Question 1

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

Accepted Answer

A) $15.00. 
B) $22.50. 
C) $11.25. 
D) $8.00. 
E) $1.50. 
A) $15.00. 
B) $22.50. 
C) $11.25. 
D) $8.00. 
E) $1.50.

Question 2

The figure above shows the market for pizza.
-In the figure above, if pizza production is restricted to 5,000 pizzas a day, the deadweight loss is

Accepted Answer

A) $45,000 per day. 
B) $12,500 per day. 
C) $22,500 per day. 
D) $90,000 per day. 
E) zero. 
A) $45,000 per day. 
B) $12,500 per day. 
C) $22,500 per day. 
D) $90,000 per day. 
E) zero.

Question 3

A marginal benefit curve

Accepted Answer

A) is the same as a demand curve. 
B) is the same as a supply curve. 
C) slopes upwards. 
D) is a vertical line at the efficient quantity. 
E) is U-shaped. 
A) is the same as a demand curve. 
B) is the same as a supply curve. 
C) slopes upwards. 
D) is a vertical line at the efficient quantity. 
E) is U-shaped.

Question 4

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 5

The demand curve is also the

Accepted Answer

A) total cost curve. 
B) total benefit curve. 
C) marginal cost curve. 
D) marginal benefit curve. 
E) marginal deadweight cost curve. 
A) total cost curve. 
B) total benefit curve. 
C) marginal cost curve. 
D) marginal benefit curve. 
E) marginal deadweight cost curve.

Question 6

The figure above shows the market for pizza.
-In the figure above, if pizza production is restricted to 5,000 pizzas a day, then marginal benefit ________ marginal cost, and ________ occurs.

Accepted Answer

A) exceeds; overproduction 
B) exceeds; underproduction 
C) is below; overproduction 
D) is below; underproduction 
E) exceeds; efficient production 
A) exceeds; overproduction 
B) exceeds; underproduction 
C) is below; overproduction 
D) is below; underproduction 
E) exceeds; efficient production

Question 7

When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is

Accepted Answer

A) minimized. 
B) maximized. 
C) equal to the deadweight loss. 
D) undefined. 
E) equal to zero. 
A) minimized. 
B) maximized. 
C) equal to the deadweight loss. 
D) undefined. 
E) equal to zero.

Question 8

-Suppose a factory can be designed to produce either trucks or cars. The figure above shows the marginal cost and marginal benefit of producing trucks in terms of the forgone cars.
a. What is the marginal benefit of the 25th truck?
b. What is the marginal cost of the 25th truck?
c. Should the 25th truck be produced?
 Why or why not.
d. What is the marginal benefit of the 75th truck?
e. What is the marginal cost of the 75th truck?
f. Should the 75th truck be produced?
 Why or why not?
g. What is the allocatively efficient quantity of trucks?

Accepted Answer

a. 3 cars
b. 1 car
c. This truck should

Question 9

Consumer 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) below the demand curve and above 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) below the demand curve and above the supply curve.

Question 10

Producer surplus definitely exists when the

Accepted Answer

A) price exceeds marginal benefit. 
B) price exceeds marginal cost. 
C) marginal cost exceeds the price. 
D) marginal benefit exceeds the price. 
E) marginal benefit exceeds the marginal cost. 
A) price exceeds marginal benefit. 
B) price exceeds marginal cost. 
C) marginal cost exceeds the price. 
D) marginal benefit exceeds the price. 
E) marginal benefit exceeds the marginal cost.

Question 11

A public good

Accepted Answer

A) is a good that is usually consumed in public, such as a restaurant meal. 
B) is a good people can consume even if they do not pay for it. 
C) is a good produced by government. 
D) results in an efficient allocation of resources. 
E) is a good for which people are willing to pay a very high price. 
A) is a good that is usually consumed in public, such as a restaurant meal. 
B) is a good people can consume even if they do not pay for it. 
C) is a good produced by government. 
D) results in an efficient allocation of resources. 
E) is a good for which people are willing to pay a very high price.

Question 12

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 13

Redistributing income from the rich to the poor creates inefficiency because

Accepted Answer

A) of wasteful expenditures by people receiving welfare grants. 
B) of the administrative costs to operate the government redistribution agencies. 
C) the redistribution creates an incentive to produce less output. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct. 
A) of wasteful expenditures by people receiving welfare grants. 
B) of the administrative costs to operate the government redistribution agencies. 
C) the redistribution creates an incentive to produce less output. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct.

