amount of the tax 
D) the market price will fall by the amount of the tax 
E) the tax is divided equally between buyers and sellers

Question 19

Economic efficiency requires all Pareto improvements to be made.

Accepted Answer

A) True 
 B)False

Question 20

Consider a market with a price ceiling.If the price ceiling is lowered which of the following would happen?

Accepted Answer

A) The consumer surplus would increase,the producer surplus would decrease and the dead weight loss would decrease 
B) The consumer surplus would increase,the producer surplus would decrease and the dead weight loss would increase 
C) The consumer surplus,the producer surplus and the dead weight loss would all decrease 
D) The consumer surplus,the producer surplus and the dead weight loss would all increase 
E) The consumer surplus would decrease,the producer surplus would increase and the dead weight loss would increase 
A) The consumer surplus would increase,the producer surplus would decrease and the dead weight loss would decrease 
B) The consumer surplus would increase,the producer surplus would decrease and the dead weight loss would increase 
C) The consumer surplus,the producer surplus and the dead weight loss would all decrease 
D) The consumer surplus,the producer surplus and the dead weight loss would all increase 
E) The consumer surplus would decrease,the producer surplus would increase and the dead weight loss would increase

If a perfectly competitive market is in equilibrium and then market demand increases,which of the following would happen?

Tom carries on loud cellphone conversations in public places.He values such conversations at $1 per minute.Steve prefers piece and quiet.He would pay $2 per minute to avoid overhearing Tom's conversations.In this situation

Economic efficiency requires that no more Pareto improvements are still possible.

A mutually advantageous trade leads a Pareto improvement.

Producer surplus for a particular unit of a good is the price the seller receives for that unit minus the largest amount the seller would accept for it.

If the printed circuit board market is perfectly competitive,

For a given supply curve,the more inelastic the demand for a good,

-In figure 14-1,which area represents total net benefits gained in the market

Market consumer surplus at any price

If the market supply curve slopes upward

At any quantity at which the demand curve lies above the supply curve,

Instead of throwing away a worn-out pair of jeans,a cowboy trades them in for $12.The jeans are resold for $45 to someone who likes to project a rugged image.These transactions are Pareto improvements.

A price floor in a perfectly competitive market

A buyer's consumer surplus on a unit of a good is its value to that buyer minus what the buyer actually pays for it.

If a firm changed its fringe benefit program so that no employee suffered a loss in benefits and some employees enjoyed an increase in benefits,then

A Pareto improvement is

Competitive pricing

If the supply curve is perfectly inelastic and an excise tax is imposed

Economic efficiency requires all Pareto improvements to be made.

Consider a market with a price ceiling.If the price ceiling is lowered which of the following would happen?

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

Exam 15: Economic Efficiency and the Competitive Ideal

If a perfectly competitive market is in equilibrium and then market demand increases,which of the following would happen?

Tom carries on loud cellphone conversations in public places.He values such conversations at $1 per minute.Steve prefers piece and quiet.He would pay $2 per minute to avoid overhearing Tom's conversations.In this situation

Economic efficiency requires that no more Pareto improvements are still possible.

A mutually advantageous trade leads a Pareto improvement.

Producer surplus for a particular unit of a good is the price the seller receives for that unit minus the largest amount the seller would accept for it.

If the printed circuit board market is perfectly competitive,

For a given supply curve,the more inelastic the demand for a good,

-In figure 14-1,which area represents total net benefits gained in the market

Market consumer surplus at any price

If the market supply curve slopes upward

At any quantity at which the demand curve lies above the supply curve,

Instead of throwing away a worn-out pair of jeans,a cowboy trades them in for $12.The jeans are resold for $45 to someone who likes to project a rugged image.These transactions are Pareto improvements.

A price floor in a perfectly competitive market

A buyer's consumer surplus on a unit of a good is its value to that buyer minus what the buyer actually pays for it.

If a firm changed its fringe benefit program so that no employee suffered a loss in benefits and some employees enjoyed an increase in benefits,then

A Pareto improvement is

Competitive pricing

If the supply curve is perfectly inelastic and an excise tax is imposed

Economic efficiency requires all Pareto improvements to be made.

Consider a market with a price ceiling.If the price ceiling is lowered which of the following would happen?

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters