Question 1

External costs may require government intervention.

Accepted Answer

A) True 
 B)False

Question 2

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 3

A set of rules that specify the ways in which the resource for which they are defined may be used are:

Accepted Answer

A)  public goods. 
B)  quasi-public goods. 
C)  property rights. 
D)  free-rider rights. 
A)  public goods. 
B)  quasi-public goods. 
C)  property rights. 
D)  free-rider rights.

Question 4

The Case in Point on Protecting Wildlife indicated that well-established private property rights in much of Southern Africa:

Accepted Answer

A)  allowed for an increase in animal populations even though animals move from property to property. 
B)  created a system in which the greed of hunters and developers reduced animal populations to dangerous levels. 
C)  prohibited the development of property as well as wildlife viewing. 
D)  allowed for viewing of wildlife but only on property owned by the government. 
A)  allowed for an increase in animal populations even though animals move from property to property. 
B)  created a system in which the greed of hunters and developers reduced animal populations to dangerous levels. 
C)  prohibited the development of property as well as wildlife viewing. 
D)  allowed for viewing of wildlife but only on property owned by the government.

Question 5

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 and decide to purchase 6 boxes of popcorn, the maximum quantity of peanuts that you can purchase is _______ bags.

Accepted Answer

A)  4 
B)  8 
C)  10 
D)  12 
A)  4 
B)  8 
C)  10 
D)  12

Question 6

External costs occur because:

Accepted Answer

A)  a good's costs are not fully reflected by its equilibrium price. 
B)  a good's costs are fully reflected by its equilibrium price. 
C)  the demand price reflects both private benefits to buyers and external benefits to nonbuyers. 
D)  the market price reflects both private costs to sellers and external costs to nonsellers. 
A)  a good's costs are not fully reflected by its equilibrium price. 
B)  a good's costs are fully reflected by its equilibrium price. 
C)  the demand price reflects both private benefits to buyers and external benefits to nonbuyers. 
D)  the market price reflects both private costs to sellers and external costs to nonsellers.

Question 7

Activities of consumers and firms:

Accepted Answer

A)  have benefits but not costs. 
B)  have costs but not benefits. 
C)  have both costs and benefits. 
D)  are too complex to be analyzed with economic theory. 
A)  have benefits but not costs. 
B)  have costs but not benefits. 
C)  have both costs and benefits. 
D)  are too complex to be analyzed with economic theory.

Question 8

Use the following for questions 55-59.
Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit
  
-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (b), if activity is restricted to activity level E, the net benefit will be shown by the area:

Accepted Answer

A)  ABGF. 
B)  ABCD. 
C)  AEFG. 
D)  ABC. 
A)  ABGF. 
B)  ABCD. 
C)  AEFG. 
D)  ABC.

Question 9

Use the following to answer question(s): Market Failure 1
  
-(Exhibit: Market Failure 1) If the market produces quantity E, then:

Accepted Answer

A)  marginal benefit is equal to marginal cost. 
B)  marginal benefit is less than marginal cost. 
C)  marginal benefit is greater than marginal cost. 
D)  price is equal to marginal cost and greater than marginal benefit. 
A)  marginal benefit is equal to marginal cost. 
B)  marginal benefit is less than marginal cost. 
C)  marginal benefit is greater than marginal cost. 
D)  price is equal to marginal cost and greater than marginal benefit.

Question 10

Use the following to answer question(s): Markets and Efficiency
  
-(Exhibit: Markets and Efficiency) What is the marginal cost of an extra pound of apples to a producer in Panel(a)?

Accepted Answer

A)  It is the value that must be given up to produce an extra pound of apples. 
B)  It is greater than the price. 
C)  It must be less than the price. 
D)  It is the cost of the least satisfactory apples. 
A)  It is the value that must be given up to produce an extra pound of apples. 
B)  It is greater than the price. 
C)  It must be less than the price. 
D)  It is the cost of the least satisfactory apples.

