Question 1

The welfare loss due to a price floor

Accepted Answer

A) is caused by a decrease in quantity 
B) is the dollar difference between producer surplus and consumer surplus 
C) is measured as the area above the market price and below the demand curve 
D) is measured as the area above both the market price and the supply curve 
E) is a Pareto improvement 
A) is caused by a decrease in quantity 
B) is the dollar difference between producer surplus and consumer surplus 
C) is measured as the area above the market price and below the demand curve 
D) is measured as the area above both the market price and the supply curve 
E) is a Pareto improvement

Question 2

Rebecca and Leah are roommates.Rebecca likes to study with the music playing loudly and Leah needs quiet when she studies.Rebecca would be willing to pay $5 a night to hear music while Leah would be willing to pay $10 a night for the quiet.In this situation

Accepted Answer

A) Leah should pay Rebecca $7.50 a night to not listen to music,because that would be a Pareto improvement 
B) Rebecca should stop listening to music because that would be a Pareto improvement 
C) There is no action that would create a Pareto improvement 
D) Rebecca should pay Leah $7.50 a night to listen to music,because that would be a Pareto improvement 
E) Leah should pay Rebecca $4.50 a night to not listen to music,because that would be a Pareto improvement 
A) Leah should pay Rebecca $7.50 a night to not listen to music,because that would be a Pareto improvement 
B) Rebecca should stop listening to music because that would be a Pareto improvement 
C) There is no action that would create a Pareto improvement 
D) Rebecca should pay Leah $7.50 a night to listen to music,because that would be a Pareto improvement 
E) Leah should pay Rebecca $4.50 a night to not listen to music,because that would be a Pareto improvement

Question 3

If the market supply curve is perfectly elastic 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 tax burden is divided equally between buyers and sellers 
D) the market price will not change 
E) the market price will fall by the amount of the tax 
A) all of the tax is paid by buyers 
B) all of the tax is paid by sellers 
C) the tax burden is divided equally between buyers and sellers 
D) the market price will not change 
E) the market price will fall by the amount of the tax

Question 4

The supply curve indicates

Accepted Answer

A) the price that will be charged for each unit of a good or service 
B) how much people are willing to pay for a good or service 
C) the minimum price some seller must receive in order to supply each unit of a good or service 
D) the value of each unit of a good or service 
E) the maximum price some seller can expect to receive from supplying each unit of a good or service 
A) the price that will be charged for each unit of a good or service 
B) how much people are willing to pay for a good or service 
C) the minimum price some seller must receive in order to supply each unit of a good or service 
D) the value of each unit of a good or service 
E) the maximum price some seller can expect to receive from supplying each unit of a good or service

Question 5

A price floor in a perfectly competitive market

Accepted Answer

A) is efficient 
B) is a Pareto improvement 
C) is effective only if it is set below the equilibrium price 
D) transfers some surplus from consumers to producers 
E) transfers some surplus from producers to consumers 
A) is efficient 
B) is a Pareto improvement 
C) is effective only if it is set below the equilibrium price 
D) transfers some surplus from consumers to producers 
E) transfers some surplus from producers to consumers

Question 6

Of the four major market structures,perfect competition is the best at achieving economic efficiency.

Accepted Answer

A) True 
 B)False

Question 7

Jordan wants to sell her wedding gown for $250,but her cousin Jessica offered her $375 for it.If the gown is sold for $375,what is Jordan's producer's surplus

Accepted Answer

A) $125 
B) $25 
C) $625 
D) $373 
E) $250 
A) $125 
B) $25 
C) $625 
D) $373 
E) $250

Question 8

Suppose that a perfectly competitive market is in equilibrium,and then market supply decreases.Which of the following would happen?

Accepted Answer

A) both producer and consumer surplus would increase 
B) both producer and consumer surplus would decrease 
C) producer surplus would decrease and consumer surplus would increase 
D) producer surplus would increase and consumer surplus would decrease 
E) producer and consumer surplus would remain unchanged 
A) both producer and consumer surplus would increase 
B) both producer and consumer surplus would decrease 
C) producer surplus would decrease and consumer surplus would increase 
D) producer surplus would increase and consumer surplus would decrease 
E) producer and consumer surplus would remain unchanged

Question 9

If Bill Gates voluntarily gives some of his money to a destitute family,it would be a Pareto improvement.

