Question 1

If the difference between the marginal benefit and the marginal cost of a good is as large as possible,

Accepted Answer

A) resources are being used with maximum efficiency. 
B) resources would create more value producing other goods and hence the production of this good should be decreased. 
C) more of the good should be produced. 
D) allocative efficiency has been attained. 
E) Both answers A and D are correct. 
A) resources are being used with maximum efficiency. 
B) resources would create more value producing other goods and hence the production of this good should be decreased. 
C) more of the good should be produced. 
D) allocative efficiency has been attained. 
E) Both answers A and D are correct.

Question 2

Which of the following is necessary for allocative efficiency to be achieved?

Accepted Answer

A) Marginal benefit must be maximized. 
B) Marginal cost must be minimized. 
C) Marginal benefit must equal marginal cost. 
D) The difference between marginal benefit and marginal cost must be maximized. 
E) Production must be at a point inside the production possibilities frontier. 
A) Marginal benefit must be maximized. 
B) Marginal cost must be minimized. 
C) Marginal benefit must equal marginal cost. 
D) The difference between marginal benefit and marginal cost must be maximized. 
E) Production must be at a point inside the production possibilities frontier.

Question 3

When the marginal cost of producing a bike is greater than the marginal benefit of the bike, for resource use to be allocatively efficient

Accepted Answer

A) more bikes should be produced. 
B) fewer bikes should be produced. 
C) no more and no fewer bikes should be produced. 
D) it must be determined if the production of bikes can be increased. 
E) people must be educated to demand more bikes. 
A) more bikes should be produced. 
B) fewer bikes should be produced. 
C) no more and no fewer bikes should be produced. 
D) it must be determined if the production of bikes can be increased. 
E) people must be educated to demand more bikes.

Question 4

Suppose a market produces 5,000 tons of wheat. At this quantity, the marginal cost exceeds the marginal benefit. This outcome could be the result of

Accepted Answer

A) a quantity regulation limiting the amount that can be produced. 
B) a monopoly. 
C) a subsidy. 
D) an external benefit. 
E) producing a public good. 
A) a quantity regulation limiting the amount that can be produced. 
B) a monopoly. 
C) a subsidy. 
D) an external benefit. 
E) producing a public good.

Question 5

If the demand for a good does not change, how will an increase in the price of that good affect the consumer surplus from it?

Accepted Answer

The consumer surplus equals the differen

Question 6

The marginal benefit of each additional unit of a good consumed

Accepted Answer

A) increases as more is consumed. 
B) is always equal to its marginal cost. 
C) decreases as more is consumed. 
D) will maximize consumer surplus. 
E) is equal to the deadweight loss if the unit of the good is not produced. 
A) increases as more is consumed. 
B) is always equal to its marginal cost. 
C) decreases as more is consumed. 
D) will maximize consumer surplus. 
E) is equal to the deadweight loss if the unit of the good is not produced.

Question 7

If a firm is willing to supply the 1,000th unit of a good at a price of $23 or more, we know that $23 is the

Accepted Answer

A) highest price the seller hopes to realize for this output. 
B) minimum price the seller must receive to produce this unit. 
C) average price of all the prices the seller could charge. 
D) price that sets the marginal benefit equal to the price. 
E) only price for which the seller is willing to sell this unit of the good. 
A) highest price the seller hopes to realize for this output. 
B) minimum price the seller must receive to produce this unit. 
C) average price of all the prices the seller could charge. 
D) price that sets the marginal benefit equal to the price. 
E) only price for which the seller is willing to sell this unit of the good.

Question 8

In a competitive market with no externalities,

Accepted Answer

A) the consumer surplus is equal to zero because of competition. 
B) buyers cannot control the price, so the consumer surplus is zero. 
C) at the equilibrium price, marginal benefit exceeds marginal cost. 
D) at the equilibrium price, marginal benefit equals marginal cost. 
E) at the equilibrium price, the total amount of consumer surplus equals the total amount of producer surplus. 
A) the consumer surplus is equal to zero because of competition. 
B) buyers cannot control the price, so the consumer surplus is zero. 
C) at the equilibrium price, marginal benefit exceeds marginal cost. 
D) at the equilibrium price, marginal benefit equals marginal cost. 
E) at the equilibrium price, the total amount of consumer surplus equals the total amount of producer surplus.

Question 9

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 10

-The figure above represents the competitive market for slices of key lime pie. When the price equals $3,

Accepted Answer

A) there is a shortage of slices of pie. 
B) there is a surplus of slices of pie. 
C) the efficient quantity of slices is being produced. 
D) the quantity produced is inefficient. 
E) the deadweight loss is maximized. 
A) there is a shortage of slices of pie. 
B) there is a surplus of slices of pie. 
C) the efficient quantity of slices is being produced. 
D) the quantity produced is inefficient. 
E) the deadweight loss is maximized.

Question 11

Lauren and Katy each bought a new bike lock for $20. Both Lauren and Katy would have paid $25 for the lock. Katy's consumer surplus equaled

Accepted Answer

A) $10. 
B) $40. 
C) $5. 
D) $20. 
E) $50. 
A) $10. 
B) $40. 
C) $5. 
D) $20. 
E) $50.

Question 12

The marginal benefit of the first hotdog consumed is ________ the marginal benefit of the fifth hotdog consumed.

Accepted Answer

A) equal to 
B) less than 
C) greater than 
D) the inverse of 
E) equal to 5 times 
A) equal to 
B) less than 
C) greater than 
D) the inverse of 
E) equal to 5 times

Question 13

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.

