Exam 6: Efficiency and Fairness of Markets

"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false? Explain your answer.

Which of the following situations describing a resource allocation method most resembles the majority rule method?

The figure above shows the market for pizza. -In the figure above, when the market is in equilibrium, marginal benefit ________ marginal cost, so the quantity of pizza produced is ________.

Why is a competitive market efficient?

Why does the marginal benefit curve have a negative slope?

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?

Marginal benefit

Which of the following statements is correct?

-The figure above shows the supply and demand for pizza. a. What is the efficient level of output? b. If 70,000 pizzas are produced, what area represents the deadweight loss? c. Why does the deadweight loss in part (b)occur? d. If 20,000 pizzas are produced, what area represents the deadweight loss? e. Why does the deadweight loss in part (d)occur?

The supply curve of a good or service is the same as

Allocative efficiency occurs

-The figure above represents the competitive market for slices of key lime pie. When 60 slices are produced, the marginal cost

-The figure above shows a nation's production possibilities frontier. If the marginal cost equals the marginal benefit at point A when 4 million pizzas are produced,

Which of the following is an example of consumer surplus?

When underproduction occurs,

Lattes at Starbucks are allocated to individuals in society through what type of method?

When a society achieves allocative efficiency, it

If the government imposes a tax on a competitive market with no externalities, then i. resource use is not efficient. Ii. there is a deadweight loss. Iii. consumer surplus is at its maximum.

Which of the following is an example in which "the big tradeoff" can occur?

The price of a cowboy hat is $100. Willie can produce a hat at a marginal cost of $130, Waylon can produce at a marginal cost of $100, and Merle can produce at a marginal cost of $85. Which of the following statements is correct?