Question 1

-The figure above shows the market for coffee. If the government pays the coffee producers a subsidy and production increases to 30 million pounds per day, the market is

Accepted Answer

A)  efficient because the marginal social benefit from the last pound of coffee exceeds its marginal social cost. 
B)  efficient because the total social benefit from coffee exceed the total social cost. 
C)  inefficient because the marginal social benefit from the last pound of coffee exceeds its marginal social cost. 
D)  inefficient because the marginal social cost of the last pound of coffee exceeds its marginal social benefit. 
A)  efficient because the marginal social benefit from the last pound of coffee exceeds its marginal social cost. 
B)  efficient because the total social benefit from coffee exceed the total social cost. 
C)  inefficient because the marginal social benefit from the last pound of coffee exceeds its marginal social cost. 
D)  inefficient because the marginal social cost of the last pound of coffee exceeds its marginal social benefit.

Question 2

Consider the market for hot dogs. As long as the marginal benefit of consuming hot dogs is greater than the price of hot dogs

Accepted Answer

A)  people receive consumer surplus from eating hot dogs. 
B)  the price of hot dogs will rise. 
C)  the value of hot dogs will rise. 
D)  there is no decreasing marginal benefit of eating hot dogs. 
A)  people receive consumer surplus from eating hot dogs. 
B)  the price of hot dogs will rise. 
C)  the value of hot dogs will rise. 
D)  there is no decreasing marginal benefit of eating hot dogs.

Question 3

Currently kidneys are allocated based on the needs of each perspective recipient, their blood type, and the urgency of their case. An alternative way to allocate kidneys is to go by the order in which patients were placed on the waiting list. In that case, the allocation of resources is made using

Accepted Answer

A)  market price. 
B)  auction. 
C)  first-come, first-served. 
D)  personal characteristics. 
A)  market price. 
B)  auction. 
C)  first-come, first-served. 
D)  personal characteristics.

Question 4

-In the above figure, a price of $1.25 and a quantity of 5 million gallons of milk per day maximizes the

Accepted Answer

A)  amount of consumer surplus. 
B)  amount of producer surplus. 
C)  sum of consumer surplus and producer surplus. 
D)  All of the above answers are correct. 
A)  amount of consumer surplus. 
B)  amount of producer surplus. 
C)  sum of consumer surplus and producer surplus. 
D)  All of the above answers are correct.

Question 5

Jane is willing to pay $4 for the first cup of coffee a day, $2.50 for the second cup, and $1 for the third cup, after which she won't buy any coffee. The price of a cup of coffee is $2.40. Jane's consumer surplus from the coffee she buys is ________ per day.

Accepted Answer

A)  $1.60 
B)  $1.70 
C)  $4.80 
D)  $6.50 
A)  $1.60 
B)  $1.70 
C)  $4.80 
D)  $6.50

Question 6

-In the table above, if there are 80 umbrellas produced, the deadweight loss from the 80th umbrella is

Accepted Answer

A)  $10. 
B)  $20. 
C)  $30. 
D)  $40. 
A)  $10. 
B)  $20. 
C)  $30. 
D)  $40.

Question 7

When there are external costs of production, such as when electric utilities burn coal, a competitive market will produce an inefficient level of output.

Accepted Answer

A) True 
 B)False

Question 8

Explain how the invisible hand delivers an efficient market outcome.

Accepted Answer

The invisible hand concepts claims that

Question 9

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. What is the marginal social cost of producing the 200th dozen doughnuts each day?

Accepted Answer

A)  $10.00 per dozen 
B)  $8.00 per dozen 
C)  $6.00 per dozen 
D)  $4.00 per dozen 
A)  $10.00 per dozen 
B)  $8.00 per dozen 
C)  $6.00 per dozen 
D)  $4.00 per dozen

Question 10

When allocating resources using market price

Accepted Answer

A)  everyone who is willing and able to pay for a good gets one. 
B)  everyone who wants a good gets one. 
C)  everyone who is willing to pay for a good gets one. 
D)  everyone who is able to pay for a good gets one. 
A)  everyone who is willing and able to pay for a good gets one. 
B)  everyone who wants a good gets one. 
C)  everyone who is willing to pay for a good gets one. 
D)  everyone who is able to pay for a good gets one.

