Question 1

A point on the demand curve shows the

Accepted Answer

A) price and the corresponding quantity demanded. 
B) marginal benefit from that unit. 
C) marginal cost to the seller of producing the unit. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) price and the corresponding quantity demanded. 
B) marginal benefit from that unit. 
C) marginal cost to the seller of producing the unit. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Question 2

Which of the following leads to a deadweight loss?
I∙overproduction
Ii∙underproduction
Iii∙taxes
Iv∙monopoly

Accepted Answer

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

Question 3

-The figure above shows Cindy's demand for CDs per year.
a∙What is Cindy's consumer surplus on all the CDs consumed if the price of a CD is $12?
b∙What is Cindy's consumer surplus on all the CDs consumed if the price of a CD is $9?
c∙What happens to Cindy's consumer surplus when the price of a CD falls?

Accepted Answer

a∙Her consumer surplus when the price of

Question 4

-The figure above shows the competitive market for slices of key lime pie.If the production is 40 slices per day, someone is willing to buy another slice of pie for

Accepted Answer

A) more than it costs to produce the slice. 
B) less than it costs to produce the slice. 
C) an amount equal to the cost of producing the slice. 
D) an amount equal to the cost of producing all 40 slices. 
E) an amount that is not comparable to the cost of producing the slice. 
A) more than it costs to produce the slice. 
B) less than it costs to produce the slice. 
C) an amount equal to the cost of producing the slice. 
D) an amount equal to the cost of producing all 40 slices. 
E) an amount that is not comparable to the cost of producing the slice.

Question 5

Allocating resources by the order of someone in authority is 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 6

To achieve allocative efficiency, an economy

Accepted Answer

A) must produce on its PPF. 
B) does not necessarily need to be production efficient. 
C) must have increases in technology. 
D) might leave some resources unemployed. 
E) can produce either on or within its PPF. 
A) must produce on its PPF. 
B) does not necessarily need to be production efficient. 
C) must have increases in technology. 
D) might leave some resources unemployed. 
E) can produce either on or within its PPF.

Question 7

The producer surplus on a unit of a good is

Accepted Answer

A) equal to the marginal benefit from the good minus its price. 
B) equal to the price of the good minus the marginal cost of producing it. 
C) always equal to consumer surplus. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct. 
A) equal to the marginal benefit from the good minus its price. 
B) equal to the price of the good minus the marginal cost of producing it. 
C) always equal to consumer surplus. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct.

Question 8

Allocative efficiency is achieved when the marginal benefit of a good

Accepted Answer

A) exceeds the marginal cost regardless of how much the difference is. 
B) is less than its marginal cost. 
C) is equal to its marginal cost. 
D) equals zero. 
E) exceeds the marginal cost by as much as possible. 
A) exceeds the marginal cost regardless of how much the difference is. 
B) is less than its marginal cost. 
C) is equal to its marginal cost. 
D) equals zero. 
E) exceeds the marginal cost by as much as possible.

Question 9

Adam Smith's Wealth of Nations, written in 1776, describes the market's invisible hand representing the

Accepted Answer

A) King of England's control over the colonies. 
B) control all governments have in organizing the market. 
C) efficiency the market achieves without the interference of governments. 
D) inefficiency of markets when governments do not organize them. 
E) invisible command system that efficiently allocates resources. 
A) King of England's control over the colonies. 
B) control all governments have in organizing the market. 
C) efficiency the market achieves without the interference of governments. 
D) inefficiency of markets when governments do not organize them. 
E) invisible command system that efficiently allocates resources.

Question 10

-The figure above shows Diane's demand curve for soda.The price of a soda is $1.00.Diane's consumer surplus from her 15th soda is

Accepted Answer

A) $0.00. 
B) $0.50. 
C) $1.00. 
D) $1.50. 
E) $2.50. 
A) $0.00. 
B) $0.50. 
C) $1.00. 
D) $1.50. 
E) $2.50.

Question 11

-The figure above shows the market for brooms.If 800 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 less than marginal benefit. 
E) there is no deadweight loss. 
A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) market failure and a deadweight loss occur. 
D) marginal cost is less than marginal benefit. 
E) there is no deadweight loss.

Question 12

What is producer surplus?

Accepted Answer

Producer surplus equals the di

Question 13

As pointed out by the "big tradeoff," government action that redistributes incomes so that everyone has the same income leads to

Accepted Answer

A) fairness according to the "fair rules" approach. 
B) efficient markets. 
C) resources being allocated according to a command system. 
D) a smaller total output 
E) lower taxes on the rich than on the poor so that the rich do not lose their incentive to work. 
A) fairness according to the "fair rules" approach. 
B) efficient markets. 
C) resources being allocated according to a command system. 
D) a smaller total output 
E) lower taxes on the rich than on the poor so that the rich do not lose their incentive to work.

Question 14

Jason hires 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.What will be the equilibrium quantity of hours tutored and the equilibrium price? Explain why this quantity and price is the equilibrium.What is Jason's consumer surplus and what is Maria's producer surplus?

Accepted Answer

The equilibrium quantity will be 4 hours

Question 15

The value of a slice of pizza to a consumer is equal to

Accepted Answer

A) its marginal benefit. 
B) the maximum price the consumer is willing to pay. 
C) the consumer surplus. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct. 
A) its marginal benefit. 
B) the maximum price the consumer is willing to pay. 
C) the consumer surplus. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct.

