Question 1

Lauren and Katy each bought a new bike lock for $20.Both Lauren and Katy would have paid $25 for the lock.Katy's consumer surplus equaled

Accepted Answer

A) $10. 
B) $40. 
C) $5. 
D) $20. 
E) $50. 
A) $10. 
B) $40. 
C) $5. 
D) $20. 
E) $50.

Question 2

-In the figure above, if pizza production is restricted to 5,000 pizzas a day, then marginal benefit ________ marginal cost, and ________ occurs.

Accepted Answer

A) exceeds; overproduction 
B) exceeds; underproduction 
C) is below; overproduction 
D) is below; underproduction 
E) exceeds; efficient production 
A) exceeds; overproduction 
B) exceeds; underproduction 
C) is below; overproduction 
D) is below; underproduction 
E) exceeds; efficient production

Question 3

What is the "invisible hand"?

Accepted Answer

The invisible hand is a concept articula

Question 4

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 5

The resource allocation method used for the online auctions on eBay is

Accepted Answer

A) market price. 
B) lottery. 
C) contest. 
D) first-come, first-served. 
E) sharing equally. 
A) market price. 
B) lottery. 
C) contest. 
D) first-come, first-served. 
E) sharing equally.

Question 6

Which of the following is true regarding a demand curve?
I∙The demand curve is also the marginal benefit curve.
Ii∙The demand curve shows the dollars' worth of other goods that people are willing to forgo to consume another unit of the good.
Iii∙The demand curve shows the maximum price that people are willing to pay for another unit of a good.

Accepted Answer

A) i and ii 
B) i and iii 
C) ii and iii 
D) i, ii, and iii 
E) i only 
A) i and ii 
B) i and iii 
C) ii and iii 
D) i, ii, and iii 
E) i only

Question 7

-The figure above shows the market for brooms.If 400 brooms are produced,

Accepted Answer

A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) market failure and a deadweight loss occur. 
D) marginal cost is greater than marginal benefit. 
E) consumer surplus equals zero. 
A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) market failure and a deadweight loss occur. 
D) marginal cost is greater than marginal benefit. 
E) consumer surplus equals zero.

Question 8

The supply curve of a good or service is the same as

Accepted Answer

A) the demand curve. 
B) the marginal benefit curve. 
C) the marginal cost curve. 
D) the total surplus curve. 
E) None of the above answers is correct. 
A) the demand curve. 
B) the marginal benefit curve. 
C) the marginal cost curve. 
D) the total surplus curve. 
E) None of the above answers is correct.

Question 9

-The figure above represents the competitive market for slices of key lime pie.When 60 slices are produced, the marginal cost

Accepted Answer

A) exceeds the marginal benefit. 
B) is less than the marginal benefit. 
C) equals the marginal benefit. 
D) is not defined. 
E) equals the deadweight loss on the 60th slice. 
A) exceeds the marginal benefit. 
B) is less than the marginal benefit. 
C) equals the marginal benefit. 
D) is not defined. 
E) equals the deadweight loss on the 60th slice.

Question 10

If the government imposes a tax on a competitive market with no externalities, then
I∙resource use is not efficient.
Ii∙there is a deadweight loss.
Iii∙consumer surplus is at its maximum.

Accepted Answer

A) ii only 
B) i and ii 
C) iii only 
D) i and iii 
E) i, ii, and iii 
A) ii only 
B) i and ii 
C) iii only 
D) i and iii 
E) i, ii, and iii

Question 11

When a society achieves production efficiency, it is

Accepted Answer

A) definitely producing at a point on its PPF. 
B) perhaps producing at a point on its PPF and perhaps producing at a point inside its PPF. 
C) definitely producing that combination of goods and services that society values most highly. 
D) not fully employing all of its available resources to produce goods and services. 
E) enjoying a free lunch. 
A) definitely producing at a point on its PPF. 
B) perhaps producing at a point on its PPF and perhaps producing at a point inside its PPF. 
C) definitely producing that combination of goods and services that society values most highly. 
D) not fully employing all of its available resources to produce goods and services. 
E) enjoying a free lunch.

