Question 1

When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is

Accepted Answer

A) minimized. 
B) maximized. 
C) equal to the deadweight loss. 
D) undefined. 
E) equal to zero. 
A) minimized. 
B) maximized. 
C) equal to the deadweight loss. 
D) undefined. 
E) equal to zero.

Question 2

-In the figure above, when 6,000 pizzas are produced, the marginal benefit of a pizza ________ its marginal cost, which means ________ pizza is being produced.

Accepted Answer

A) exceeds its marginal cost; too little 
B) exceeds its marginal cost; too much 
C) is below its marginal cost; too much 
D) is below its marginal cost; too little 
E) equals its marginal cost; the efficient quantity of 
A) exceeds its marginal cost; too little 
B) exceeds its marginal cost; too much 
C) is below its marginal cost; too much 
D) is below its marginal cost; too little 
E) equals its marginal cost; the efficient quantity of

Question 3

Suppose the nation is producing at a point on its PPF.If the marginal cost of producing one more computer is greater than the marginal benefit, the nation is producing

Accepted Answer

A) too few computers to be allocatively efficient. 
B) too many computers to be allocatively efficient. 
C) the correct number of computers to be allocatively efficient. 
D) at the point of allocative efficiency. 
E) More information is needed to determine if the nation is or is not producing at the allocatively efficient point. 
A) too few computers to be allocatively efficient. 
B) too many computers to be allocatively efficient. 
C) the correct number of computers to be allocatively efficient. 
D) at the point of allocative efficiency. 
E) More information is needed to determine if the nation is or is not producing at the allocatively efficient point.

Question 4

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

Accepted Answer

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

Question 5

If the price is greater than the marginal cost of producing a good, the seller has

Accepted Answer

A) no benefit from the sale. 
B) a loss. 
C) some producer surplus from the sale. 
D) some negative consumer surplus from the sale. 
E) None of the above answers is correct. 
A) no benefit from the sale. 
B) a loss. 
C) some producer surplus from the sale. 
D) some negative consumer surplus from the sale. 
E) None of the above answers is correct.

Question 6

-In the figure above, the equilibrium market price is $20.The producer surplus is shown by the area

Accepted Answer

A) A. 
B) B. 
C) A + B. 
D) A ÷ B. 
E) A - B. 
A) A. 
B) B. 
C) A + B. 
D) A ÷ B. 
E) A - B.

Question 7

Lattes at Starbucks are allocated to individuals in society through what type of method?

Accepted Answer

A) lottery 
B) contest 
C) sharing equally 
D) market price 
E) personal characteristics 
A) lottery 
B) contest 
C) sharing equally 
D) market price 
E) personal characteristics

Question 8

Resource use is allocative efficient

Accepted Answer

A) when it is not possible to produce more of one good. 
B) when we produce goods and services that we value most highly. 
C) when most resources are fully employed. 
D) at any point on the PPF. 
E) at all points either on or within the PPF because all these production points are attainable. 
A) when it is not possible to produce more of one good. 
B) when we produce goods and services that we value most highly. 
C) when most resources are fully employed. 
D) at any point on the PPF. 
E) at all points either on or within the PPF because all these production points are attainable.

Question 9

Moving ________ along the marginal cost curve, the ________.

Accepted Answer

A) upward; opportunity cost of one more unit increases 
B) upward; marginal cost decreases 
C) downward; marginal cost increases 
D) upward; opportunity cost of one more unit does not change 
E) downward; opportunity cost of one more unit does not change 
A) upward; opportunity cost of one more unit increases 
B) upward; marginal cost decreases 
C) downward; marginal cost increases 
D) upward; opportunity cost of one more unit does not change 
E) downward; opportunity cost of one more unit does not change

Question 10

-The figure above shows the market for pants.If the government subsidizes the production of pants so that production expands from 6 million pairs to 7 million pairs,

Accepted Answer

A) there would be no deadweight loss. 
B) the government's policy would have no effect on the sum of consumer surplus and producer surplus. 
C) a deadweight loss would result. 
D) the government's policy would increase the sum of consumer surplus and producer surplus. 
E) production would be even more efficient than if 6 million pairs of pants are produced because more is always better than less. 
A) there would be no deadweight loss. 
B) the government's policy would have no effect on the sum of consumer surplus and producer surplus. 
C) a deadweight loss would result. 
D) the government's policy would increase the sum of consumer surplus and producer surplus. 
E) production would be even more efficient than if 6 million pairs of pants are produced because more is always better than less.