Accepted Answer

A) True 
 B)False

Question 10

If an action creates more total benefits for gainers than total harm to losers,

Accepted Answer

A) that action would be a Pareto improvement. 
B) taking that action would improve efficiency 
C) the government should step in to take that action 
D) a side payment exists that would make the action a Pareto improvement 
E) any side payment would make the action inefficient 
A) that action would be a Pareto improvement. 
B) taking that action would improve efficiency 
C) the government should step in to take that action 
D) a side payment exists that would make the action a Pareto improvement 
E) any side payment would make the action inefficient

Question 11

Market producer surplus is the area above the market price and below the market supply curve.

Accepted Answer

A) True 
 B)False

Question 12

If 20 smoothies are sold at a market price of $5.50 each,then

Accepted Answer

A) there must not be an excess supply of smoothies 
B) selling the 21st smoothie would be a Pareto improvement 
C) the market must be perfectly competitive 
D) the value to some individual of the 20th smoothie is $5.50 
E) there must be an excess demand for smoothies 
A) there must not be an excess supply of smoothies 
B) selling the 21st smoothie would be a Pareto improvement 
C) the market must be perfectly competitive 
D) the value to some individual of the 20th smoothie is $5.50 
E) there must be an excess demand for smoothies

Question 13

A Pareto improvement

Accepted Answer

A) cannot take place unless a side payment is made 
B) cannot take place unless a market is perfectly competitive 
C) cannot occur unless both parties to a transaction enjoy positive net benefits 
D) will increase the total net benefits available in a perfectly competitive market 
E) occurs whenever the sum of market consumer surplus and market producer surplus is positive 
A) cannot take place unless a side payment is made 
B) cannot take place unless a market is perfectly competitive 
C) cannot occur unless both parties to a transaction enjoy positive net benefits 
D) will increase the total net benefits available in a perfectly competitive market 
E) occurs whenever the sum of market consumer surplus and market producer surplus is positive

Question 14

The height of the demand curve at any quantity indicates

Accepted Answer

A) total expenditure on the good or service 
B) total revenue to the seller of the good or service 
C) whether the price is fair or not 
D) how much that particular unit is worth to the person who buys it 
E) how much the person who buys that unit actually pays for it 
A) total expenditure on the good or service 
B) total revenue to the seller of the good or service 
C) whether the price is fair or not 
D) how much that particular unit is worth to the person who buys it 
E) how much the person who buys that unit actually pays for it

Question 15

The height of the market supply curve

Accepted Answer

A) at any quantity shows the value -- to someone -- of the last unit of the good consumed 
B) at any quantity shows the cost -- to someone -- of purchasing the last unit of the good 
C) at any quantity shows the marginal cost of producing the last unit of a good 
D) shows the market value of a good or service 
E) measures the size of the side payment necessary to achieve a Pareto improvement 
A) at any quantity shows the value -- to someone -- of the last unit of the good consumed 
B) at any quantity shows the cost -- to someone -- of purchasing the last unit of the good 
C) at any quantity shows the marginal cost of producing the last unit of a good 
D) shows the market value of a good or service 
E) measures the size of the side payment necessary to achieve a Pareto improvement

Question 16

Pareto improvements occur

Accepted Answer

A) through the tax system 
B) rarely in the real world 
C) when the economy has reached the point of economic efficiency 
D) when market exchanges take place 
E) when consumers are not perfectly informed 
A) through the tax system 
B) rarely in the real world 
C) when the economy has reached the point of economic efficiency 
D) when market exchanges take place 
E) when consumers are not perfectly informed

Question 17

In an efficient economy,

Accepted Answer

A) no one could be made better off by a change in the way goods are allocated 
B) revenue for all firms is maximized 
C) a change in the way goods are allocated could make someone worse off 
D) goods are allocated fairly among individuals 
E) no one would be made worse off if there is a change in the way goods are allocated 
A) no one could be made better off by a change in the way goods are allocated 
B) revenue for all firms is maximized 
C) a change in the way goods are allocated could make someone worse off 
D) goods are allocated fairly among individuals 
E) no one would be made worse off if there is a change in the way goods are allocated

