Question 1

The opportunity cost of producing one more unit of a good or service is the

Accepted Answer

A) marginal cost. 
B) marginal benefit. 
C) efficient level of production. 
D) market outcome. 
E) price of the good or service. 
A) marginal cost. 
B) marginal benefit. 
C) efficient level of production. 
D) market outcome. 
E) price of the good or service.

Question 2

Explain the difference between the words "value," "price," and "cost."

Accepted Answer

Value refers to the marginal benefit of

Question 3

When the city of Fresno holds a referendum to determine if taxes will be raised to pay for road repairs, the city is 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 4

The price of a shirt is $20. Charlie can produce a shirt at a marginal cost of $10, Mac can produce a shirt for $18, and Dennis can produce a shirt for $22. For a shirt, Deandra has a marginal benefit of $25, Frank has marginal benefit of $20, and Artemis has a marginal benefit of $18. Which of the following statements is correct?

Accepted Answer

A) The sum of consumer surplus is $5 and the sum of producer surplus is $12. 
B) The sum of consumer surplus is $12. 
C) Only Frank and Artemis will purchase a shirt. 
D) Only Dennis will produce a shirt. 
E)  The sum of producer surplus is $10. 
A) The sum of consumer surplus is $5 and the sum of producer surplus is $12. 
B) The sum of consumer surplus is $12. 
C) Only Frank and Artemis will purchase a shirt. 
D) Only Dennis will produce a shirt. 
E)  The sum of producer surplus is $10.

Question 5

To determine how much of a good to produce to achieve allocative efficiency, we

Accepted Answer

A) construct a production possibilities frontier and choose the midpoint. 
B) construct a production possibilities frontier and choose any point on it. 
C) must produce on the PPF and at the point where the marginal benefit and marginal cost of the good are equal. 
D) must produce on the PPF and at the point where the marginal benefit exceeds by any amount the marginal cost of the good. 
E) must produce on the PPF and at the point where the marginal benefit exceeds by as much as possible the marginal cost of the good. 
A) construct a production possibilities frontier and choose the midpoint. 
B) construct a production possibilities frontier and choose any point on it. 
C) must produce on the PPF and at the point where the marginal benefit and marginal cost of the good are equal. 
D) must produce on the PPF and at the point where the marginal benefit exceeds by any amount the marginal cost of the good. 
E) must produce on the PPF and at the point where the marginal benefit exceeds by as much as possible the marginal cost of the good.

Question 6

6.7 Integrative Questions
  
-The figure above shows the market for brooms. If the market is efficient,

Accepted Answer

A) 0 brooms are produced. 
B) 600 brooms are produced. 
C) more than 1000 brooms are produced. 
D) between 0 and 600 brooms are produced. 
E) between 600 and 1000 brooms are produced. 
A) 0 brooms are produced. 
B) 600 brooms are produced. 
C) more than 1000 brooms are produced. 
D) between 0 and 600 brooms are produced. 
E) between 600 and 1000 brooms are produced.

Question 7

Which of the following statements is correct?
I. The demand curve shows the maximum price people are willing to pay for a given quantity of the good.
Ii. The maximum price a consumer is willing to pay for an additional unit is the marginal benefit of that unit.
Iii. Value is what a consumer receives and price is what a consumer pays.

Accepted Answer

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

Question 8

Graphically, producer surplus is the area under the

Accepted Answer

A) demand curve and above the supply curve, up to the relevant quantity. 
B) price and above the demand curve, up to the relevant quantity. 
C) price and above the supply curve, up to the relevant quantity. 
D) price and above the quantity axis, up to the relevant quantity. 
E) demand curve and above the price, up to the relevant quantity. 
A) demand curve and above the supply curve, up to the relevant quantity. 
B) price and above the demand curve, up to the relevant quantity. 
C) price and above the supply curve, up to the relevant quantity. 
D) price and above the quantity axis, up to the relevant quantity. 
E) demand curve and above the price, up to the relevant quantity.

Question 9

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 10

What is the impact of a government subsidy to producers?

Accepted Answer

A) Less is produced relative to the efficient level, creating a deadweight loss. 
B) More is produced relative to the efficient level, creating a deadweight loss. 
C) Producer surplus is increased, which creates a larger consumer surplus. 
D) Producers are able to sell the product at a higher price. 
E) Consumers must pay a higher price for the good. 
A) Less is produced relative to the efficient level, creating a deadweight loss. 
B) More is produced relative to the efficient level, creating a deadweight loss. 
C) Producer surplus is increased, which creates a larger consumer surplus. 
D) Producers are able to sell the product at a higher price. 
E) Consumers must pay a higher price for the good.

Question 11

-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 o

Question 12

"A demand curve is the same as a marginal cost curve." Is this statement correct or incorrect?
 Explain your answer.

Accepted Answer

The statement is incorrect. A demand cur

Question 13

Which of the following occurs when a market is efficient?

Accepted Answer

A) Consumer surplus equals producer surplus. 
B) Consumer surplus is as large as possible. 
C) Producer surplus is as large as possible. 
D) The sum of consumer surplus and producer surplus is maximized. 
E) The marginal benefit exceeds the marginal cost by as much as possible. 
A) Consumer surplus equals producer surplus. 
B) Consumer surplus is as large as possible. 
C) Producer surplus is as large as possible. 
D) The sum of consumer surplus and producer surplus is maximized. 
E) The marginal benefit exceeds the marginal cost by as much as possible.