Question 14

The Ironman Hawaii randomly draws a few hundred slots from thousands of applicants for the race. The method of allocation for the opportunity to participate in the race is ________, and the method of allocation for determining the winner of the race is ________.

Accepted Answer

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

Question 15

-In the figure above, the equilibrium market price is $20. Area A is the

Accepted Answer

A) marginal cost of 150th unit. 
B) willingness to pay for the 150th unit. 
C) producer surplus. 
D) consumer surplus. 
E) marginal benefit of 150th unit. 
A) marginal cost of 150th unit. 
B) willingness to pay for the 150th unit. 
C) producer surplus. 
D) consumer surplus. 
E) marginal benefit of 150th unit.

Question 16

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. 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 17

When the price of a product exceeds the marginal cost of producing it, producers have a

Accepted Answer

A) consumer surplus. 
B) producer surplus. 
C) consumer shortage. 
D) producer shortage. 
E) deadweight surplus. 
A) consumer surplus. 
B) producer surplus. 
C) consumer shortage. 
D) producer shortage. 
E) deadweight surplus.

Question 18

A cost not borne by the producer but borne by other people is known as ________ cost.

Accepted Answer

A) a marginal 
B) an internal 
C) an external 
D) a nonessential 
E) a subsidized 
A) a marginal 
B) an internal 
C) an external 
D) a nonessential 
E) a subsidized

Question 19

What must be true for a consumer to enjoy a consumer surplus from a unit of a good?

Accepted Answer

The marginal benefit to the co

Question 20

If the government takes over the distribution of some scarce good in a time of a natural disaster and provides the good at no charge to users, what must also be done?

Accepted Answer

A) The government must produce the good itself. 
B) Some rationing mechanism must be set up to determine who gets the good. 
C) Everyone hurt in the natural disaster must get one of the goods. 
D) nothing 
E) Because we live in a democracy, the government must use majority rule as the rationing mechanism. 
A) The government must produce the good itself. 
B) Some rationing mechanism must be set up to determine who gets the good. 
C) Everyone hurt in the natural disaster must get one of the goods. 
D) nothing 
E) Because we live in a democracy, the government must use majority rule as the rationing mechanism.

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

The figure above shows the market for pizza. -In the figure above, if pizza production is restricted to 5,000 pizzas a day, the deadweight loss is

A marginal benefit curve

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

The demand curve is also the

The figure above shows the market for pizza. -In the figure above, if pizza production is restricted to 5,000 pizzas a day, then marginal benefit marginal cost, and occurs.

When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is

Consumer surplus is the area

Producer surplus definitely exists when the

A public good

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

Redistributing income from the rich to the poor creates inefficiency because

The Ironman Hawaii randomly draws a few hundred slots from thousands of applicants for the race. The method of allocation for the opportunity to participate in the race is , and the method of allocation for determining the winner of the race is .

-In the figure above, the equilibrium market price is $20. Area A is the

When the price of a product exceeds the marginal cost of producing it, producers have a

A cost not borne by the producer but borne by other people is known as ________ cost.

What must be true for a consumer to enjoy a consumer surplus from a unit of a good?

If the government takes over the distribution of some scarce good in a time of a natural disaster and provides the good at no charge to users, what must also be done?

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

The figure above shows the market for pizza. -In the figure above, if pizza production is restricted to 5,000 pizzas a day, the deadweight loss is

A marginal benefit curve

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

The demand curve is also the

The figure above shows the market for pizza. -In the figure above, if pizza production is restricted to 5,000 pizzas a day, then marginal benefit ________ marginal cost, and ________ occurs.

When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is

Consumer surplus is the area

Producer surplus definitely exists when the

A public good

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

Redistributing income from the rich to the poor creates inefficiency because

The Ironman Hawaii randomly draws a few hundred slots from thousands of applicants for the race. The method of allocation for the opportunity to participate in the race is ________, and the method of allocation for determining the winner of the race is ________.

-In the figure above, the equilibrium market price is $20. Area A is the

When the price of a product exceeds the marginal cost of producing it, producers have a

A cost not borne by the producer but borne by other people is known as ________ cost.

What must be true for a consumer to enjoy a consumer surplus from a unit of a good?

If the government takes over the distribution of some scarce good in a time of a natural disaster and provides the good at no charge to users, what must also be done?

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

The figure above shows the market for pizza. -In the figure above, if pizza production is restricted to 5,000 pizzas a day, then marginal benefit marginal cost, and occurs.

The Ironman Hawaii randomly draws a few hundred slots from thousands of applicants for the race. The method of allocation for the opportunity to participate in the race is , and the method of allocation for determining the winner of the race is .