Question 1

The failure to achieve an efficient allocation of resources is called market failure.

Accepted Answer

A) True 
 B)False

Question 2

Net benefit is maximized when marginal benefit _______ marginal cost.

Accepted Answer

A)  exceeds 
B)  is less than 
C)  is equal to 
D)  approaches 
A)  exceeds 
B)  is less than 
C)  is equal to 
D)  approaches

Question 3

The models of demand and supply assume:

Accepted Answer

A)  competitive markets. 
B)  no one in the market has power over equilibrium price. 
C)  each market participant takes the price as given. 
D)  all of the above. 
A)  competitive markets. 
B)  no one in the market has power over equilibrium price. 
C)  each market participant takes the price as given. 
D)  all of the above.

Question 4

The efficiency condition requires:

Accepted Answer

A)  marginal costs be generally less than marginal benefits. 
B)  prices in the marketplace confront decision makers with the marginal benefits and marginal costs of their decisions. 
C)  more goods be produced than exchanged. 
D)  more goods be exchanged than produced. 
A)  marginal costs be generally less than marginal benefits. 
B)  prices in the marketplace confront decision makers with the marginal benefits and marginal costs of their decisions. 
C)  more goods be produced than exchanged. 
D)  more goods be exchanged than produced.

Question 5

The amount by which an additional unit of an activity increases total benefit is:

Accepted Answer

A)  net benefit. 
B)  marginal benefit. 
C)  marginal cost. 
D)  utility. 
A)  net benefit. 
B)  marginal benefit. 
C)  marginal cost. 
D)  utility.

Question 6

Public goods are private goods produced by government.

Accepted Answer

A) True 
 B)False

Question 7

An efficient allocation of resources is also an equitable allocation of resources.

Accepted Answer

A) True 
 B)False

Question 8

Whenever MB < MC, the decisionmaker should do _______ of the activity.

Accepted Answer

A)  less 
B)  the same amount 
C)  more 
D)  none 
A)  less 
B)  the same amount 
C)  more 
D)  none

Question 9

An external cost is imposed when an action imposes costs on others outside the context of market exchange.

Accepted Answer

A) True 
 B)False

Question 10

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $10 to spend and decide to purchase 20 bags of peanuts, the maximum quantity of popcorn that you can purchase is _______ boxes.

Accepted Answer

A)  8 
B)  10 
C)  12 
D)  16 
A)  8 
B)  10 
C)  12 
D)  16

Question 11

Because individuals are unlikely to reveal their demand for public goods, private firms will produce a _______ quantity of public goods than is _______ .

Accepted Answer

A)  smaller; efficient 
B)  smaller; inefficient 
C)  greater; efficient 
D)  greater; inefficient 
A)  smaller; efficient 
B)  smaller; inefficient 
C)  greater; efficient 
D)  greater; inefficient

Question 12

An efficient allocation of resources is one that maximizes the net benefits of each activity.

Accepted Answer

A) True 
 B)False

Question 13

The marginal benefit is the amount by which an additional unit of activity increases total benefit.

Accepted Answer

A) True 
 B)False

Question 14

Market power exerted by either buyers or sellers is an example of:

Accepted Answer

A)  competitive markets. 
B)  the efficient condition. 
C)  market failure. 
D)  nonmaximizing behavior. 
A)  competitive markets. 
B)  the efficient condition. 
C)  market failure. 
D)  nonmaximizing behavior.

Question 15

Profit is the:

Accepted Answer

A)  difference between a firm's total revenue and its total economic cost. 
B)  satisfaction consumers derive from their consumption of goods and services. 
C)  highest price that buyers are willing to pay for a given quantity of a good. 
D)  lowest price that sellers are willing to accept for a given quantity of a good. 
A)  difference between a firm's total revenue and its total economic cost. 
B)  satisfaction consumers derive from their consumption of goods and services. 
C)  highest price that buyers are willing to pay for a given quantity of a good. 
D)  lowest price that sellers are willing to accept for a given quantity of a good.

Question 16

Automobile emissions generate pollution and cause higher costs and discomfort to residents of a city.In this case:

Accepted Answer

A)  too few of society's resources are being used to operate automobiles. 
B)  the externality can be internalized into the market by imposing a specific tax on drivers. 
C)  there is an external benefit to society from operating automobiles. 
D)  the externality can be internalized into the market by granting a specific subsidy to drivers. 
A)  too few of society's resources are being used to operate automobiles. 
B)  the externality can be internalized into the market by imposing a specific tax on drivers. 
C)  there is an external benefit to society from operating automobiles. 
D)  the externality can be internalized into the market by granting a specific subsidy to drivers.

