Question 1

The maximum amount of other goods and services that people are willing to give up in order to get one more unit of a good is defined as the good's

Accepted Answer

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

Question 2

Which of the following occurs when a market is efficient?

Accepted Answer

A) Producers earn the highest income possible. 
B) Production costs equal total benefit. 
C) Consumer surplus equals producer surplus. 
D) Scarce resources are used to produce the goods and services that people value most highly. 
E) Every consumer has all of the good or service he or she wants. 
A) Producers earn the highest income possible. 
B) Production costs equal total benefit. 
C) Consumer surplus equals producer surplus. 
D) Scarce resources are used to produce the goods and services that people value most highly. 
E) Every consumer has all of the good or service he or she wants.

Question 3

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 4

Marginal benefit is the

Accepted Answer

A) total benefit we receive from consuming a good or service. 
B) additional benefit we receive from consuming one more unit of a good or service. 
C) minimum amount of other goods or services we are willing to give up. 
D) opportunities given up to get one more unit of a good or service. 
E) the benefit we receive from consuming one more unit of a good or service minus the cost of the producing one more unit of the good or service. 
A) total benefit we receive from consuming a good or service. 
B) additional benefit we receive from consuming one more unit of a good or service. 
C) minimum amount of other goods or services we are willing to give up. 
D) opportunities given up to get one more unit of a good or service. 
E) the benefit we receive from consuming one more unit of a good or service minus the cost of the producing one more unit of the good or service.

Question 5

At a competitive equilibrium with no externalities, taxes, subsidies, public goods, common resources, or high transactions costs,which of the following occurs?
i. an efficient outcome
ii. definitely a fair outcome when judged by the fair-results approach
iii. marginal cost equals marginal benefit
iv. producer surplus equals consumer surplus

Accepted Answer

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

Question 6

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 7

In a figure that shows a supply curve and a demand curve, producer surplus is the area

Accepted Answer

A) below the demand curve and above the market price. 
B) below the supply curve and above the market price. 
C) above the demand curve and below the market price. 
D) above the supply curve and below the market price. 
E) between the demand curve and the supply curve. 
A) below the demand curve and above the market price. 
B) below the supply curve and above the market price. 
C) above the demand curve and below the market price. 
D) above the supply curve and below the market price. 
E) between the demand curve and the supply curve.

Question 8

-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 9

When technology increases the supply of a good and lower prices increase the quantity demanded,

Accepted Answer

A) the economy is reallocating resources to achieve an efficient allocation. 
B) consumer surplus falls. 
C) the invisible hand is unnecessary. 
D) the marginal benefit of the good increases with the quantity produced. 
E) the economy is no longer efficient because the quantity changes. 
A) the economy is reallocating resources to achieve an efficient allocation. 
B) consumer surplus falls. 
C) the invisible hand is unnecessary. 
D) the marginal benefit of the good increases with the quantity produced. 
E) the economy is no longer efficient because the quantity changes.

Question 10

The "equality of opportunity" idea of fairness claims

Accepted Answer

A) a society should make the poorest as well off as possible. 
B) the results and the rules should both be fair. 
C) it's not fair if the rules aren't fair. 
D) private property can be transferred under government order. 
E) only a first-come, first-served system of allocating resources is fair. 
A) a society should make the poorest as well off as possible. 
B) the results and the rules should both be fair. 
C) it's not fair if the rules aren't fair. 
D) private property can be transferred under government order. 
E) only a first-come, first-served system of allocating resources is fair.

Question 11

Efficiency in a market occurs when the production of the good is such that

Accepted Answer

A) marginal benefit exceeds marginal cost. 
B) marginal benefit equals marginal cost. 
C) marginal benefit is lower than marginal cost. 
D) the marginal cost stops increasing. 
E) marginal benefit exceeds marginal cost by the maximum amount possible. 
A) marginal benefit exceeds marginal cost. 
B) marginal benefit equals marginal cost. 
C) marginal benefit is lower than marginal cost. 
D) the marginal cost stops increasing. 
E) marginal benefit exceeds marginal cost by the maximum amount possible.

Question 12

When allocative efficiency occurs,

Accepted Answer

A) an economy produces the goods and services most highly valued. 
B) marginal benefit exceeds marginal cost by some amount. 
C) technology must be increasing. 
D) we can simultaneously produce more of all goods. 
E) marginal benefit exceeds marginal cost by as much as possible. 
A) an economy produces the goods and services most highly valued. 
B) marginal benefit exceeds marginal cost by some amount. 
C) technology must be increasing. 
D) we can simultaneously produce more of all goods. 
E) marginal benefit exceeds marginal cost by as much as possible.