Question 11

-In the above table, when 200 brownies are produced

Accepted Answer

A)  marginal social benefit is greater than marginal social cost, and resource use is efficient. 
B)  marginal social benefit is greater than marginal social cost, and there is a deadweight loss. 
C)  marginal social benefit equals marginal social cost, and resource use is efficient. 
D)  marginal social benefit is less than marginal social cost, and there is a deadweight loss. 
A)  marginal social benefit is greater than marginal social cost, and resource use is efficient. 
B)  marginal social benefit is greater than marginal social cost, and there is a deadweight loss. 
C)  marginal social benefit equals marginal social cost, and resource use is efficient. 
D)  marginal social benefit is less than marginal social cost, and there is a deadweight loss.

Question 12

-In the above figure, if five million CDs per month are produced and consumed, that is

Accepted Answer

A)  better than producing and consuming four million CDs because more is always better than less. 
B)  more than the efficient quantity because the marginal social benefit exceeds the marginal social cost. 
C)  more than the efficient quantity because the marginal social cost exceeds the marginal social benefit. 
D)  less than the efficient quantity because the opportunity cost exceeds the marginal social benefit. 
A)  better than producing and consuming four million CDs because more is always better than less. 
B)  more than the efficient quantity because the marginal social benefit exceeds the marginal social cost. 
C)  more than the efficient quantity because the marginal social cost exceeds the marginal social benefit. 
D)  less than the efficient quantity because the opportunity cost exceeds the marginal social benefit.

Question 13

Allocative efficiency occurs when

Accepted Answer

A)  marginal social cost exceeds marginal social benefit. 
B)  marginal social benefit exceeds marginal social cost. 
C)  marginal social benefit equals marginal social cost. 
D)  total social benefit exceeds total social cost. 
A)  marginal social cost exceeds marginal social benefit. 
B)  marginal social benefit exceeds marginal social cost. 
C)  marginal social benefit equals marginal social cost. 
D)  total social benefit exceeds total social cost.

Question 14

-In the above figure, what is the marginal social benefit of the four-hundredth pretzel?

Accepted Answer

A)  $0 
B)  $2.00 
C)  $3.00 
D)  $4.00 
A)  $0 
B)  $2.00 
C)  $3.00 
D)  $4.00

Question 15

At the current level of output, the marginal social cost of tennis balls is greater than the marginal social benefit. Then

Accepted Answer

A)  more than the efficient quantity of tennis balls is being produced. 
B)  there is excess demand for tennis balls. 
C)  firms producing tennis balls must be earning negative profit. 
D)  too few tennis balls are being produced. 
A)  more than the efficient quantity of tennis balls is being produced. 
B)  there is excess demand for tennis balls. 
C)  firms producing tennis balls must be earning negative profit. 
D)  too few tennis balls are being produced.

Question 16

The symmetry principle is the requirement that

Accepted Answer

A)  people in similar situations be treated similarly. 
B)  Society's income be distributed symmetrically among its members. 
C)  the poorest 20 percent of households should receive the same total income as the richest 10 percent of households. 
D)  the average person be made as well off as possible. 
A)  people in similar situations be treated similarly. 
B)  Society's income be distributed symmetrically among its members. 
C)  the poorest 20 percent of households should receive the same total income as the richest 10 percent of households. 
D)  the average person be made as well off as possible.

Question 17

Bill Gates is the world's second richest person whose net worth is estimated at $54 billion. The idea that Bill Gates marginal utility for his 54 billionth dollar is less than someone else's 1000th dollar is the

Accepted Answer

A)  "Utilitarian" principle. 
B)  "Big Tradeoff" principle. 
C)  "Make the Poorest as Well Off as Possible" principle. 
D)  "Equity" principle. 
A)  "Utilitarian" principle. 
B)  "Big Tradeoff" principle. 
C)  "Make the Poorest as Well Off as Possible" principle. 
D)  "Equity" principle.

Question 18

Consumer surplus is the value of a good minus the cost of producing it, summed over the quantity bought.

Accepted Answer

A) True 
 B)False

Question 19

When a deadweight loss occurs in a market, we can be certain that

Accepted Answer

A)  taxes have been imposed in a market. 
B)  the market is a monopoly. 
C)  there underproduction in the market. 
D)  the entire society experiences a loss. 
A)  taxes have been imposed in a market. 
B)  the market is a monopoly. 
C)  there underproduction in the market. 
D)  the entire society experiences a loss.

