Question 1

The "big tradeoff" refers to

Accepted Answer

A) producing capital goods instead of consumable goods. 
B) marginal benefit versus marginal cost. 
C) efficiency and fairness. 
D) taking an economics course instead of some other course. 
E) using market prices rather than a command system to allocate resources. 
A) producing capital goods instead of consumable goods. 
B) marginal benefit versus marginal cost. 
C) efficiency and fairness. 
D) taking an economics course instead of some other course. 
E) using market prices rather than a command system to allocate resources.

Question 2

Which of the following is part of the cost of income transfers?

Accepted Answer

A) Tax-collecting agencies cost money to administer. 
B) Taxing incomes encourages people to work harder. 
C) Income transfers make the results more unfair. 
D) Income transfers increase the size of the economic pie. 
E) Income transfers are a similar to allocating resources using a lottery. 
A) Tax-collecting agencies cost money to administer. 
B) Taxing incomes encourages people to work harder. 
C) Income transfers make the results more unfair. 
D) Income transfers increase the size of the economic pie. 
E) Income transfers are a similar to allocating resources using a lottery.

Question 3

-In the figure above, when the market is in equilibrium, marginal benefit ________ marginal cost, so the quantity of pizza produced is ________.

Accepted Answer

A) equals; efficient 
B) exceeds; efficient 
C) is below; efficient 
D) is below; not efficient 
E) exceeds; not efficient 
A) equals; efficient 
B) exceeds; efficient 
C) is below; efficient 
D) is below; not efficient 
E) exceeds; not efficient

Question 4

Jenn is willing to pay $75 for a purse and the purse's price is $60.What is Jenn's consumer surplus on this purse?

Accepted Answer

The consumer surplus equals the differen

Question 5

Auditors working for a large accounting firm are often away from the office.When they are in the office, they are allowed to use any desk that is available.Which method is used to allocate desks?

Accepted Answer

A) lottery 
B) first-come, first-served 
C) command 
D) contest 
E) sharing equally 
A) lottery 
B) first-come, first-served 
C) command 
D) contest 
E) sharing equally

Question 6

In general, the marginal benefit curve

Accepted Answer

A) has a positive slope. 
B) has a negative slope. 
C) is horizontal. 
D) is vertical. 
E) is concave. 
A) has a positive slope. 
B) has a negative slope. 
C) is horizontal. 
D) is vertical. 
E) is concave.

Question 7

The chair of the Department of Economics at Colorado State University decided that office space is for tenured faculty and that graduate students are required to share cubicles.What method is used to allocate office space?

Accepted Answer

A) lottery 
B) majority rule 
C) command 
D) first-come, first-served 
E) sharing equally 
A) lottery 
B) majority rule 
C) command 
D) first-come, first-served 
E) sharing equally

Question 8

Ben's cost of making an additional rocking chair is $75.

Accepted Answer

A) If he sells it for a $100, his producer surplus is $25. 
B) His marginal cost is equal to $75. 
C) The marginal benefit to the consumer from the chair will be $75. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct. 
A) If he sells it for a $100, his producer surplus is $25. 
B) His marginal cost is equal to $75. 
C) The marginal benefit to the consumer from the chair will be $75. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct.

Question 9

-The figure above shows the market for brooms.If 800 brooms are produced,

Accepted Answer

A) marginal cost exceeds marginal benefit. 
B) a deadweight loss does not occur because everyone who wants to buy a broom can. 
C) the "big tradeoff" occurs. 
D) value exceeds price. 
E) the "fair results" approach to fairness is definitely not violated. 
A) marginal cost exceeds marginal benefit. 
B) a deadweight loss does not occur because everyone who wants to buy a broom can. 
C) the "big tradeoff" occurs. 
D) value exceeds price. 
E) the "fair results" approach to fairness is definitely not violated.

Question 10

When society produces the combination of goods and services on the PPF that it values the most highly, society has

Accepted Answer

A) achieved only production efficiency and definitely not allocative efficiency. 
B) achieved only allocative efficiency definitely not production efficiency. 
C) achieved both production efficiency and allocative efficiency. 
D) achieved a free lunch. 
E) perhaps achieved production efficiency and has perhaps achieved allocative efficiency. 
A) achieved only production efficiency and definitely not allocative efficiency. 
B) achieved only allocative efficiency definitely not production efficiency. 
C) achieved both production efficiency and allocative efficiency. 
D) achieved a free lunch. 
E) perhaps achieved production efficiency and has perhaps achieved allocative efficiency.

Question 11

-Using the values for the marginal benefit and the marginal cost of a bushel of apples given in the table above, what is the allocatively efficient quantity of apples? Suppose 10 million bushels of apples are produced.Should the quantity be increased or decreased? What if 20 million bushels are produced; should the quantity be increased or decreased?

Accepted Answer

The allocatively efficient quantity of a

Question 12

Consumer surplus exists when a

Accepted Answer

A) person buys something with a marginal benefit less than what they paid. 
B) person buys something with a marginal benefit exactly what they paid. 
C) person buys something with a marginal benefit more than what they paid. 
D) producer sells something for more than it is worth. 
E) person buys something with a marginal cost less than what they paid. 
A) person buys something with a marginal benefit less than what they paid. 
B) person buys something with a marginal benefit exactly what they paid. 
C) person buys something with a marginal benefit more than what they paid. 
D) producer sells something for more than it is worth. 
E) person buys something with a marginal cost less than what they paid.

