Question 1

-In the figure above, if pizza production increases to 15,000 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 2

What must be true for a consumer to enjoy a consumer surplus from a unit of a good?

Accepted Answer

The marginal benefit to the co

Question 3

Allocative efficiency occurs

Accepted Answer

A) anywhere inside or on the production possibilities frontier. 
B) when the total cost of production is minimized. 
C) at all points on the production possibilities frontier. 
D) at only one point on the production possibilities frontier. 
E) at the points where the production possibilities frontier crosses the horizontal or vertical axis. 
A) anywhere inside or on the production possibilities frontier. 
B) when the total cost of production is minimized. 
C) at all points on the production possibilities frontier. 
D) at only one point on the production possibilities frontier. 
E) at the points where the production possibilities frontier crosses the horizontal or vertical axis.

Question 4

Marginal cost is the opportunity cost of producing

Accepted Answer

A) every unit possible. 
B) zero units. 
C) the first unit and only the first unit. 
D) one more unit of a good or service. 
E) None of the above answers is correct. 
A) every unit possible. 
B) zero units. 
C) the first unit and only the first unit. 
D) one more unit of a good or service. 
E) None of the above answers is correct.

Question 5

In general, the marginal cost curve

Accepted Answer

A) has a positive slope. 
B) has a negative slope. 
C) is horizontal. 
D) is vertical. 
E) is U-shaped. 
A) has a positive slope. 
B) has a negative slope. 
C) is horizontal. 
D) is vertical. 
E) is U-shaped.

Question 6

In a competitive market with no externalities,

Accepted Answer

A) the consumer surplus is equal to zero because of competition. 
B) buyers cannot control the price, so the consumer surplus is zero. 
C) at the equilibrium price, marginal benefit exceeds marginal cost. 
D) at the equilibrium price, marginal benefit equals marginal cost. 
E) at the equilibrium price, the total amount of consumer surplus equals the total amount of producer surplus. 
A) the consumer surplus is equal to zero because of competition. 
B) buyers cannot control the price, so the consumer surplus is zero. 
C) at the equilibrium price, marginal benefit exceeds marginal cost. 
D) at the equilibrium price, marginal benefit equals marginal cost. 
E) at the equilibrium price, the total amount of consumer surplus equals the total amount of producer surplus.

Question 7

The supply curve shows the

Accepted Answer

A) marginal benefit of a firm producing another unit of a good. 
B) dollars' worth of other goods and services we are willing to give up to get another unit of the good. 
C) minimum price that firms must receive to supply a certain quantity of a good. 
D) the producer surplus of producing the good. 
E) maximum price that firms will accept in order to supply a certain quantity of a good. 
A) marginal benefit of a firm producing another unit of a good. 
B) dollars' worth of other goods and services we are willing to give up to get another unit of the good. 
C) minimum price that firms must receive to supply a certain quantity of a good. 
D) the producer surplus of producing the good. 
E) maximum price that firms will accept in order to supply a certain quantity of a good.

Question 8

Often politicians assert that a price, such as the price of gasoline or the rent for an apartment, is too high and that it is unfair for these prices to be so high.If these products are traded in competitive markets, what fairness rule are politicians using? Why?

Accepted Answer

The fairness rule is one of "It's not fa

Question 9

-In the figure above, at the market price of $15, the consumer surplus equals

Accepted Answer

A) $10,000. 
B) $30,000. 
C) $40,000. 
D) 2,000 units. 
E) $20,000. 
A) $10,000. 
B) $30,000. 
C) $40,000. 
D) 2,000 units. 
E) $20,000.

Question 10

The phrase "decreasing marginal benefit" means that

Accepted Answer

A) the more you consume of the product, the less total benefit you derive. 
B) the marginal cost will be increasing as you consume more of a good. 
C) each additional unit of a good you consume gives you less additional benefit than the previous unit. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) the more you consume of the product, the less total benefit you derive. 
B) the marginal cost will be increasing as you consume more of a good. 
C) each additional unit of a good you consume gives you less additional benefit than the previous unit. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Question 11

Briefly describe the concept of the "invisible hand."