Question 12

-In the figure above, the equilibrium market price is $20.$20 is the

Accepted Answer

A) marginal cost of 150th unit. 
B) willingness to pay for the 1st unit. 
C) producer surplus. 
D) consumer surplus. 
E) deadweight loss. 
A) marginal cost of 150th unit. 
B) willingness to pay for the 1st unit. 
C) producer surplus. 
D) consumer surplus. 
E) deadweight loss.

Question 13

-In the above figure, if the quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied, then area C + area E is equal to

Accepted Answer

A) deadweight loss. 
B) consumer surplus. 
C) total surplus. 
D) producer surplus. 
E) total revenue. 
A) deadweight loss. 
B) consumer surplus. 
C) total surplus. 
D) producer surplus. 
E) total revenue.

Question 14

The price of a shirt is $20.Charlie can produce a shirt at a marginal cost of $10, Mac can produce a shirt for $18, and Dennis can produce a shirt for $22.For a shirt, Deandra has a marginal benefit of $25, Frank has marginal benefit of $20, and Artemis has a marginal benefit of $18.Which of the following statements is correct?

Accepted Answer

A) The sum of consumer surplus is $5 and the sum of producer surplus is $12. 
B) The sum of consumer surplus is $12. 
C) Only Frank and Artemis will purchase a shirt. 
D) Only Dennis will produce a shirt. 
E) The sum of producer surplus is $10. 
A) The sum of consumer surplus is $5 and the sum of producer surplus is $12. 
B) The sum of consumer surplus is $12. 
C) Only Frank and Artemis will purchase a shirt. 
D) Only Dennis will produce a shirt. 
E) The sum of producer surplus is $10.

Question 15

The idea that unequal incomes is unfair generally uses the ________ principle of fairness.

Accepted Answer

A) big tradeoff 
B) involuntary exchange 
C) voluntary exchange 
D) it's not fair if the result isn't fair 
E) it's not fair if the rules aren't fair 
A) big tradeoff 
B) involuntary exchange 
C) voluntary exchange 
D) it's not fair if the result isn't fair 
E) it's not fair if the rules aren't fair

Question 16

What allocation method is the primary method used in the United States?

Accepted Answer

While all the different allocation metho

Question 17

What did Adam Smith identify as the source of the invisible hand in 1776?

Accepted Answer

A) a benevolent central government that decided was best for everyone 
B) an individual's concern for fellow humans 
C) an individual's own self-interest 
D) the stock market 
E) buyers' and suppliers' concerns to obtain and retain good reputations 
A) a benevolent central government that decided was best for everyone 
B) an individual's concern for fellow humans 
C) an individual's own self-interest 
D) the stock market 
E) buyers' and suppliers' concerns to obtain and retain good reputations

Question 18

-The figure above shows the market for pants.If the production of the pants results in an external cost from pollution that is the result of the dye used, then

Accepted Answer

A) 6 million pairs is the efficient quantity. 
B) fewer than 6 million pairs is the efficient quantity. 
C) more than 6 million pairs is the efficient quantity. 
D) None of the above answers is necessarily correct because more information is needed about the size of the external cost. 
E) None of the above answers are correct because it is impossible to tell whether the external cost results in underproduction or overproduction. 
A) 6 million pairs is the efficient quantity. 
B) fewer than 6 million pairs is the efficient quantity. 
C) more than 6 million pairs is the efficient quantity. 
D) None of the above answers is necessarily correct because more information is needed about the size of the external cost. 
E) None of the above answers are correct because it is impossible to tell whether the external cost results in underproduction or overproduction.

Question 19

In the summer of 2008, the price of gasoline increased greatly.If the demand curve for gasoline did not shift, which of the following occurred?

