Question 1

Often people trying to withdraw money from their bank must wait in line, which reflects a ________ allocation method.

Accepted Answer

A) first-come, first-served 
B) market price 
C) contest 
D) majority rule 
E) command 
A) first-come, first-served 
B) market price 
C) contest 
D) majority rule 
E) command

Question 2

Value is

Accepted Answer

A) the price we pay for a good. 
B) the cost of resources used to produce a good. 
C) objective so that it is determined by market forces, not preferences. 
D) the marginal benefit we get from consuming another unit of a good or service. 
E) the difference between the price paid for a good and the marginal cost of producing that unit of the good. 
A) the price we pay for a good. 
B) the cost of resources used to produce a good. 
C) objective so that it is determined by market forces, not preferences. 
D) the marginal benefit we get from consuming another unit of a good or service. 
E) the difference between the price paid for a good and the marginal cost of producing that unit of the good.

Question 3

According to the "fair rules" view of fairness, are taxes fair? Explain.

Accepted Answer

Taxes are unfair according to the fair r

Question 4

The marginal cost curve is

Accepted Answer

A) downward sloping to reflect the bowed out PPF. 
B) downward sloping as marginal benefits increase. 
C) upward sloping because marginal cost falls as more of a good or service is produced. 
D) upward sloping to reflect the increasing opportunity cost of producing one more unit. 
E) U-shaped to reflect the bowed out PPF. 
A) downward sloping to reflect the bowed out PPF. 
B) downward sloping as marginal benefits increase. 
C) upward sloping because marginal cost falls as more of a good or service is produced. 
D) upward sloping to reflect the increasing opportunity cost of producing one more unit. 
E) U-shaped to reflect the bowed out PPF.

Question 5

Suppose the price of a scooter is $200 and Cora Lee is willing to pay $250.Cora Lee's

Accepted Answer

A) consumer surplus from that scooter is $200. 
B) consumer surplus from that scooter is $50. 
C) marginal benefit from that scooter is $100. 
D) consumer surplus from that scooter is $150. 
E) consumer surplus from that scooter is $250. 
A) consumer surplus from that scooter is $200. 
B) consumer surplus from that scooter is $50. 
C) marginal benefit from that scooter is $100. 
D) consumer surplus from that scooter is $150. 
E) consumer surplus from that scooter is $250.

Question 6

-In the figure above, production efficiency occurs at ________, and allocative efficiency occurs at ________.

Accepted Answer

A) all points on the PPF; only one point on the PPF 
B) only one point on the PPF; all points on the PPF 
C) only one point on the PPF; only one point on the PPF 
D) all points on the PPF; all points on the PPF 
E) all points on the PPF; all points above the PPF 
A) all points on the PPF; only one point on the PPF 
B) only one point on the PPF; all points on the PPF 
C) only one point on the PPF; only one point on the PPF 
D) all points on the PPF; all points on the PPF 
E) all points on the PPF; all points above the PPF

Question 7

-The figure above shows the market for hot dogs.
a∙What is the maximum price consumers are willing to pay for the 25th hot dog?
b∙What is the efficient quantity?
c∙Suppose that the production was limited to 25 hot dogs.In the figure, indicate the amount of the deadweight loss.

Accepted Answer

a∙Consumers are willing to pay a maximum

Question 8

Outcomes are fair according to the

Accepted Answer

A) rules view if private property rights are established and trade is voluntary. 
B) results view if private property rights are established and trade is voluntary. 
C) rules view if there is not too much inequality. 
D) results view if there is not a big tradeoff. 
E) results view if there is equality of opportunity. 
A) rules view if private property rights are established and trade is voluntary. 
B) results view if private property rights are established and trade is voluntary. 
C) rules view if there is not too much inequality. 
D) results view if there is not a big tradeoff. 
E) results view if there is equality of opportunity.

Question 9

When there is market failure so that a market produces less than the efficient amount,

Accepted Answer

A) consumer surplus definitely is larger than when the efficient quantity is produced. 
B) the sum of producer surplus and consumer surplus is larger than when the efficient quantity is produced. 
C) there is a deadweight loss. 
D) consumers definitely lose and producers definitely gain. 
E) consumers definitely gain and producers definitely lose. 
A) consumer surplus definitely is larger than when the efficient quantity is produced. 
B) the sum of producer surplus and consumer surplus is larger than when the efficient quantity is produced. 
C) there is a deadweight loss. 
D) consumers definitely lose and producers definitely gain. 
E) consumers definitely gain and producers definitely lose.