Question 20

-In the figure above, if the quantity is restricted to 2, then the deadweight loss in this market equals

Accepted Answer

A)  b + g. 
B)  c + d. 
C)  e + k. 
D)  h + i. 
A)  b + g. 
B)  c + d. 
C)  e + k. 
D)  h + i.

-The figure above shows the market for coffee. If the government pays the coffee producers a subsidy and production increases to 30 million pounds per day, the market is

Consider the market for hot dogs. As long as the marginal benefit of consuming hot dogs is greater than the price of hot dogs

Currently kidneys are allocated based on the needs of each perspective recipient, their blood type, and the urgency of their case. An alternative way to allocate kidneys is to go by the order in which patients were placed on the waiting list. In that case, the allocation of resources is made using

-In the above figure, a price of $1.25 and a quantity of 5 million gallons of milk per day maximizes the

Jane is willing to pay $4 for the first cup of coffee a day, $2.50 for the second cup, and $1 for the third cup, after which she won't buy any coffee. The price of a cup of coffee is $2.40. Jane's consumer surplus from the coffee she buys is ________ per day.

-In the table above, if there are 80 umbrellas produced, the deadweight loss from the 80th umbrella is

When there are external costs of production, such as when electric utilities burn coal, a competitive market will produce an inefficient level of output.

Explain how the invisible hand delivers an efficient market outcome.

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. What is the marginal social cost of producing the 200th dozen doughnuts each day?

When allocating resources using market price

-In the above table, when 200 brownies are produced

-In the above figure, if five million CDs per month are produced and consumed, that is

Allocative efficiency occurs when

-In the above figure, what is the marginal social benefit of the four-hundredth pretzel?

At the current level of output, the marginal social cost of tennis balls is greater than the marginal social benefit. Then

The symmetry principle is the requirement that

Bill Gates is the world's second richest person whose net worth is estimated at $54 billion. The idea that Bill Gates marginal utility for his 54 billionth dollar is less than someone else's 1000^th dollar is the

Consumer surplus is the value of a good minus the cost of producing it, summed over the quantity bought.

When a deadweight loss occurs in a market, we can be certain that

-In the figure above, if the quantity is restricted to 2, then the deadweight loss in this market equals

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 5: Efficiency and Equity

-The figure above shows the market for coffee. If the government pays the coffee producers a subsidy and production increases to 30 million pounds per day, the market is

Consider the market for hot dogs. As long as the marginal benefit of consuming hot dogs is greater than the price of hot dogs

Currently kidneys are allocated based on the needs of each perspective recipient, their blood type, and the urgency of their case. An alternative way to allocate kidneys is to go by the order in which patients were placed on the waiting list. In that case, the allocation of resources is made using

-In the above figure, a price of $1.25 and a quantity of 5 million gallons of milk per day maximizes the

Jane is willing to pay $4 for the first cup of coffee a day, $2.50 for the second cup, and $1 for the third cup, after which she won't buy any coffee. The price of a cup of coffee is $2.40. Jane's consumer surplus from the coffee she buys is ________ per day.

-In the table above, if there are 80 umbrellas produced, the deadweight loss from the 80th umbrella is

When there are external costs of production, such as when electric utilities burn coal, a competitive market will produce an inefficient level of output.

Explain how the invisible hand delivers an efficient market outcome.

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. What is the marginal social cost of producing the 200th dozen doughnuts each day?

When allocating resources using market price

-In the above table, when 200 brownies are produced

-In the above figure, if five million CDs per month are produced and consumed, that is

Allocative efficiency occurs when

-In the above figure, what is the marginal social benefit of the four-hundredth pretzel?

At the current level of output, the marginal social cost of tennis balls is greater than the marginal social benefit. Then

The symmetry principle is the requirement that

Bill Gates is the world's second richest person whose net worth is estimated at $54 billion. The idea that Bill Gates marginal utility for his 54 billionth dollar is less than someone else's 1000th dollar is the

Consumer surplus is the value of a good minus the cost of producing it, summed over the quantity bought.

When a deadweight loss occurs in a market, we can be certain that

-In the figure above, if the quantity is restricted to 2, then the deadweight loss in this market equals

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Bill Gates is the world's second richest person whose net worth is estimated at $54 billion. The idea that Bill Gates marginal utility for his 54 billionth dollar is less than someone else's 1000^th dollar is the