Accepted Answer

The invisible hand suggests that a compe

Question 12

If marginal benefit is equal to marginal cost, then the

Accepted Answer

A) producer surplus is equal to the consumer surplus. 
B) sum of producer surplus and consumer surplus is as large as possible. 
C) sum of producer surplus and consumer surplus equals zero. 
D) market has squeezed out total surplus so that it equals zero. 
E) deadweight loss is more than zero but less than its maximum. 
A) producer surplus is equal to the consumer surplus. 
B) sum of producer surplus and consumer surplus is as large as possible. 
C) sum of producer surplus and consumer surplus equals zero. 
D) market has squeezed out total surplus so that it equals zero. 
E) deadweight loss is more than zero but less than its maximum.

Question 13

In order to efficiently allocate goods and services, we have to compare

Accepted Answer

A) total cost to total benefit. 
B) total cost to price. 
C) marginal benefit to price. 
D) marginal cost to marginal benefit. 
E) price to marginal cost. 
A) total cost to total benefit. 
B) total cost to price. 
C) marginal benefit to price. 
D) marginal cost to marginal benefit. 
E) price to marginal cost.

Question 14

In December 2010, Kansas had a severe ice storm that caused electrical blackouts.The Fictitious Portable Generator firm of Lawrence had several portable generators that could be used by homeowners to provide electricity.Which of the following would be the fair-rules way to provide them?

Accepted Answer

A) The government confiscates the generators owned by Fictitious and distributes them. 
B) Fictitious is forced by the state to rent the generators at half the normal rate. 
C) The state sets up a lottery to determine who rents the available generators at the normal rate. 
D) Fictitious rents generators at the equilibrium market price. 
E) Fictitious follows government commands about who gets to use the generators. 
A) The government confiscates the generators owned by Fictitious and distributes them. 
B) Fictitious is forced by the state to rent the generators at half the normal rate. 
C) The state sets up a lottery to determine who rents the available generators at the normal rate. 
D) Fictitious rents generators at the equilibrium market price. 
E) Fictitious follows government commands about who gets to use the generators.

Question 15

To a seller, the cost of a good or service is ________ and the price is ________.

Accepted Answer

A) what must be given up to produce the good or service; what is received for the good or service 
B) what is received for the good or service; what must be given up to produce the good or service 
C) the producer surplus the seller receives; the consumer surplus the buyer receives 
D) the producer surplus the buyer receives; the consumer surplus the seller receives 
E) None of the above answers is correct. 
A) what must be given up to produce the good or service; what is received for the good or service 
B) what is received for the good or service; what must be given up to produce the good or service 
C) the producer surplus the seller receives; the consumer surplus the buyer receives 
D) the producer surplus the buyer receives; the consumer surplus the seller receives 
E) None of the above answers is correct.

Question 16

Why does redistribution, so that the distribution of income is equal, bring about less total output?

Accepted Answer

A) Incentives to work are reduced. 
B) No one can determine marginal benefit or marginal cost as a result. 
C) Those in political power will likely receive a larger income. 
D) Because the marginal benefit and marginal cost of work have been equally increased. 
E) The premise of the question is incorrect because an equal distribution of income would increase rather than decrease the total amount produced. 
A) Incentives to work are reduced. 
B) No one can determine marginal benefit or marginal cost as a result. 
C) Those in political power will likely receive a larger income. 
D) Because the marginal benefit and marginal cost of work have been equally increased. 
E) The premise of the question is incorrect because an equal distribution of income would increase rather than decrease the total amount produced.

Question 17

If a landlord will rent an apartment only to married couples over 30 years old, the landlord is allocating resources using a ________ allocation method.

Accepted Answer

A) majority rule 
B) market price 
C) contest 
D) personal characteristics 
E) command 
A) majority rule 
B) market price 
C) contest 
D) personal characteristics 
E) command

Question 18

If the marginal benefit of a hot dog is greater than its marginal cost, then to increase efficiency,

Accepted Answer

A) more hot dogs should be produced. 
B) fewer hot dogs should be produced. 
C) nothing should be done if the marginal benefit is greater than the marginal cost by the maximum amount because in this case the efficient quantity of hot dogs is being produced. 
D) production should be halted. 
E) More information is needed about the price of a hot dog in order to determine if production should be increased, decreased, or not changed. 
A) more hot dogs should be produced. 
B) fewer hot dogs should be produced. 
C) nothing should be done if the marginal benefit is greater than the marginal cost by the maximum amount because in this case the efficient quantity of hot dogs is being produced. 
D) production should be halted. 
E) More information is needed about the price of a hot dog in order to determine if production should be increased, decreased, or not changed.