Question 14

In order to efficiently allocate goods and services, we have to compare

Accepted Answer

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

Question 15

What do economists call the loss society experiences when there is market failure and the production of a good is less than the efficient amount?

Accepted Answer

A) tax 
B) subsidy 
C) price floor 
D) deadweight loss 
E) quantity restriction. 
A) tax 
B) subsidy 
C) price floor 
D) deadweight loss 
E) quantity restriction.

Question 16

The figure above shows the supply curve for pizza and the market price of pizza.
-In the figure above, the minimum price that must be offered for the 5,000th pizza a day to be produced is

Accepted Answer

A) $6. 
B) $10. 
C) $8. 
D) $2. 
E) $4. 
A) $6. 
B) $10. 
C) $8. 
D) $2. 
E) $4.

Question 17

The producer surplus is found by subtracting the ________ and then adding the difference for all units sold.

Accepted Answer

A) marginal cost from price 
B) price from marginal cost 
C) marginal benefit from total benefit 
D) marginal cost from marginal benefit 
E) deadweight loss from the price 
A) marginal cost from price 
B) price from marginal cost 
C) marginal benefit from total benefit 
D) marginal cost from marginal benefit 
E) deadweight loss from the price

Question 18

Bill Gates is a founder of Microsoft and the world's richest individual. Suppose Microsoft sells more software and Mr. Gates acquires another billion dollars in wealth. Simultaneously, suppose a burglar whose income is well below average broke into Bill Gates' house and stole a million dollars' worth of antiques. Using the "it's not fair if the rules aren't fair" approach to fairness, is Mr. Gates' acquisition of additional wealth fair?
 Is the (poor)thief's acquisition fair?

Accepted Answer

In order for Mr. Gates to become richer,

Question 19

-In the figure above, for the 3,000th unit, the maximum price a consumer is willing to pay is

Accepted Answer

A) $5. 
B) $10. 
C) $15. 
D) $0. 
E) $25. 
A) $5. 
B) $10. 
C) $15. 
D) $0. 
E) $25.

Question 20

Production efficiency requires that

Accepted Answer

A) the economy be producing on the PPF but the marginal cost of a good does not need to equal its marginal benefit. 
B) the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit. 
C) the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF. 
D) the society be producing at the point of allocative efficiency. 
E) opportunity costs be minimized. 
A) the economy be producing on the PPF but the marginal cost of a good does not need to equal its marginal benefit. 
B) the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit. 
C) the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF. 
D) the society be producing at the point of allocative efficiency. 
E) opportunity costs be minimized.

If the difference between the marginal benefit and the marginal cost of a good is as large as possible,

Which of the following is necessary for allocative efficiency to be achieved?

When the marginal cost of producing a bike is greater than the marginal benefit of the bike, for resource use to be allocatively efficient

Suppose a market produces 5,000 tons of wheat. At this quantity, the marginal cost exceeds the marginal benefit. This outcome could be the result of

If the demand for a good does not change, how will an increase in the price of that good affect the consumer surplus from it?

The marginal benefit of each additional unit of a good consumed

If a firm is willing to supply the 1,000th unit of a good at a price of $23 or more, we know that $23 is the

In a competitive market with no externalities,

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

-The figure above represents the competitive market for slices of key lime pie. When the price equals $3,

Lauren and Katy each bought a new bike lock for $20. Both Lauren and Katy would have paid $25 for the lock. Katy's consumer surplus equaled

The marginal benefit of the first hotdog consumed is ________ the marginal benefit of the fifth hotdog consumed.

Cost

In order to efficiently allocate goods and services, we have to compare

What do economists call the loss society experiences when there is market failure and the production of a good is less than the efficient amount?

The figure above shows the supply curve for pizza and the market price of pizza. -In the figure above, the minimum price that must be offered for the 5,000th pizza a day to be produced is

The producer surplus is found by subtracting the ________ and then adding the difference for all units sold.

-In the figure above, for the 3,000th unit, the maximum price a consumer is willing to pay is

Production efficiency requires that

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

If the difference between the marginal benefit and the marginal cost of a good is as large as possible,

Which of the following is necessary for allocative efficiency to be achieved?

When the marginal cost of producing a bike is greater than the marginal benefit of the bike, for resource use to be allocatively efficient

Suppose a market produces 5,000 tons of wheat. At this quantity, the marginal cost exceeds the marginal benefit. This outcome could be the result of

If the demand for a good does not change, how will an increase in the price of that good affect the consumer surplus from it?

The marginal benefit of each additional unit of a good consumed

If a firm is willing to supply the 1,000th unit of a good at a price of $23 or more, we know that $23 is the

In a competitive market with no externalities,

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

-The figure above represents the competitive market for slices of key lime pie. When the price equals $3,

Lauren and Katy each bought a new bike lock for $20. Both Lauren and Katy would have paid $25 for the lock. Katy's consumer surplus equaled

The marginal benefit of the first hotdog consumed is ________ the marginal benefit of the fifth hotdog consumed.

Cost

In order to efficiently allocate goods and services, we have to compare

What do economists call the loss society experiences when there is market failure and the production of a good is less than the efficient amount?

The figure above shows the supply curve for pizza and the market price of pizza. -In the figure above, the minimum price that must be offered for the 5,000th pizza a day to be produced is

The producer surplus is found by subtracting the ________ and then adding the difference for all units sold.

-In the figure above, for the 3,000th unit, the maximum price a consumer is willing to pay is

Production efficiency requires that

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