Question 13

In the above figure, what is the marginal cost of the 8th pizza?

Accepted Answer

A) $1.50 
B) $12 
C) $6 
D) $96 
E) 8 pizzas 
A) $1.50 
B) $12 
C) $6 
D) $96 
E) 8 pizzas

Question 14

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 15

Suppose Jennifer derives $100 in marginal benefits from her first skiing trip and $80 from her third trip. Her marginal benefit from her second trip is likely to be

Accepted Answer

A) more than $100. 
B) between $100 and $80. 
C) between $79 and $51. 
D) less than $51. 
E) some amount that cannot be calculated without additional information. 
A) more than $100. 
B) between $100 and $80. 
C) between $79 and $51. 
D) less than $51. 
E) some amount that cannot be calculated without additional information.

Question 16

Air pollution is an external cost because it

Accepted Answer

A) is a pollution of the external environment. 
B) is a cost not borne by the producer of the good. 
C) benefits no one. 
D) is not associated with resource use. 
E) is created only when production occurs. 
A) is a pollution of the external environment. 
B) is a cost not borne by the producer of the good. 
C) benefits no one. 
D) is not associated with resource use. 
E) is created only when production occurs.

Question 17

The price of a cowboy hat is $100. Willie is willing to pay $130, Waylon is willing to pay $100, and Merle is willing to pay $85. All of the following statements are true EXCEPT:

Accepted Answer

A) Merle's consumer surplus is $15. 
B) The sum of consumer surplus will be $30. 
C) Waylon's consumer surplus is $0. 
D) Only Willie and Waylon will purchase the cowboy hat. 
E) Willie's consumer surplus is $30. 
A) Merle's consumer surplus is $15. 
B) The sum of consumer surplus will be $30. 
C) Waylon's consumer surplus is $0. 
D) Only Willie and Waylon will purchase the cowboy hat. 
E) Willie's consumer surplus is $30.

Question 18

-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 19

-The figure above shows the supply curve for pizzas.
a. What is the marginal cost of the 20th pizza?
b. What is the minimum supply price of the 20th pizza?
c. If the price is $6 per pizza, what is the producer surplus on the 20th pizza?
d. If the price is $6 per pizza, what is the producer surplus for the total quantity of pizzas produced?
e. If the price is $8 per pizza, what is the producer surplus for the total quantity of pizzas produced?
f. If the price is $10 per pizza, what is the producer surplus for the total quantity of pizzas produced?

Accepted Answer

a. The marginal cost of the 20th pizza i

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.

The maximum amount of other goods and services that people are willing to give up in order to get one more unit of a good is defined as the good's

Which of the following occurs when a market is efficient?

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?

Marginal benefit is the

A point on the demand curve shows the

In a figure that shows a supply curve and a demand curve, producer surplus is the area

-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

When technology increases the supply of a good and lower prices increase the quantity demanded,

The "equality of opportunity" idea of fairness claims

Efficiency in a market occurs when the production of the good is such that

When allocative efficiency occurs,

In the above figure, what is the marginal cost of the 8th pizza?

Consumer surplus exists when a

Suppose Jennifer derives $100 in marginal benefits from her first skiing trip and $80 from her third trip. Her marginal benefit from her second trip is likely to be

Air pollution is an external cost because it

The price of a cowboy hat is $100. Willie is willing to pay $130, Waylon is willing to pay $100, and Merle is willing to pay $85. All of the following statements are true EXCEPT:

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

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 maximum amount of other goods and services that people are willing to give up in order to get one more unit of a good is defined as the good's

Which of the following occurs when a market is efficient?

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?

Marginal benefit is the

A point on the demand curve shows the

In a figure that shows a supply curve and a demand curve, producer surplus is the area

-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

When technology increases the supply of a good and lower prices increase the quantity demanded,

The "equality of opportunity" idea of fairness claims

Efficiency in a market occurs when the production of the good is such that

When allocative efficiency occurs,

In the above figure, what is the marginal cost of the 8th pizza?

Consumer surplus exists when a

Suppose Jennifer derives $100 in marginal benefits from her first skiing trip and $80 from her third trip. Her marginal benefit from her second trip is likely to be

Air pollution is an external cost because it

The price of a cowboy hat is $100. Willie is willing to pay $130, Waylon is willing to pay $100, and Merle is willing to pay $85. All of the following statements are true EXCEPT:

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

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