Question 13

When a product benefits people other than the buyer of the product, the product is said to have

Accepted Answer

A) an external cost. 
B) an excludable cost. 
C) an external benefit. 
D) an excludable benefit. 
E) a subsidized benefit. 
A) an external cost. 
B) an excludable cost. 
C) an external benefit. 
D) an excludable benefit. 
E) a subsidized benefit.

Question 14

-The figure above shows the supply and demand curves for pizza.If the market is at its competitive equilibrium, what area in the graph above represents:
a∙consumer surplus?
b∙producer surplus?

Accepted Answer

The answer of  
-The figure above shows the supply...

Question 15

When less than the efficient amount of a good is produced, how does the marginal benefit of the last unit produced compare to its marginal cost?

Accepted Answer

When less than the efficient amount of a

Question 16

What are some of the potential obstacles that can lead to market failure by preventing a market from reaching the efficient outcome? Briefly define each obstacle.

Accepted Answer

The obstacles basically fall into two ca

Question 17

The fair rules approach to fairness requires

Accepted Answer

A) consumer surplus equals producer surplus. 
B) income transfers from rich to poor. 
C) property rights and voluntary exchange. 
D) that marginal cost equal marginal benefit. 
E) consumer surplus exceed producer surplus because there are more consumers than producers. 
A) consumer surplus equals producer surplus. 
B) income transfers from rich to poor. 
C) property rights and voluntary exchange. 
D) that marginal cost equal marginal benefit. 
E) consumer surplus exceed producer surplus because there are more consumers than producers.

Question 18

Which of the following government policies ensures market efficiency?

Accepted Answer

A) subsidy 
B) tax 
C) price regulations 
D) quantity regulations 
E) None of the above answers is correct. 
A) subsidy 
B) tax 
C) price regulations 
D) quantity regulations 
E) None of the above answers is correct.

Question 19

Which of the following is true? When there are no externalities, public goods, common resources, taxes or subsidies, then
I∙allocative efficiency occurs when marginal benefit exceeds marginal cost by as much as possible.
Ii∙an a competitive equilibrium, resource allocation is efficient.
Iii∙fair rules require income transfers from the rich to the poor.

Accepted Answer

A) Only ii 
B) Only i 
C) Only iii 
D) i and ii 
E) i and iii 
A) Only ii 
B) Only i 
C) Only iii 
D) i and ii 
E) i and iii

Question 20

Cost

Accepted Answer

A) is what the buyer pays to get the good. 
B) is always equal to the marginal benefit for every unit of a good produced. 
C) is what the seller must give up to produce the good. 
D) is greater than market price, which results in a profit for firms. 
E) means the same thing as price. 
A) is what the buyer pays to get the good. 
B) is always equal to the marginal benefit for every unit of a good produced. 
C) is what the seller must give up to produce the good. 
D) is greater than market price, which results in a profit for firms. 
E) means the same thing as price.

The "big tradeoff" refers to

Which of the following is part of the cost of income transfers?

-In the figure above, when the market is in equilibrium, marginal benefit marginal cost, so the quantity of pizza produced is .

Jenn is willing to pay $75 for a purse and the purse's price is $60.What is Jenn's consumer surplus on this purse?

Auditors working for a large accounting firm are often away from the office.When they are in the office, they are allowed to use any desk that is available.Which method is used to allocate desks?

In general, the marginal benefit curve

The chair of the Department of Economics at Colorado State University decided that office space is for tenured faculty and that graduate students are required to share cubicles.What method is used to allocate office space?

Ben's cost of making an additional rocking chair is $75.

-The figure above shows the market for brooms.If 800 brooms are produced,

When society produces the combination of goods and services on the PPF that it values the most highly, society has

Consumer surplus exists when a

When a product benefits people other than the buyer of the product, the product is said to have

-The figure above shows the supply and demand curves for pizza.If the market is at its competitive equilibrium, what area in the graph above represents: a∙consumer surplus? b∙producer surplus?

When less than the efficient amount of a good is produced, how does the marginal benefit of the last unit produced compare to its marginal cost?

What are some of the potential obstacles that can lead to market failure by preventing a market from reaching the efficient outcome? Briefly define each obstacle.

The fair rules approach to fairness requires

Which of the following government policies ensures market efficiency?

Cost

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

The "big tradeoff" refers to

Which of the following is part of the cost of income transfers?

-In the figure above, when the market is in equilibrium, marginal benefit ________ marginal cost, so the quantity of pizza produced is ________.

Jenn is willing to pay $75 for a purse and the purse's price is $60.What is Jenn's consumer surplus on this purse?

Auditors working for a large accounting firm are often away from the office.When they are in the office, they are allowed to use any desk that is available.Which method is used to allocate desks?

In general, the marginal benefit curve

The chair of the Department of Economics at Colorado State University decided that office space is for tenured faculty and that graduate students are required to share cubicles.What method is used to allocate office space?

Ben's cost of making an additional rocking chair is $75.

-The figure above shows the market for brooms.If 800 brooms are produced,

When society produces the combination of goods and services on the PPF that it values the most highly, society has

Consumer surplus exists when a

When a product benefits people other than the buyer of the product, the product is said to have

-The figure above shows the supply and demand curves for pizza.If the market is at its competitive equilibrium, what area in the graph above represents: a∙consumer surplus? b∙producer surplus?

When less than the efficient amount of a good is produced, how does the marginal benefit of the last unit produced compare to its marginal cost?

What are some of the potential obstacles that can lead to market failure by preventing a market from reaching the efficient outcome? Briefly define each obstacle.

The fair rules approach to fairness requires

Which of the following government policies ensures market efficiency?

Cost

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 the market is in equilibrium, marginal benefit marginal cost, so the quantity of pizza produced is .