Question 17

According to the authors of your text, whatever distribution of income society chooses, an ________ allocation of resources is preferred to an _______ one.

Accepted Answer

A)  inefficient; efficient 
B)  efficient; equitable 
C)  equitable; efficient 
D)  efficient; inefficient 
A)  inefficient; efficient 
B)  efficient; equitable 
C)  equitable; efficient 
D)  efficient; inefficient

Question 18

Activities that generate external costs will likely be carried out at levels that _______ those that would be efficient.

Accepted Answer

A)  equal to 
B)  are less than 
C)  exceed 
D)  compete with 
A)  equal to 
B)  are less than 
C)  exceed 
D)  compete with

Question 19

Use the following to answer question(s): Markets and Efficiency
  
-(Exhibit: Markets and Efficiency) Refer to Panel (c).Suppose the costs to apple producers rise.This will:

Accepted Answer

A)  increase the marginal cost of producing apples. 
B)  increase the supply of apples. 
C)  cause the price of apples to fall. 
D)  result in A and C. 
A)  increase the marginal cost of producing apples. 
B)  increase the supply of apples. 
C)  cause the price of apples to fall. 
D)  result in A and C.

Question 20

The marginal cost of an additional unit of a private good is zero.

Accepted Answer

A) True 
 B)False

The failure to achieve an efficient allocation of resources is called market failure.

Net benefit is maximized when marginal benefit _______ marginal cost.

The models of demand and supply assume:

The efficiency condition requires:

The amount by which an additional unit of an activity increases total benefit is:

Public goods are private goods produced by government.

An efficient allocation of resources is also an equitable allocation of resources.

Whenever MB < MC, the decisionmaker should do _______ of the activity.

An external cost is imposed when an action imposes costs on others outside the context of market exchange.

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $10 to spend and decide to purchase 20 bags of peanuts, the maximum quantity of popcorn that you can purchase is _______ boxes.

Because individuals are unlikely to reveal their demand for public goods, private firms will produce a _ quantity of public goods than is _ .

An efficient allocation of resources is one that maximizes the net benefits of each activity.

The marginal benefit is the amount by which an additional unit of activity increases total benefit.

Market power exerted by either buyers or sellers is an example of:

Profit is the:

Automobile emissions generate pollution and cause higher costs and discomfort to residents of a city.In this case:

According to the authors of your text, whatever distribution of income society chooses, an __ allocation of resources is preferred to an _ one.

Activities that generate external costs will likely be carried out at levels that _______ those that would be efficient.

Use the following to answer question(s): Markets and Efficiency -(Exhibit: Markets and Efficiency) Refer to Panel (c).Suppose the costs to apple producers rise.This will:

The marginal cost of an additional unit of a private good is zero.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 6: Markets, Maximizers, and Efficiency

The failure to achieve an efficient allocation of resources is called market failure.

Net benefit is maximized when marginal benefit _______ marginal cost.

The models of demand and supply assume:

The efficiency condition requires:

The amount by which an additional unit of an activity increases total benefit is:

Public goods are private goods produced by government.

An efficient allocation of resources is also an equitable allocation of resources.

Whenever MB < MC, the decisionmaker should do _______ of the activity.

An external cost is imposed when an action imposes costs on others outside the context of market exchange.

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $10 to spend and decide to purchase 20 bags of peanuts, the maximum quantity of popcorn that you can purchase is _______ boxes.

Because individuals are unlikely to reveal their demand for public goods, private firms will produce a _______ quantity of public goods than is _______ .

An efficient allocation of resources is one that maximizes the net benefits of each activity.

The marginal benefit is the amount by which an additional unit of activity increases total benefit.

Market power exerted by either buyers or sellers is an example of:

Profit is the:

Automobile emissions generate pollution and cause higher costs and discomfort to residents of a city.In this case:

According to the authors of your text, whatever distribution of income society chooses, an ________ allocation of resources is preferred to an _______ one.

Activities that generate external costs will likely be carried out at levels that _______ those that would be efficient.

Use the following to answer question(s): Markets and Efficiency -(Exhibit: Markets and Efficiency) Refer to Panel (c).Suppose the costs to apple producers rise.This will:

The marginal cost of an additional unit of a private good is zero.

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Because individuals are unlikely to reveal their demand for public goods, private firms will produce a _ quantity of public goods than is _ .

According to the authors of your text, whatever distribution of income society chooses, an __ allocation of resources is preferred to an _ one.