Question 1

Prices set too low can actually be against the public interest.

Accepted Answer

A) True 
 B)False

Question 2

The producer's surplus is equal to the difference between how much the seller can charge for a product and how much the consumer is willing to purchase it for.

Accepted Answer

A) True 
 B)False

Question 3

Using prices to promote efficiency in the utilization of bridges,

Accepted Answer

A) higher prices should be charged for the use of the most crowded bridges. 
B) lower prices should be charged for the use of the uncrowded bridges. 
C) traffic would be equalized among the bridges where space is a scarce resource. 
D) All of the above are correct. 
A) higher prices should be charged for the use of the most crowded bridges. 
B) lower prices should be charged for the use of the uncrowded bridges. 
C) traffic would be equalized among the bridges where space is a scarce resource. 
D) All of the above are correct.

Question 4

In the case of the production of electronic calculators, introduced in the United States in the 1960s,

Accepted Answer

A) a technological breakthrough reduced the input quantities needed to produce them. 
B) quantity demanded increased significantly as prices fell. 
C) production costs fell with advances in technology. 
D) All of the above are correct. 
A) a technological breakthrough reduced the input quantities needed to produce them. 
B) quantity demanded increased significantly as prices fell. 
C) production costs fell with advances in technology. 
D) All of the above are correct.

Question 5

High prices do not occur in laissez-faire markets.

Accepted Answer

A) True 
 B)False

Question 6

To efficiently manage traffic on a system of bridges,

Accepted Answer

A) the more-crowded bridges should have lower tolls, so that they are affordable. 
B) the tolls should be equal for all bridges, so that people can choose the most convenient routes. 
C) tolls should be higher on more-crowded bridges and lower on less-crowded bridges. 
D) there should be no tolls on bridges, because people should not have to pay to drive to their jobs. 
A) the more-crowded bridges should have lower tolls, so that they are affordable. 
B) the tolls should be equal for all bridges, so that people can choose the most convenient routes. 
C) tolls should be higher on more-crowded bridges and lower on less-crowded bridges. 
D) there should be no tolls on bridges, because people should not have to pay to drive to their jobs.

Question 7

Efficiency in the choice of outputs requires that marginal cost be equal to marginal revenue and nothing else.

Accepted Answer

A) True 
 B)False

Question 8

An economy consists of two goods: beef and lamb.Of all the points on this economy's production possibilities frontier, which one is best in terms of efficiency?

Accepted Answer

There is no best poi

Question 9

Any increase in efficiency increases output available for distribution.

Accepted Answer

A) True 
 B)False

Question 10

It is in society's best interest that the MC of the last unit produced of a good is equal to its MU.

Accepted Answer

A) True 
 B)False

Question 11

Under laissez faire, the force that drives the economy toward an efficient outcome is

Accepted Answer

A) central planning. 
B) majority voting. 
C) the pursuit of self-interest. 
D) altruism. 
A) central planning. 
B) majority voting. 
C) the pursuit of self-interest. 
D) altruism.

Question 12

Many persons object to the results of the competitive market system because

Accepted Answer

A) it takes too much energy to coordinate activities. 
B) efficient outcomes may not be compatible with their ideas of a fair distribution. 
C) a few people can control all economic activity. 
D) it fosters high rents and low beef prices. 
A) it takes too much energy to coordinate activities. 
B) efficient outcomes may not be compatible with their ideas of a fair distribution. 
C) a few people can control all economic activity. 
D) it fosters high rents and low beef prices.

Question 13

Input-output analysis was developed by Wassily Leontief.

Accepted Answer

A) True 
 B)False

Question 14

Division of iron ore between the production of bridge girders and tanker drums is an example of

Accepted Answer

A) a distribution problem. 
B) production planning. 
C) input-output analysis. 
D) both output selection and distribution 
A) a distribution problem. 
B) production planning. 
C) input-output analysis. 
D) both output selection and distribution

Question 15

The degree to which an economic system approaches a market economy depends on the degree to which

Accepted Answer

A) economic choices are made through the free interaction of buyers and sellers in the marketplace. 
B) there are monopolies in the marketplace. 
C) people have a high standard of living. 
D) advanced technology is used. 
A) economic choices are made through the free interaction of buyers and sellers in the marketplace. 
B) there are monopolies in the marketplace. 
C) people have a high standard of living. 
D) advanced technology is used.

Question 16

At the equilibrium point in a perfectly competitive industry, the total surplus (the sum of the consumer surplus and producer surplus) will be at its maximum.

Accepted Answer

A) True 
 B)False

Question 17

Define the following terms and explain why they are important in the study of economics.
a.efficient allocation
b.laissez faire
c.peak pricing
d.input-output analysis
e.coordination tasks

Accepted Answer

a.An efficient allocation of resources i

Question 18

Efficient allocation of resources makes everyone better off.

Accepted Answer

A) True 
 B)False

Question 19

Laissez-faire refers to a situation in which there is ____ with the workings of the market system.

Accepted Answer

A) zero consumer involvement 
B) zero government interference 
C) minimal government interference 
D) complete government interference 
A) zero consumer involvement 
B) zero government interference 
C) minimal government interference 
D) complete government interference

Question 20

The market allocates goods to individuals according to the individuals'

Accepted Answer

A) desire for the good. 
B) ability to pay for the good. 
C) desire and ability to pay for the good. 
D) political influence. 
A) desire for the good. 
B) ability to pay for the good. 
C) desire and ability to pay for the good. 
D) political influence.

Exam 14: The Case for Free Markets: the Price System

Prices set too low can actually be against the public interest.

The producer's surplus is equal to the difference between how much the seller can charge for a product and how much the consumer is willing to purchase it for.

Using prices to promote efficiency in the utilization of bridges,

In the case of the production of electronic calculators, introduced in the United States in the 1960s,

High prices do not occur in laissez-faire markets.

To efficiently manage traffic on a system of bridges,

Efficiency in the choice of outputs requires that marginal cost be equal to marginal revenue and nothing else.

An economy consists of two goods: beef and lamb.Of all the points on this economy's production possibilities frontier, which one is best in terms of efficiency?

Any increase in efficiency increases output available for distribution.

It is in society's best interest that the MC of the last unit produced of a good is equal to its MU.

Under laissez faire, the force that drives the economy toward an efficient outcome is

Many persons object to the results of the competitive market system because

Input-output analysis was developed by Wassily Leontief.

Division of iron ore between the production of bridge girders and tanker drums is an example of

The degree to which an economic system approaches a market economy depends on the degree to which

At the equilibrium point in a perfectly competitive industry, the total surplus (the sum of the consumer surplus and producer surplus) will be at its maximum.

Define the following terms and explain why they are important in the study of economics. a.efficient allocation b.laissez faire c.peak pricing d.input-output analysis e.coordination tasks

Efficient allocation of resources makes everyone better off.

Laissez-faire refers to a situation in which there is ____ with the workings of the market system.

The market allocates goods to individuals according to the individuals'

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

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