Question 19

An unequal distribution of income is considered fair according to Robert Nozick if

Accepted Answer

A) marginal cost equals marginal benefit. 
B) the cost of administering a welfare system is minimized. 
C) property rights are enforced and voluntary exchange occurs. 
D) the economy is producing its maximum total output. 
E) resources are allocated using the command method. 
A) marginal cost equals marginal benefit. 
B) the cost of administering a welfare system is minimized. 
C) property rights are enforced and voluntary exchange occurs. 
D) the economy is producing its maximum total output. 
E) resources are allocated using the command method.

Question 20

Allocative efficiency refers to

Accepted Answer

A) producing the goods and services most highly valued. 
B) using the least amount of labor to produce output. 
C) producing the maximum possible amount of output. 
D) obtaining the least output with the most inputs. 
E) producing at any point on the PPF. 
A) producing the goods and services most highly valued. 
B) using the least amount of labor to produce output. 
C) producing the maximum possible amount of output. 
D) obtaining the least output with the most inputs. 
E) producing at any point on the PPF.

-In the figure above, if pizza production increases to 15,000 pizzas a day, then marginal benefit marginal cost, and occurs.

What must be true for a consumer to enjoy a consumer surplus from a unit of a good?

Allocative efficiency occurs

Marginal cost is the opportunity cost of producing

In general, the marginal cost curve

In a competitive market with no externalities,

The supply curve shows the

Often politicians assert that a price, such as the price of gasoline or the rent for an apartment, is too high and that it is unfair for these prices to be so high.If these products are traded in competitive markets, what fairness rule are politicians using? Why?

-In the figure above, at the market price of $15, the consumer surplus equals

The phrase "decreasing marginal benefit" means that

Briefly describe the concept of the "invisible hand."

If marginal benefit is equal to marginal cost, then the

In order to efficiently allocate goods and services, we have to compare

In December 2010, Kansas had a severe ice storm that caused electrical blackouts.The Fictitious Portable Generator firm of Lawrence had several portable generators that could be used by homeowners to provide electricity.Which of the following would be the fair-rules way to provide them?

To a seller, the cost of a good or service is and the price is .

Why does redistribution, so that the distribution of income is equal, bring about less total output?

If a landlord will rent an apartment only to married couples over 30 years old, the landlord is allocating resources using a ________ allocation method.

If the marginal benefit of a hot dog is greater than its marginal cost, then to increase efficiency,

An unequal distribution of income is considered fair according to Robert Nozick if

Allocative efficiency refers to

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

-In the figure above, if pizza production increases to 15,000 pizzas a day, then marginal benefit ________ marginal cost, and ________ occurs.

What must be true for a consumer to enjoy a consumer surplus from a unit of a good?

Allocative efficiency occurs

Marginal cost is the opportunity cost of producing

In general, the marginal cost curve

In a competitive market with no externalities,

The supply curve shows the

Often politicians assert that a price, such as the price of gasoline or the rent for an apartment, is too high and that it is unfair for these prices to be so high.If these products are traded in competitive markets, what fairness rule are politicians using? Why?

-In the figure above, at the market price of $15, the consumer surplus equals

The phrase "decreasing marginal benefit" means that

Briefly describe the concept of the "invisible hand."

If marginal benefit is equal to marginal cost, then the

In order to efficiently allocate goods and services, we have to compare

In December 2010, Kansas had a severe ice storm that caused electrical blackouts.The Fictitious Portable Generator firm of Lawrence had several portable generators that could be used by homeowners to provide electricity.Which of the following would be the fair-rules way to provide them?

To a seller, the cost of a good or service is ________ and the price is ________.

Why does redistribution, so that the distribution of income is equal, bring about less total output?

If a landlord will rent an apartment only to married couples over 30 years old, the landlord is allocating resources using a ________ allocation method.

If the marginal benefit of a hot dog is greater than its marginal cost, then to increase efficiency,

An unequal distribution of income is considered fair according to Robert Nozick if

Allocative efficiency refers to

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 increases to 15,000 pizzas a day, then marginal benefit marginal cost, and occurs.

To a seller, the cost of a good or service is and the price is .