Question 10

Producer surplus definitely exists when the

Accepted Answer

A) price exceeds marginal benefit. 
B) price exceeds marginal cost. 
C) marginal cost exceeds the price. 
D) marginal benefit exceeds the price. 
E) marginal benefit exceeds the marginal cost. 
A) price exceeds marginal benefit. 
B) price exceeds marginal cost. 
C) marginal cost exceeds the price. 
D) marginal benefit exceeds the price. 
E) marginal benefit exceeds the marginal cost.

Question 11

At a competitive equilibrium with no externalities, taxes, subsidies, public goods, common resources, or high transactions costs,which of the following occurs?
i. an efficient outcome
ii. definitely a fair outcome when judged by the fair-results approach
iii. marginal cost equals marginal benefit
iv. producer surplus equals consumer surplus

Accepted Answer

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

Question 12

What is consumer surplus?

Accepted Answer

Consumer surplus equals the difference b

Question 13

John has a marginal benefit of $7 for 1 slice of pizza, $5 for a second slice, $3 for a third slice, $1 for a fourth slice, and $0.50 for a fifth slice.The price of pizza is $1.50 per slice.Which of the following statements is correct?

Accepted Answer

A) John will purchase 3 slices of pizza and have consumer surplus of $10.50. 
B) John will purchase 4 slices of pizza and have consumer surplus of $12.00. 
C) John will purchase 2 slices of pizza and have consumer surplus of $1.50. 
D) John will purchase 3 slices of pizza and have consumer surplus of $4.50. 
E) John will purchase 2 slices of pizza and have consumer surplus of $3.00. 
A) John will purchase 3 slices of pizza and have consumer surplus of $10.50. 
B) John will purchase 4 slices of pizza and have consumer surplus of $12.00. 
C) John will purchase 2 slices of pizza and have consumer surplus of $1.50. 
D) John will purchase 3 slices of pizza and have consumer surplus of $4.50. 
E) John will purchase 2 slices of pizza and have consumer surplus of $3.00.

Question 14

When the price rises and the supply curve does not shift, the firms' producer surplus ________.When the price falls and the supply curve does not shift, the firms' producer surplus ________.

Accepted Answer

A) increases; decreases 
B) decreases; increases 
C) decreases; decreases 
D) increases; increases 
E) does not change; does not change 
A) increases; decreases 
B) decreases; increases 
C) decreases; decreases 
D) increases; increases 
E) does not change; does not change

Question 15

Allocative efficiency is achieved when the marginal benefit of a good

Accepted Answer

A) exceeds the marginal cost by as much as possible. 
B) exceeds the marginal cost but not by as much as possible. 
C) is less than the marginal cost. 
D) equals the marginal cost. 
E) equals zero. 
A) exceeds the marginal cost by as much as possible. 
B) exceeds the marginal cost but not by as much as possible. 
C) is less than the marginal cost. 
D) equals the marginal cost. 
E) equals zero.

Question 16

Which of the following is an example in which "the big tradeoff" can occur?

Accepted Answer

A) The government redistributes income from the rich to the poor. 
B) Ford increases the price of a pickup truck. 
C) A basketball player signs a $5 million contract. 
D) A college lowers tuition. 
E) The price of personal computers falls year after year. 
A) The government redistributes income from the rich to the poor. 
B) Ford increases the price of a pickup truck. 
C) A basketball player signs a $5 million contract. 
D) A college lowers tuition. 
E) The price of personal computers falls year after year.

Question 17

-In the figure above, if the market is at equilibrium, then the total consumer surplus equals the area ________ and the total producer surplus equals the area ________.

Accepted Answer

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

Question 18

Efficiency in a market occurs when the production of the good is such that

Accepted Answer

A) marginal benefit exceeds marginal cost. 
B) marginal benefit equals marginal cost. 
C) marginal benefit is lower than marginal cost. 
D) the marginal cost stops increasing. 
E) marginal benefit exceeds marginal cost by the maximum amount possible. 
A) marginal benefit exceeds marginal cost. 
B) marginal benefit equals marginal cost. 
C) marginal benefit is lower than marginal cost. 
D) the marginal cost stops increasing. 
E) marginal benefit exceeds marginal cost by the maximum amount possible.