Question 11

-The figure above shows the market for brooms.Which of the following could lead to the production of fewer than 600 brooms?

Accepted Answer

A) a monopoly 
B) a deadweight loss 
C) subsidies 
D) an external cost 
E) a big tradeoff 
A) a monopoly 
B) a deadweight loss 
C) subsidies 
D) an external cost 
E) a big tradeoff

Question 12

A competitive market with no externalities is efficient when it is in equilibrium because

Accepted Answer

A) total benefit equals total cost. 
B) marginal benefit equals marginal cost. 
C) consumer surplus equals producer surplus. 
D) the sum of consumer surplus plus producer surplus is minimized. 
E) the deadweight gain equals its maximum. 
A) total benefit equals total cost. 
B) marginal benefit equals marginal cost. 
C) consumer surplus equals producer surplus. 
D) the sum of consumer surplus plus producer surplus is minimized. 
E) the deadweight gain equals its maximum.

Question 13

A cost not borne by the producer but borne by other people is known as ________ cost.

Accepted Answer

A) a marginal 
B) an internal 
C) an external 
D) a nonessential 
E) a subsidized 
A) a marginal 
B) an internal 
C) an external 
D) a nonessential 
E) a subsidized

Question 14

Producer surplus is the ________ summed over the quantity produced.

Accepted Answer

A) price of the good minus the marginal cost of producing it 
B) marginal benefit of the good minus its marginal cost 
C) marginal benefit of the good minus its price 
D) marginal cost of the good minus the opportunity cost of producing it 
E) None of the above answers is correct. 
A) price of the good minus the marginal cost of producing it 
B) marginal benefit of the good minus its marginal cost 
C) marginal benefit of the good minus its price 
D) marginal cost of the good minus the opportunity cost of producing it 
E) None of the above answers is correct.

Question 15

Jason wants to hire Maria to tutor him in economics.Jason is willing to pay $30 for the first hour of tutoring, $25 for the second, $20 for the third, $15 for the fourth, and $10 for the fifth.Maria has an opportunity cost per hour of $6 for the first, $9 for the second, $12 for the third, $15 for the fourth, and $18 for the fifth.The initial equilibrium price for tutoring is $15 an hour and hence Maria tutors Jason for 4 hours.Now, Maria realizes that she is the only economics tutor because all the other tutors have graduated.Because she is the only tutor, she has a monopoly and, as a monopolist, Maria decides to charge a price of $25 instead of $15 an hour.
a∙At the price of $25 an hour, how many hours will Maria tutor Jason?
b∙At the initial equilibrium price of $15 an hour, what was Jason's total consumer surplus and Maria's total producer surplus?
c∙At the price of $25 an hour, how many hours will Jason hire Maria to tutor him? What is Jason's total consumer surplus and Maria's total producer surplus?
d∙How does the sum of Jason's consumer surplus plus Maria's producer surplus compare at the initial equilibrium price of $15 an hour (part b)and at the new price of $25 an hour (part c)? Comment on any difference.

Accepted Answer

a∙Maria will tutor Jason for 2 hours.
b∙

Question 16

If one producer has control over an entire market and underproduces, the producer will

Accepted Answer

A) increase producer surplus by lowering pollution costs. 
B) increase consumer surplus by lowering producer surplus. 
C) increase both consumer and producer surplus. 
D) create a deadweight loss. 
E) decrease the deadweight loss that would exist if the market were efficient. 
A) increase producer surplus by lowering pollution costs. 
B) increase consumer surplus by lowering producer surplus. 
C) increase both consumer and producer surplus. 
D) create a deadweight loss. 
E) decrease the deadweight loss that would exist if the market were efficient.