Question 11

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 12

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.As the price changes to the new equilibrium price, some producers will:

Accepted Answer

A)  find that their marginal benefit of producing apples is below their marginal cost. 
B)  cut back on apple production. 
C)  respond to the signal sent by consumers and start to produce other goods that are more valuable than apples. 
D)  do all of the above. 
A)  find that their marginal benefit of producing apples is below their marginal cost. 
B)  cut back on apple production. 
C)  respond to the signal sent by consumers and start to produce other goods that are more valuable than apples. 
D)  do all of the above.

Question 13

Use the following to answer question(s): Markets and Efficiency
  
-(Exhibit: Markets and Efficiency) Using Panel (a), which of the following statements is (are) true?

Accepted Answer

A)  A consumer purchasing apples sends a message to producers that tells them marginal benefit equals or exceeds marginal cost. 
B)  A consumer's decision to buy apples ratifies the decisions of producers to forgo the production of other goods to produce apples. 
C)  At the equilibrium price, the marginal benefit of apples to consumers is reflected by the price they are willing to pay and is equal to the marginal cost of apples. 
D)  All of the above statements are true. 
A)  A consumer purchasing apples sends a message to producers that tells them marginal benefit equals or exceeds marginal cost. 
B)  A consumer's decision to buy apples ratifies the decisions of producers to forgo the production of other goods to produce apples. 
C)  At the equilibrium price, the marginal benefit of apples to consumers is reflected by the price they are willing to pay and is equal to the marginal cost of apples. 
D)  All of the above statements are true.

Question 14

If the marginal benefit received from a good is equal to the marginal cost of production, then:

Accepted Answer

A)  society's well-being cannot be improved by changing production. 
B)  society's well-being can be improved if production decreases. 
C)  society's well-being can be improved if production increases. 
D)  the market is producing too much of the good. 
A)  society's well-being cannot be improved by changing production. 
B)  society's well-being can be improved if production decreases. 
C)  society's well-being can be improved if production increases. 
D)  the market is producing too much of the good.

Question 15

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.Based upon that, which of the following statements is true?

Accepted Answer

A)  At the price of $.80, the quantity of apples demanded will now be greater than the quantity supplied. 
B)  At the price of $.80, the quantity supplied of apples will now equal the quantity demanded. 
C)  There is pressure for the price of apples to fall to $0.70 per pound. 
D)  A shortage of apples will force the price up to the new price of $0.90. 
A)  At the price of $.80, the quantity of apples demanded will now be greater than the quantity supplied. 
B)  At the price of $.80, the quantity supplied of apples will now equal the quantity demanded. 
C)  There is pressure for the price of apples to fall to $0.70 per pound. 
D)  A shortage of apples will force the price up to the new price of $0.90.

Question 16

Use the following to answer question(s): Net Benefit
  
-(Exhibit: Net Benefit) Net benefit to society is maximized at point _______ , where consumer surplus is the area _______ , and producer surplus is the area _______ .

Accepted Answer

A)  J; BCD; ABD 
B)  D; ABD; BCD 
C)  G; BCD; ABD 
D)  D; BCD; ABD 
A)  J; BCD; ABD 
B)  D; ABD; BCD 
C)  G; BCD; ABD 
D)  D; BCD; ABD

Question 17

The costs economists use in the concept of economic profit are:

Accepted Answer

A)  accounting costs. 
B)  strictly dollar costs, not opportunity costs. 
C)  opportunity costs, or the value of the best opportunity forgone. 
D)  both A and C. 
A)  accounting costs. 
B)  strictly dollar costs, not opportunity costs. 
C)  opportunity costs, or the value of the best opportunity forgone. 
D)  both A and C.

Question 18

Economic theory suggests that market failure is a result of:

Accepted Answer

A)  the quantity demanded exceeding the quantity supplied. 
B)  the quantity supplied exceeding the quantity demanded. 
C)  prices that are too high or too low. 
D)  markets not reflecting and revealing the full costs and benefits of choices. 
A)  the quantity demanded exceeding the quantity supplied. 
B)  the quantity supplied exceeding the quantity demanded. 
C)  prices that are too high or too low. 
D)  markets not reflecting and revealing the full costs and benefits of choices.