Accepted Answer

A) Drivers received no consumer surplus after the price increase. 
B) Consumer surplus increased if drivers drove less. 
C) Consumer surplus decreased. 
D) If consumers drove the same amount, they received less total benefit. 
E) Both the marginal benefit from each gallon of gasoline and the consumer surplus from each gallon of gasoline decreased. 
A) Drivers received no consumer surplus after the price increase. 
B) Consumer surplus increased if drivers drove less. 
C) Consumer surplus decreased. 
D) If consumers drove the same amount, they received less total benefit. 
E) Both the marginal benefit from each gallon of gasoline and the consumer surplus from each gallon of gasoline decreased.

Question 20

Mary is willing to pay $50 for a Christmas tree, John is willing to pay $45 and Jeff is willing to pay $40.The price of a tree is $40.The total consumer surplus for Mary, John and Jeff taken together is

Accepted Answer

A) $15. 
B) $135. 
C) $40. 
D) $95. 
E) $120. 
A) $15. 
B) $135. 
C) $40. 
D) $95. 
E) $120.

Lauren and Katy each bought a new bike lock for $20.Both Lauren and Katy would have paid $25 for the lock.Katy's consumer surplus equaled

-In the figure above, if pizza production is restricted to 5,000 pizzas a day, then marginal benefit marginal cost, and occurs.

What is the "invisible hand"?

Air pollution is an external cost because it

The resource allocation method used for the online auctions on eBay is

-The figure above shows the market for brooms.If 400 brooms are produced,

The supply curve of a good or service is the same as

-The figure above represents the competitive market for slices of key lime pie.When 60 slices are produced, the marginal cost

If the government imposes a tax on a competitive market with no externalities, then I∙resource use is not efficient. Ii∙there is a deadweight loss. Iii∙consumer surplus is at its maximum.

When a society achieves production efficiency, it is

-In the figure above, the equilibrium market price is $20.$20 is the

-In the above figure, if the quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied, then area C + area E is equal to

The idea that unequal incomes is unfair generally uses the ________ principle of fairness.

What allocation method is the primary method used in the United States?

What did Adam Smith identify as the source of the invisible hand in 1776?

-The figure above shows the market for pants.If the production of the pants results in an external cost from pollution that is the result of the dye used, then

In the summer of 2008, the price of gasoline increased greatly.If the demand curve for gasoline did not shift, which of the following occurred?

Mary is willing to pay $50 for a Christmas tree, John is willing to pay $45 and Jeff is willing to pay $40.The price of a tree is $40.The total consumer surplus for Mary, John and Jeff taken together is

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

Lauren and Katy each bought a new bike lock for $20.Both Lauren and Katy would have paid $25 for the lock.Katy's consumer surplus equaled

-In the figure above, if pizza production is restricted to 5,000 pizzas a day, then marginal benefit ________ marginal cost, and ________ occurs.

What is the "invisible hand"?

Air pollution is an external cost because it

The resource allocation method used for the online auctions on eBay is

-The figure above shows the market for brooms.If 400 brooms are produced,

The supply curve of a good or service is the same as

-The figure above represents the competitive market for slices of key lime pie.When 60 slices are produced, the marginal cost

If the government imposes a tax on a competitive market with no externalities, then I∙resource use is not efficient. Ii∙there is a deadweight loss. Iii∙consumer surplus is at its maximum.

When a society achieves production efficiency, it is

-In the figure above, the equilibrium market price is $20.$20 is the

-In the above figure, if the quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied, then area C + area E is equal to

The idea that unequal incomes is unfair generally uses the ________ principle of fairness.

What allocation method is the primary method used in the United States?

What did Adam Smith identify as the source of the invisible hand in 1776?

-The figure above shows the market for pants.If the production of the pants results in an external cost from pollution that is the result of the dye used, then

In the summer of 2008, the price of gasoline increased greatly.If the demand curve for gasoline did not shift, which of the following occurred?

Mary is willing to pay $50 for a Christmas tree, John is willing to pay $45 and Jeff is willing to pay $40.The price of a tree is $40.The total consumer surplus for Mary, John and Jeff taken together is

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

-In the figure above, if pizza production is restricted to 5,000 pizzas a day, then marginal benefit marginal cost, and occurs.