Question 17

-In the figure above, if pizza production increases to 15,000 pizzas a day, the deadweight loss is

Accepted Answer

A) $45,000 per day. 
B) $12,500 per day. 
C) $22,500 per day. 
D) $90,000 per day. 
E) zero. 
A) $45,000 per day. 
B) $12,500 per day. 
C) $22,500 per day. 
D) $90,000 per day. 
E) zero.

Question 18

Efficiency occurs in a market when

Accepted Answer

A) the sum of consumer surplus and producer surplus is maximized. 
B) consumer surplus is equal to producer surplus. 
C) consumer surplus is less than producer surplus. 
D) consumer surplus is greater than producer surplus. 
E) total revenue is maximized. 
A) the sum of consumer surplus and producer surplus is maximized. 
B) consumer surplus is equal to producer surplus. 
C) consumer surplus is less than producer surplus. 
D) consumer surplus is greater than producer surplus. 
E) total revenue is maximized.

Question 19

Why is the demand curve the same as the marginal benefit curve?

Accepted Answer

The demand curve for a good tells us for

Question 20

Consumers' total benefit from consuming a good is equal to the

Accepted Answer

A) total amount spent on the good. 
B) consumer surplus on the quantity purchased. 
C) consumer surplus plus the total amount spent on the good. 
D) consumer surplus minus the total amount spent on the good. 
E) total amount spent on the good divided by the number of units purchased. 
A) total amount spent on the good. 
B) consumer surplus on the quantity purchased. 
C) consumer surplus plus the total amount spent on the good. 
D) consumer surplus minus the total amount spent on the good. 
E) total amount spent on the good divided by the number of units purchased.

When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is

-In the figure above, when 6,000 pizzas are produced, the marginal benefit of a pizza its marginal cost, which means pizza is being produced.

Suppose the nation is producing at a point on its PPF.If the marginal cost of producing one more computer is greater than the marginal benefit, the nation is producing

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

If the price is greater than the marginal cost of producing a good, the seller has

-In the figure above, the equilibrium market price is $20.The producer surplus is shown by the area

Lattes at Starbucks are allocated to individuals in society through what type of method?

Resource use is allocative efficient

Moving along the marginal cost curve, the .

-The figure above shows the market for pants.If the government subsidizes the production of pants so that production expands from 6 million pairs to 7 million pairs,

-The figure above shows the market for brooms.Which of the following could lead to the production of fewer than 600 brooms?

A competitive market with no externalities is efficient when it is in equilibrium because

A cost not borne by the producer but borne by other people is known as ________ cost.

Producer surplus is the ________ summed over the quantity produced.

If one producer has control over an entire market and underproduces, the producer will

-In the figure above, if pizza production increases to 15,000 pizzas a day, the deadweight loss is

Efficiency occurs in a market when

Why is the demand curve the same as the marginal benefit curve?

Consumers' total benefit from consuming a good is equal to the

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

When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is

-In the figure above, when 6,000 pizzas are produced, the marginal benefit of a pizza ________ its marginal cost, which means ________ pizza is being produced.

Suppose the nation is producing at a point on its PPF.If the marginal cost of producing one more computer is greater than the marginal benefit, the nation is producing

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

If the price is greater than the marginal cost of producing a good, the seller has

-In the figure above, the equilibrium market price is $20.The producer surplus is shown by the area

Lattes at Starbucks are allocated to individuals in society through what type of method?

Resource use is allocative efficient

Moving ________ along the marginal cost curve, the ________.

-The figure above shows the market for pants.If the government subsidizes the production of pants so that production expands from 6 million pairs to 7 million pairs,

-The figure above shows the market for brooms.Which of the following could lead to the production of fewer than 600 brooms?

A competitive market with no externalities is efficient when it is in equilibrium because

A cost not borne by the producer but borne by other people is known as ________ cost.

Producer surplus is the ________ summed over the quantity produced.

If one producer has control over an entire market and underproduces, the producer will

-In the figure above, if pizza production increases to 15,000 pizzas a day, the deadweight loss is

Efficiency occurs in a market when

Why is the demand curve the same as the marginal benefit curve?

Consumers' total benefit from consuming a good is equal to the

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, when 6,000 pizzas are produced, the marginal benefit of a pizza its marginal cost, which means pizza is being produced.

Moving along the marginal cost curve, the .