Question 19

A good for which exclusion cannot be applied and for which the marginal cost of another user is zero is a _______ good.

Accepted Answer

A)  private 
B)  free 
C)  market 
D)  public 
A)  private 
B)  free 
C)  market 
D)  public

Question 20

Use the following to answer question(s): Marginal Benefits and Marginal Costs
  
-(Exhibit: Marginal Benefits and Marginal Costs) In the exhibit, more time spent studying economics adds points to economics scores but subtracts points from accounting scores.The student in this example would maximize net benefits by studying economics for _______ hours.

Accepted Answer

A)  0 
B)  2 
C)  4 
D)  6 
A)  0 
B)  2 
C)  4 
D)  6

External costs may require government intervention.

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

A set of rules that specify the ways in which the resource for which they are defined may be used are:

The Case in Point on Protecting Wildlife indicated that well-established private property rights in much of Southern Africa:

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 and decide to purchase 6 boxes of popcorn, the maximum quantity of peanuts that you can purchase is _______ bags.

External costs occur because:

Activities of consumers and firms:

Use the following for questions 55-59. Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit -(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (b), if activity is restricted to activity level E, the net benefit will be shown by the area:

Use the following to answer question(s): Market Failure 1 -(Exhibit: Market Failure 1) If the market produces quantity E, then:

Use the following to answer question(s): Markets and Efficiency -(Exhibit: Markets and Efficiency) What is the marginal cost of an extra pound of apples to a producer in Panel(a)?

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

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.As the price changes to the new equilibrium price, some producers will:

Use the following to answer question(s): Markets and Efficiency -(Exhibit: Markets and Efficiency) Using Panel (a), which of the following statements is (are) true?

If the marginal benefit received from a good is equal to the marginal cost of production, then:

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.Based upon that, which of the following statements is true?

Use the following to answer question(s): Net Benefit -(Exhibit: Net Benefit) Net benefit to society is maximized at point ___ , where consumer surplus is the area _ , and producer surplus is the area _____ .

The costs economists use in the concept of economic profit are:

Economic theory suggests that market failure is a result of:

A good for which exclusion cannot be applied and for which the marginal cost of another user is zero is a _______ good.

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

External costs may require government intervention.

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

A set of rules that specify the ways in which the resource for which they are defined may be used are:

The Case in Point on Protecting Wildlife indicated that well-established private property rights in much of Southern Africa:

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 and decide to purchase 6 boxes of popcorn, the maximum quantity of peanuts that you can purchase is _______ bags.

External costs occur because:

Activities of consumers and firms:

Use the following for questions 55-59. Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit -(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit) In Panel (b), if activity is restricted to activity level E, the net benefit will be shown by the area:

Use the following to answer question(s): Market Failure 1 -(Exhibit: Market Failure 1) If the market produces quantity E, then:

Use the following to answer question(s): Markets and Efficiency -(Exhibit: Markets and Efficiency) What is the marginal cost of an extra pound of apples to a producer in Panel(a)?

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

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.As the price changes to the new equilibrium price, some producers will:

Use the following to answer question(s): Markets and Efficiency -(Exhibit: Markets and Efficiency) Using Panel (a), which of the following statements is (are) true?

If the marginal benefit received from a good is equal to the marginal cost of production, then:

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.Based upon that, which of the following statements is true?

Use the following to answer question(s): Net Benefit -(Exhibit: Net Benefit) Net benefit to society is maximized at point _______ , where consumer surplus is the area _______ , and producer surplus is the area _______ .

The costs economists use in the concept of economic profit are:

Economic theory suggests that market failure is a result of:

A good for which exclusion cannot be applied and for which the marginal cost of another user is zero is a _______ good.

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): Net Benefit -(Exhibit: Net Benefit) Net benefit to society is maximized at point ___ , where consumer surplus is the area _ , and producer surplus is the area _____ .