Question 14

-In the above figure, if the quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied, then area C + area E is equal to

Accepted Answer

A) deadweight loss. 
B) consumer surplus. 
C) total surplus. 
D) producer surplus. 
E) total revenue. 
A) deadweight loss. 
B) consumer surplus. 
C) total surplus. 
D) producer surplus. 
E) total revenue.

Question 15

Maria helps tutor students taking economics. The equilibrium price for tutoring is $15 per hour. Maria has determined her opportunity cost per hour to be $6 for the first, $9 for the second, $12 for the third, $15 for the fourth, and $18 for the fifth. How many hours will Maria tutor?
 Why this amount of hours?
 What, if any, is Maria's producer surplus?

Accepted Answer

Maria will tutor for 4 hours. For all of

Question 16

If a firm produces five chairs with marginal costs of $25, $30, $40, $55, and $75, respectively, and sells them for $80 each, what is the firm's total producer surplus?

Accepted Answer

A) $400 
B) $225 
C) $175 
D) $150 
E) $80 
A) $400 
B) $225 
C) $175 
D) $150 
E) $80

Question 17

The figure above shows the supply curve for pizza and the market price of pizza.
-In the figure above, the producer surplus is

Accepted Answer

A) $60,000. 
B) $100,000. 
C) $40,000. 
D) $80,000. 
E) $50,000. 
A) $60,000. 
B) $100,000. 
C) $40,000. 
D) $80,000. 
E) $50,000.

Question 18

For resource use to be allocatively efficient, when the marginal benefit of a slice of pizza exceeds the marginal cost ________.

Accepted Answer

A) more slices of pizza should be produced 
B) fewer slices of pizza should be produced 
C) no more slices of pizza should be produced 
D) allocative efficiency is reached only if the marginal benefit exceeds the marginal cost by as much as possible 
E) None of the above answers is correct. 
A) more slices of pizza should be produced 
B) fewer slices of pizza should be produced 
C) no more slices of pizza should be produced 
D) allocative efficiency is reached only if the marginal benefit exceeds the marginal cost by as much as possible 
E) None of the above answers is correct.

Question 19

The demand curve is the same as another curve. Which curve is the same as the demand curve?
 Why are the curves the same?

Accepted Answer

The demand curve is the same as the marg

Question 20

The principle of decreasing marginal benefit explains why the marginal benefit curve

Accepted Answer

A) is upward sloping. 
B) has an infinite slope. 
C) is vertical. 
D) is downward sloping. 
E) is horizontal. 
A) is upward sloping. 
B) has an infinite slope. 
C) is vertical. 
D) is downward sloping. 
E) is horizontal.

The opportunity cost of producing one more unit of a good or service is the

Explain the difference between the words "value," "price," and "cost."

When the city of Fresno holds a referendum to determine if taxes will be raised to pay for road repairs, the city is using a ________ allocation method.

To determine how much of a good to produce to achieve allocative efficiency, we

6.7 Integrative Questions -The figure above shows the market for brooms. If the market is efficient,

Graphically, producer surplus is the area under the

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

What is the impact of a government subsidy to producers?

"A demand curve is the same as a marginal cost curve." Is this statement correct or incorrect? Explain your answer.

Which of the following occurs when a market is efficient?

-In the above figure, if the quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied, then area C + area E is equal to

If a firm produces five chairs with marginal costs of $25, $30, $40, $55, and $75, respectively, and sells them for $80 each, what is the firm's total producer surplus?

The figure above shows the supply curve for pizza and the market price of pizza. -In the figure above, the producer surplus is

For resource use to be allocatively efficient, when the marginal benefit of a slice of pizza exceeds the marginal cost ________.

The demand curve is the same as another curve. Which curve is the same as the demand curve? Why are the curves the same?

The principle of decreasing marginal benefit explains why the marginal benefit curve

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 6: Efficiency and Fairness of Markets

The opportunity cost of producing one more unit of a good or service is the

Explain the difference between the words "value," "price," and "cost."

When the city of Fresno holds a referendum to determine if taxes will be raised to pay for road repairs, the city is using a ________ allocation method.

To determine how much of a good to produce to achieve allocative efficiency, we

6.7 Integrative Questions -The figure above shows the market for brooms. If the market is efficient,

Graphically, producer surplus is the area under the

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

What is the impact of a government subsidy to producers?

"A demand curve is the same as a marginal cost curve." Is this statement correct or incorrect? Explain your answer.

Which of the following occurs when a market is efficient?

-In the above figure, if the quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied, then area C + area E is equal to

If a firm produces five chairs with marginal costs of $25, $30, $40, $55, and $75, respectively, and sells them for $80 each, what is the firm's total producer surplus?

The figure above shows the supply curve for pizza and the market price of pizza. -In the figure above, the producer surplus is

For resource use to be allocatively efficient, when the marginal benefit of a slice of pizza exceeds the marginal cost ________.

The demand curve is the same as another curve. Which curve is the same as the demand curve? Why are the curves the same?

The principle of decreasing marginal benefit explains why the marginal benefit curve

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters