Question 1

If external costs exist, the competitive free market:

Accepted Answer

A)  allocates resources inefficiently. 
B)  allocates resources efficiently. 
C)  automatically corrects an overallocation of resources. 
D)  automatically corrects an underallocation of resources. 
A)  allocates resources inefficiently. 
B)  allocates resources efficiently. 
C)  automatically corrects an overallocation of resources. 
D)  automatically corrects an underallocation of resources.

Question 2

Suppose that the expected exam scores from studying economics for 0, 1, 2, or 3 hours are 65, 80, 90, and 95 points, respectively, while the expected exam scores for studying 0, 1, 2, or 3 hours of accounting are 50, 65, 70, and 70 points, respectively.With 3 total hours of study time, your combined scores can reach a maximum of _______ points.

Accepted Answer

A)  145 
B)  150 
C)  155 
D)  165 
A)  145 
B)  150 
C)  155 
D)  165

Question 3

Use the following to answer question(s): Markets and Efficiency
  
-(Exhibit: Markets and Efficiency) The exhibit illustrates that the marketplace can be thought of as a:

Accepted Answer

A)  signaling mechanism. 
B)  place where prices convey information to consumers about their total benefits of apple consumption. 
C)  place where prices convey information to producers about their total costs of apple production. 
D)  place where producers always make a profit. 
A)  signaling mechanism. 
B)  place where prices convey information to consumers about their total benefits of apple consumption. 
C)  place where prices convey information to producers about their total costs of apple production. 
D)  place where producers always make a profit.

Question 4

Net benefit can be maximized by equating:

Accepted Answer

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

Question 5

Public goods are not sold in efficient quantities in the marketplace because:

Accepted Answer

A)  once supplied to a buyer, they are made available at no cost to someone else. 
B)  the more one person has, the less another person has. 
C)  they are usually so costly that only the wealthy can afford them. 
D)  of none of the above. 
A)  once supplied to a buyer, they are made available at no cost to someone else. 
B)  the more one person has, the less another person has. 
C)  they are usually so costly that only the wealthy can afford them. 
D)  of none of the above.

Question 6

The difference between a firm's total revenue and its total economic cost is:

Accepted Answer

A)  production. 
B)  utility. 
C)  efficiency. 
D)  profit. 
A)  production. 
B)  utility. 
C)  efficiency. 
D)  profit.

Question 7

Use the following for questions 111-115.
    
-(Exhibit: The Demand for Golf Balls) Assume that 3 dozen golf balls are purchased for $14 per dozen.Consumer surplus is:

Accepted Answer

A)  $1. 
B)  $4. 
C)  $9. 
D)  $16. 
A)  $1. 
B)  $4. 
C)  $9. 
D)  $16.

Question 8

Which of the following is not true?

Accepted Answer

A)  In a competitive market, in the long run, price will equal marginal cost. 
B)  For resource allocation to be efficient, property rights must be exclusive and nontransferable. 
C)  A common property resource is unlikely to be allocated efficiently in the marketplace. 
D)  All of the above are true. 
A)  In a competitive market, in the long run, price will equal marginal cost. 
B)  For resource allocation to be efficient, property rights must be exclusive and nontransferable. 
C)  A common property resource is unlikely to be allocated efficiently in the marketplace. 
D)  All of the above are true.

Question 9

Which of the following statements is (are) true?

Accepted Answer

A)  An efficient allocation of resources maximizes the net benefit of each activity. 
B)  An efficient allocation of resources implies that the distribution of income is equitable. 
C)  Judgments about equity are positive judgments. 
D)  A and B are true. 
A)  An efficient allocation of resources maximizes the net benefit of each activity. 
B)  An efficient allocation of resources implies that the distribution of income is equitable. 
C)  Judgments about equity are positive judgments. 
D)  A and B are true.

Question 10

When public goods are provided by private firms, with no government involvement, we expect that:

Accepted Answer

A)  the equilibrium quantity will be less than would be efficient. 
B)  the equilibrium quantity will be greater than would be efficient. 
C)  the equilibrium quantity will be the efficient quantity. 
D)  their profits will be excessive. 
A)  the equilibrium quantity will be less than would be efficient. 
B)  the equilibrium quantity will be greater than would be efficient. 
C)  the equilibrium quantity will be the efficient quantity. 
D)  their profits will be excessive.

Question 11

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $5 to spend on both goods, the maximum quantity of popcorn that you can purchase is _______ boxes.

Accepted Answer

A)  5 
B)  10 
C)  20 
D)  40 
A)  5 
B)  10 
C)  20 
D)  40

Question 12

The marginal decision rule requires that for an individual to maximize utility, MB>MC.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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 on both goods, the maximum quantity of peanuts that you can purchase is _______ bags.

Accepted Answer

A)  5 
B)  10 
C)  20 
D)  40 
A)  5 
B)  10 
C)  20 
D)  40

Question 15

Suppose that the expected exam scores from studying economics for 0, 1, 2, or 3 hours are 65, 80, 90, and 95 points, respectively, while the expected exam scores for studying 0, 1, 2, or 3 hours of accounting are 50, 65, 70, and 70 points, respectively.With 3 total hours of study time, the opportunity (or marginal) cost in terms of your accounting score of spending the first hour studying economics is ________ points.

Accepted Answer

A)  0 
B)  5 
C)  10 
D)  15 
A)  0 
B)  5 
C)  10 
D)  15

Question 16

If the market supply and demand curves for computers include all costs or benefits, then in this case:

Accepted Answer

A)  too few of society's resources are being used to produce computers. 
B)  too many of society's resources are being used to produce computers. 
C)  the efficient amount of society's resources are being used to produce computers. 
D)  there is an external benefit to society from computer production. 
A)  too few of society's resources are being used to produce computers. 
B)  too many of society's resources are being used to produce computers. 
C)  the efficient amount of society's resources are being used to produce computers. 
D)  there is an external benefit to society from computer production.

Question 17

Use the following to answer question(s): Surplus and Supply
  
-(Exhibit: Surplus and Supply) The difference between the total revenue received by sellers and their total cost is called _______ surplus, and for output level OE is depicted by the area enclosed in _______ .

Accepted Answer

A)  consumer; ABD 
B)  producer; OBDE 
C)  net; OADE 
D)  producer; ABD 
A)  consumer; ABD 
B)  producer; OBDE 
C)  net; OADE 
D)  producer; ABD

Question 18

An efficient allocation of resources is one that achieves the maximum net benefit from all activities.

Accepted Answer

A) True 
 B)False

Question 19

Use the following to answer question(s): Markets and Efficiency
  
-(Exhibit: Markets and Efficiency) In Panel (b) demand shifted from D₁ to D₂, reflecting a change in consumer preferences.The price of apples will change to the new equilibrium price:

Accepted Answer

A)  where the marginal benefit of apples is again equal to the marginal cost. 
B)  of $0.70. 
C)  where an efficient solution is again achieved. 
D)  that is described by all of the above. 
A)  where the marginal benefit of apples is again equal to the marginal cost. 
B)  of $0.70. 
C)  where an efficient solution is again achieved. 
D)  that is described by all of the above.

Question 20

A private good is a good or service for which exclusion:

Accepted Answer

A)  is possible and for which marginal cost of an additional user is zero. 
B)  is possible and for which marginal cost of an additional user is positive. 
C)  cannot be applied and for which marginal cost of an additional user is zero. 
D)  cannot be applied and for which marginal cost of an additional user is positive. 
A)  is possible and for which marginal cost of an additional user is zero. 
B)  is possible and for which marginal cost of an additional user is positive. 
C)  cannot be applied and for which marginal cost of an additional user is zero. 
D)  cannot be applied and for which marginal cost of an additional user is positive.

If external costs exist, the competitive free market:

Use the following to answer question(s): Markets and Efficiency -(Exhibit: Markets and Efficiency) The exhibit illustrates that the marketplace can be thought of as a:

Net benefit can be maximized by equating:

Public goods are not sold in efficient quantities in the marketplace because:

The difference between a firm's total revenue and its total economic cost is:

Use the following for questions 111-115. -(Exhibit: The Demand for Golf Balls) Assume that 3 dozen golf balls are purchased for $14 per dozen.Consumer surplus is:

Which of the following is not true?

Which of the following statements is (are) true?

When public goods are provided by private firms, with no government involvement, we expect that:

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $5 to spend on both goods, the maximum quantity of popcorn that you can purchase is _______ boxes.

The marginal decision rule requires that for an individual to maximize utility, MB>MC.

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

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 on both goods, the maximum quantity of peanuts that you can purchase is _______ bags.

If the market supply and demand curves for computers include all costs or benefits, then in this case:

Use the following to answer question(s): Surplus and Supply -(Exhibit: Surplus and Supply) The difference between the total revenue received by sellers and their total cost is called _ surplus, and for output level OE is depicted by the area enclosed in _ .

An efficient allocation of resources is one that achieves the maximum net benefit from all activities.

Use the following to answer question(s): Markets and Efficiency -(Exhibit: Markets and Efficiency) In Panel (b) demand shifted from D₁ to D₂, reflecting a change in consumer preferences.The price of apples will change to the new equilibrium price:

A private good is a good or service for which exclusion:

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

If external costs exist, the competitive free market:

Use the following to answer question(s): Markets and Efficiency -(Exhibit: Markets and Efficiency) The exhibit illustrates that the marketplace can be thought of as a:

Net benefit can be maximized by equating:

Public goods are not sold in efficient quantities in the marketplace because:

The difference between a firm's total revenue and its total economic cost is:

Use the following for questions 111-115. -(Exhibit: The Demand for Golf Balls) Assume that 3 dozen golf balls are purchased for $14 per dozen.Consumer surplus is:

Which of the following is not true?

Which of the following statements is (are) true?

When public goods are provided by private firms, with no government involvement, we expect that:

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $5 to spend on both goods, the maximum quantity of popcorn that you can purchase is _______ boxes.

The marginal decision rule requires that for an individual to maximize utility, MB>MC.

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

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 on both goods, the maximum quantity of peanuts that you can purchase is _______ bags.

If the market supply and demand curves for computers include all costs or benefits, then in this case:

Use the following to answer question(s): Surplus and Supply -(Exhibit: Surplus and Supply) The difference between the total revenue received by sellers and their total cost is called _______ surplus, and for output level OE is depicted by the area enclosed in _______ .

An efficient allocation of resources is one that achieves the maximum net benefit from all activities.

Use the following to answer question(s): Markets and Efficiency -(Exhibit: Markets and Efficiency) In Panel (b) demand shifted from D₁ to D₂, reflecting a change in consumer preferences.The price of apples will change to the new equilibrium price:

A private good is a good or service for which exclusion:

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

Use the following to answer question(s): Surplus and Supply -(Exhibit: Surplus and Supply) The difference between the total revenue received by sellers and their total cost is called _ surplus, and for output level OE is depicted by the area enclosed in _ .