Question 18

The benefit to some consumer of the last unit of a good consumed is

Accepted Answer

A) represented by the height of the supply curve at that quantity 
B) negative if the producer is suffering economic loss 
C) decreases at an increasing rate in a competitive product market 
D) is zero 
E) represented by the height of the demand curve at that quantity 
A) represented by the height of the supply curve at that quantity 
B) negative if the producer is suffering economic loss 
C) decreases at an increasing rate in a competitive product market 
D) is zero 
E) represented by the height of the demand curve at that quantity

Question 19

In real-world markets

Accepted Answer

A) economic efficiency is rare because making voluntary transactions is difficult 
B) economic efficiency is rare because Pareto improvements are difficult to make 
C) economic efficiency is best thought of as a continuum 
D) perfect competition is an impediment to economic efficiency 
E) every possible Pareto improvement is exploited 
A) economic efficiency is rare because making voluntary transactions is difficult 
B) economic efficiency is rare because Pareto improvements are difficult to make 
C) economic efficiency is best thought of as a continuum 
D) perfect competition is an impediment to economic efficiency 
E) every possible Pareto improvement is exploited

Question 20

An efficient economy

Accepted Answer

A) is a fair economy 
B) can only be a capitalist economy 
C) is not necessarily a fair economy 
D) would never experience air or water pollution 
E) would not have a government sector 
A) is a fair economy 
B) can only be a capitalist economy 
C) is not necessarily a fair economy 
D) would never experience air or water pollution 
E) would not have a government sector

The welfare loss due to a price floor

Rebecca and Leah are roommates.Rebecca likes to study with the music playing loudly and Leah needs quiet when she studies.Rebecca would be willing to pay $5 a night to hear music while Leah would be willing to pay $10 a night for the quiet.In this situation

If the market supply curve is perfectly elastic and an excise tax is imposed,

The supply curve indicates

A price floor in a perfectly competitive market

Of the four major market structures,perfect competition is the best at achieving economic efficiency.

Jordan wants to sell her wedding gown for $250,but her cousin Jessica offered her $375 for it.If the gown is sold for $375,what is Jordan's producer's surplus

Suppose that a perfectly competitive market is in equilibrium,and then market supply decreases.Which of the following would happen?

If Bill Gates voluntarily gives some of his money to a destitute family,it would be a Pareto improvement.

If an action creates more total benefits for gainers than total harm to losers,

Market producer surplus is the area above the market price and below the market supply curve.

If 20 smoothies are sold at a market price of $5.50 each,then

A Pareto improvement

The height of the demand curve at any quantity indicates

The height of the market supply curve

Pareto improvements occur

In an efficient economy,

The benefit to some consumer of the last unit of a good consumed is

In real-world markets

An efficient economy

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

The welfare loss due to a price floor

Rebecca and Leah are roommates.Rebecca likes to study with the music playing loudly and Leah needs quiet when she studies.Rebecca would be willing to pay $5 a night to hear music while Leah would be willing to pay $10 a night for the quiet.In this situation

If the market supply curve is perfectly elastic and an excise tax is imposed,

The supply curve indicates

A price floor in a perfectly competitive market

Of the four major market structures,perfect competition is the best at achieving economic efficiency.

Jordan wants to sell her wedding gown for $250,but her cousin Jessica offered her $375 for it.If the gown is sold for $375,what is Jordan's producer's surplus

Suppose that a perfectly competitive market is in equilibrium,and then market supply decreases.Which of the following would happen?

If Bill Gates voluntarily gives some of his money to a destitute family,it would be a Pareto improvement.

If an action creates more total benefits for gainers than total harm to losers,

Market producer surplus is the area above the market price and below the market supply curve.

If 20 smoothies are sold at a market price of $5.50 each,then

A Pareto improvement

The height of the demand curve at any quantity indicates

The height of the market supply curve

Pareto improvements occur

In an efficient economy,

The benefit to some consumer of the last unit of a good consumed is

In real-world markets

An efficient economy

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