Question 1

In a competitive market economy, a resource in short supply will be allocated

Accepted Answer

A) so that each firm gets enough to keep producing some portion of its output. 
B) according to how much each firm purchased before the shortage. 
C) to those firms that can make the most profitable use of it. 
D) by government fiat. 
A) so that each firm gets enough to keep producing some portion of its output. 
B) according to how much each firm purchased before the shortage. 
C) to those firms that can make the most profitable use of it. 
D) by government fiat.

Question 2

Some years ago New York City imposed rent controls in an effort to provide housing at "fair" prices for as many people as possible.The result was a serious shortage of housing and deterioration of existing rental properties.How would an economist have described the result in terms of economic efficiency?

Accepted Answer

Keeping the prices low discouraged the c

Question 3

Laissez faire is a policy that espouses central planning.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is least likely to be an example of peak/off-peak pricing?

Accepted Answer

A) breakfast cereals 
B) hotels 
C) wireless service 
D) electricity 
A) breakfast cereals 
B) hotels 
C) wireless service 
D) electricity

Question 5

The questions of what to produce, how to produce, and for whom are answered by

Accepted Answer

A) free-market economies. 
B) economies that are a mixture of planning and markets. 
C) command economies. 
D) all economic systems in some manner. 
A) free-market economies. 
B) economies that are a mixture of planning and markets. 
C) command economies. 
D) all economic systems in some manner.

Question 6

The nation listed below whose economy currently comes closest to a free market is

Accepted Answer

A) North Korea. 
B) Germany. 
C) People's Republic of China. 
D) Cuba. 
A) North Korea. 
B) Germany. 
C) People's Republic of China. 
D) Cuba.

Question 7

Under perfect competition, the lure of profits makes producers try to equate marginal cost and price.

Accepted Answer

A) True 
 B)False

Question 8

The technique that addresses the problem of assigning inputs to specific industries is

Accepted Answer

A) known as laissez faire. 
B) input-output analysis. 
C) cost-benefit analysis. 
D) a production possibilities frontier. 
A) known as laissez faire. 
B) input-output analysis. 
C) cost-benefit analysis. 
D) a production possibilities frontier.

Question 9

Under a system of laissez faire, output selection is determined by consumers' wants.

Accepted Answer

A) True 
 B)False

Question 10

The "invisible hand" refers to the control that government must exercise over a market economy.

Accepted Answer

A) True 
 B)False

Question 11

The invisible hand enforces the tendency toward

Accepted Answer

A) MR = MU. 
B) MC = P = MU. 
C) MC = MPP = P. 
D) MRP = MPP = P. 
A) MR = MU. 
B) MC = P = MU. 
C) MC = MPP = P. 
D) MRP = MPP = P.

Question 12

For an efficient outcome, MR must exceed MC.

Accepted Answer

A) True 
 B)False

Question 13

In a classic administrative snafu, the Army assigns trained classical musicians to kitchen duty and places trained cooks in the military band.This is an example of inefficiency in

Accepted Answer

A) output selection. 
B) production planning. 
C) product distribution. 
D) market segmentation. 
A) output selection. 
B) production planning. 
C) product distribution. 
D) market segmentation.

Question 14

There is only one efficient allocation of resources in an economy at one point in time.

Accepted Answer

A) True 
 B)False

Question 15

An efficient solution to a pricing problem

Accepted Answer

A) makes both buyers and sellers better off than any other possible solution. 
B) may not be the socially "fair" solution. 
C) occurs when producers' total cost of production equals consumers' total utility from the output produced. 
D) maximizes the output of the good being priced. 
A) makes both buyers and sellers better off than any other possible solution. 
B) may not be the socially "fair" solution. 
C) occurs when producers' total cost of production equals consumers' total utility from the output produced. 
D) maximizes the output of the good being priced.

Question 16

The introduction of a tax in a perfectly competitive marketplace that is originally in equilibrium will lower total surplus.

Accepted Answer

A) True 
 B)False

Question 17

Explain why movie theaters charge more for evening performances than for matinees.

Accepted Answer

If prices were the same at all times, mo

Question 18

In order for the price system to have satisfied the exacting requirements for efficiency,

Accepted Answer

A) MU must equal MC for each and every commodity. 
B) the average cost of producing each good must be equal to its MU. 
C) the maximum possible of total economic profit must be produced. 
D) every consumer's MU will be equal to marginal physical product 
A) MU must equal MC for each and every commodity. 
B) the average cost of producing each good must be equal to its MU. 
C) the maximum possible of total economic profit must be produced. 
D) every consumer's MU will be equal to marginal physical product

Question 19

When all prices are set equal to marginal costs,

Accepted Answer

A) consumers buy more than they should. 
B) consumers will get less utility. 
C) markets are giving correct signals to consumers. 
D) producers make excessive profits. 
A) consumers buy more than they should. 
B) consumers will get less utility. 
C) markets are giving correct signals to consumers. 
D) producers make excessive profits.

Question 20

When an economy is operating with maximum efficiency, the production of more of commodity A will entail the production of less of commodity B because

Accepted Answer

A) resources are specialized and are not shiftable. 
B) resources are limited. 
C) the structure of demand is fixed at any point in time. 
D) material wants are insatiable. 
A) resources are specialized and are not shiftable. 
B) resources are limited. 
C) the structure of demand is fixed at any point in time. 
D) material wants are insatiable.

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

In a competitive market economy, a resource in short supply will be allocated

Laissez faire is a policy that espouses central planning.

Which of the following is least likely to be an example of peak/off-peak pricing?

The questions of what to produce, how to produce, and for whom are answered by

The nation listed below whose economy currently comes closest to a free market is

Under perfect competition, the lure of profits makes producers try to equate marginal cost and price.

The technique that addresses the problem of assigning inputs to specific industries is

Under a system of laissez faire, output selection is determined by consumers' wants.

The "invisible hand" refers to the control that government must exercise over a market economy.

The invisible hand enforces the tendency toward

For an efficient outcome, MR must exceed MC.

In a classic administrative snafu, the Army assigns trained classical musicians to kitchen duty and places trained cooks in the military band.This is an example of inefficiency in

There is only one efficient allocation of resources in an economy at one point in time.

An efficient solution to a pricing problem

The introduction of a tax in a perfectly competitive marketplace that is originally in equilibrium will lower total surplus.

Explain why movie theaters charge more for evening performances than for matinees.

In order for the price system to have satisfied the exacting requirements for efficiency,

When all prices are set equal to marginal costs,

When an economy is operating with maximum efficiency, the production of more of commodity A will entail the production of less of commodity B because

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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