Question 19

In a competitive market for a private good with no price or quantity regulations, no external cost nor external benefit, low transactions costs, and no taxes or subsidies,

Accepted Answer

A) the allocation of resources is planned by the government. 
B) production is organized by government organizations. 
C) efficiency can be attained in the market with no government intervention. 
D) efficiency is usually be achieved by majority rule. 
E) efficiency is generally obtained by using a command system. 
A) the allocation of resources is planned by the government. 
B) production is organized by government organizations. 
C) efficiency can be attained in the market with no government intervention. 
D) efficiency is usually be achieved by majority rule. 
E) efficiency is generally obtained by using a command system.

Question 20

What is the "big tradeoff"?

Accepted Answer

The "big tradeoff" is the tradeoff betwe

Often people trying to withdraw money from their bank must wait in line, which reflects a ________ allocation method.

Value is

According to the "fair rules" view of fairness, are taxes fair? Explain.

The marginal cost curve is

Suppose the price of a scooter is $200 and Cora Lee is willing to pay $250.Cora Lee's

-In the figure above, production efficiency occurs at , and allocative efficiency occurs at .

-The figure above shows the market for hot dogs. a∙What is the maximum price consumers are willing to pay for the 25th hot dog? b∙What is the efficient quantity? c∙Suppose that the production was limited to 25 hot dogs.In the figure, indicate the amount of the deadweight loss.

Outcomes are fair according to the

When there is market failure so that a market produces less than the efficient amount,

Producer surplus definitely exists when the

What is consumer surplus?

John has a marginal benefit of $7 for 1 slice of pizza, $5 for a second slice, $3 for a third slice, $1 for a fourth slice, and $0.50 for a fifth slice.The price of pizza is $1.50 per slice.Which of the following statements is correct?

When the price rises and the supply curve does not shift, the firms' producer surplus .When the price falls and the supply curve does not shift, the firms' producer surplus .

Allocative efficiency is achieved when the marginal benefit of a good

Which of the following is an example in which "the big tradeoff" can occur?

-In the figure above, if the market is at equilibrium, then the total consumer surplus equals the area and the total producer surplus equals the area .

Efficiency in a market occurs when the production of the good is such that

In a competitive market for a private good with no price or quantity regulations, no external cost nor external benefit, low transactions costs, and no taxes or subsidies,

What is the "big tradeoff"?

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

Often people trying to withdraw money from their bank must wait in line, which reflects a ________ allocation method.

Value is

According to the "fair rules" view of fairness, are taxes fair? Explain.

The marginal cost curve is

Suppose the price of a scooter is $200 and Cora Lee is willing to pay $250.Cora Lee's

-In the figure above, production efficiency occurs at ________, and allocative efficiency occurs at ________.

-The figure above shows the market for hot dogs. a∙What is the maximum price consumers are willing to pay for the 25th hot dog? b∙What is the efficient quantity? c∙Suppose that the production was limited to 25 hot dogs.In the figure, indicate the amount of the deadweight loss.

Outcomes are fair according to the

When there is market failure so that a market produces less than the efficient amount,

Producer surplus definitely exists when the

What is consumer surplus?

John has a marginal benefit of $7 for 1 slice of pizza, $5 for a second slice, $3 for a third slice, $1 for a fourth slice, and $0.50 for a fifth slice.The price of pizza is $1.50 per slice.Which of the following statements is correct?

When the price rises and the supply curve does not shift, the firms' producer surplus ________.When the price falls and the supply curve does not shift, the firms' producer surplus ________.

Allocative efficiency is achieved when the marginal benefit of a good

Which of the following is an example in which "the big tradeoff" can occur?

-In the figure above, if the market is at equilibrium, then the total consumer surplus equals the area ________ and the total producer surplus equals the area ________.

Efficiency in a market occurs when the production of the good is such that

In a competitive market for a private good with no price or quantity regulations, no external cost nor external benefit, low transactions costs, and no taxes or subsidies,

What is the "big tradeoff"?

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, production efficiency occurs at , and allocative efficiency occurs at .

When the price rises and the supply curve does not shift, the firms' producer surplus .When the price falls and the supply curve does not shift, the firms' producer surplus .

-In the figure above, if the market is at equilibrium, then the total consumer surplus equals the area and the total producer surplus equals the area .