Question 16

The idea of the "big tradeoff" points out the costs of

Accepted Answer

A) using a results approach to fairness when the rules approach is correct. 
B) transferring income using taxes that decrease efficiency. 
C) price hikes during natural disasters. 
D) using a rules approach to fairness when the results approach is correct. 
E) None of the above answers is correct. 
A) using a results approach to fairness when the rules approach is correct. 
B) transferring income using taxes that decrease efficiency. 
C) price hikes during natural disasters. 
D) using a rules approach to fairness when the results approach is correct. 
E) None of the above answers is correct.

Question 17

When output is less than the efficient level,

Accepted Answer

A) consumers are willing to pay more for another unit than it costs to produce the unit. 
B) the amount consumers are willing to pay equals the cost of production. 
C) the cost of production is greater than the price consumers are willing to pay. 
D) the production costs can't be measured. 
E) the marginal cost of producing the good must be greater than the marginal benefit from the good. 
A) consumers are willing to pay more for another unit than it costs to produce the unit. 
B) the amount consumers are willing to pay equals the cost of production. 
C) the cost of production is greater than the price consumers are willing to pay. 
D) the production costs can't be measured. 
E) the marginal cost of producing the good must be greater than the marginal benefit from the good.

Question 18

-The figure above represents the competitive market for slices of key lime pie.If the production is 80 slices per day, the cost of the 80th slice is

Accepted Answer

A) less than anyone is willing to pay for it. 
B) more than anyone is willing to pay for it. 
C) equal to what someone is willing to pay for it. 
D) indeterminant. 
E) equal to the deadweight loss from the 80th slice. 
A) less than anyone is willing to pay for it. 
B) more than anyone is willing to pay for it. 
C) equal to what someone is willing to pay for it. 
D) indeterminant. 
E) equal to the deadweight loss from the 80th slice.

Question 19

Which of the following can result in a market producing an inefficient quantity of a good?
I∙competition
Ii∙an external cost or an external benefit
Iii∙a tax

Accepted Answer

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

Question 20

The difference between the marginal benefit from a new pair of shoes and the price of the new pair of shoes is

Accepted Answer

A) the consumer surplus from that pair of shoes. 
B) what we get. 
C) what we have to pay. 
D) the price when the marginal benefit is maximized. 
E) the consumer's expenditure on the shoes. 
A) the consumer surplus from that pair of shoes. 
B) what we get. 
C) what we have to pay. 
D) the price when the marginal benefit is maximized. 
E) the consumer's expenditure on the shoes.

A point on the demand curve shows the

Which of the following leads to a deadweight loss? I∙overproduction Ii∙underproduction Iii∙taxes Iv∙monopoly

-The figure above shows the competitive market for slices of key lime pie.If the production is 40 slices per day, someone is willing to buy another slice of pie for

Allocating resources by the order of someone in authority is a ________ allocation method.

To achieve allocative efficiency, an economy

The producer surplus on a unit of a good is

Allocative efficiency is achieved when the marginal benefit of a good

Adam Smith's Wealth of Nations, written in 1776, describes the market's invisible hand representing the

-The figure above shows Diane's demand curve for soda.The price of a soda is $1.00.Diane's consumer surplus from her 15th soda is

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

What is producer surplus?

As pointed out by the "big tradeoff," government action that redistributes incomes so that everyone has the same income leads to

The value of a slice of pizza to a consumer is equal to

The idea of the "big tradeoff" points out the costs of

When output is less than the efficient level,

-The figure above represents the competitive market for slices of key lime pie.If the production is 80 slices per day, the cost of the 80th slice is

Which of the following can result in a market producing an inefficient quantity of a good? I∙competition Ii∙an external cost or an external benefit Iii∙a tax

The difference between the marginal benefit from a new pair of shoes and the price of the new pair of shoes 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

A point on the demand curve shows the

Which of the following leads to a deadweight loss? I∙overproduction Ii∙underproduction Iii∙taxes Iv∙monopoly

-The figure above shows the competitive market for slices of key lime pie.If the production is 40 slices per day, someone is willing to buy another slice of pie for

Allocating resources by the order of someone in authority is a ________ allocation method.

To achieve allocative efficiency, an economy

The producer surplus on a unit of a good is

Allocative efficiency is achieved when the marginal benefit of a good

Adam Smith's Wealth of Nations, written in 1776, describes the market's invisible hand representing the

-The figure above shows Diane's demand curve for soda.The price of a soda is $1.00.Diane's consumer surplus from her 15th soda is

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

What is producer surplus?

As pointed out by the "big tradeoff," government action that redistributes incomes so that everyone has the same income leads to

The value of a slice of pizza to a consumer is equal to

The idea of the "big tradeoff" points out the costs of

When output is less than the efficient level,

-The figure above represents the competitive market for slices of key lime pie.If the production is 80 slices per day, the cost of the 80th slice is

Which of the following can result in a market producing an inefficient quantity of a good? I∙competition Ii∙an external cost or an external benefit Iii∙a tax

The difference between the marginal benefit from a new pair of shoes and the price of the new pair of shoes 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