Question 1

Production efficiency requires that

Accepted Answer

A) the economy be producing on the PPF but the marginal cost of a good does not need to equal its marginal benefit. 
B) the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit. 
C) the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF. 
D) the society be producing at the point of allocative efficiency. 
E) opportunity costs be minimized. 
A) the economy be producing on the PPF but the marginal cost of a good does not need to equal its marginal benefit. 
B) the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit. 
C) the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF. 
D) the society be producing at the point of allocative efficiency. 
E) opportunity costs be minimized.

Question 2

-The figure shows the demand curve for hotel rooms at a local resort.
a.If the hotel charges $120 per night,how many rooms will they rent?
b.If there are only 40 rooms available,how much are customers willing to pay for a room?
c.If 60 rooms are available,how much are customers willing to pay?
d.What do the dollars in your answer to part (c)represent?

Accepted Answer

a.At $120 a night,the hotel will rent 20

Question 3

When the cost of producing a product is paid,at least in part,by someone other than the producer,the cost is referred to as

Accepted Answer

A) an external cost. 
B) an external profit. 
C) an external benefit. 
D) an external/internal cost. 
E) a public cost. 
A) an external cost. 
B) an external profit. 
C) an external benefit. 
D) an external/internal cost. 
E) a public cost.

Question 4

Which of the following is true?
I.Production efficiency occurs only when resources are used to produce the combination of goods that has the greatest value.
Ii.Allocative efficiency occurs when marginal benefit equals marginal cost.
Iii.A demand curve is a marginal cost curve.

Accepted Answer

A) only ii 
B) only i 
C) only iii 
D) i and ii 
E) ii and iii 
A) only ii 
B) only i 
C) only iii 
D) i and ii 
E) ii and iii

Question 5

-The figure above shows the market for brooms.If 800 brooms are produced,

Accepted Answer

A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) market failure and a deadweight loss occur. 
D) marginal cost is less than marginal benefit. 
E) there is no deadweight loss. 
A) consumer surplus is maximized. 
B) producer surplus is maximized. 
C) market failure and a deadweight loss occur. 
D) marginal cost is less than marginal benefit. 
E) there is no deadweight loss.

Question 6

Allocative efficiency occurs

Accepted Answer

A) anywhere inside or on the production possibilities frontier. 
B) when the total cost of production is minimized. 
C) at all points on the production possibilities frontier. 
D) at only one point on the production possibilities frontier. 
E) at the points where the production possibilities frontier crosses the horizontal or vertical axis. 
A) anywhere inside or on the production possibilities frontier. 
B) when the total cost of production is minimized. 
C) at all points on the production possibilities frontier. 
D) at only one point on the production possibilities frontier. 
E) at the points where the production possibilities frontier crosses the horizontal or vertical axis.

Question 7

John has a marginal benefit of $7 for 1 slice of pizza,$5 for a second slice,$3 for a third slice,$1 for a fourth slice,and $0.50 for a fifth slice.The price of pizza is $1.50 per slice.Which of the following statements is correct?

Accepted Answer

A) John will purchase 3 slices of pizza and have consumer surplus of $10.50. 
B) John will purchase 4 slices of pizza and have consumer surplus of $12.00. 
C) John will purchase 2 slices of pizza and have consumer surplus of $1.50. 
D) John will purchase 3 slices of pizza and have consumer surplus of $4.50. 
E) John will purchase 2 slices of pizza and have consumer surplus of $3.00. 
A) John will purchase 3 slices of pizza and have consumer surplus of $10.50. 
B) John will purchase 4 slices of pizza and have consumer surplus of $12.00. 
C) John will purchase 2 slices of pizza and have consumer surplus of $1.50. 
D) John will purchase 3 slices of pizza and have consumer surplus of $4.50. 
E) John will purchase 2 slices of pizza and have consumer surplus of $3.00.

Question 8

An unequal distribution of income is considered fair according to Robert Nozick if

Accepted Answer

A) marginal cost equals marginal benefit. 
B) the cost of administering a welfare system is minimized. 
C) property rights are enforced and voluntary exchange occurs. 
D) the economy is producing its maximum total output. 
E) resources are allocated using the command method. 
A) marginal cost equals marginal benefit. 
B) the cost of administering a welfare system is minimized. 
C) property rights are enforced and voluntary exchange occurs. 
D) the economy is producing its maximum total output. 
E) resources are allocated using the command method.

Question 9

Which of the following is a correct description of the supply curve?
I.The supply curve is also the marginal cost curve.
Ii.The supply curve shows the dollars' worth of other goods that we must sacrifice to produce another unit of a good.
Iii.The supply curve shows the additional cost of producing another unit of a good.

Accepted Answer

A) i only 
B) i and ii 
C) ii and iii 
D) i,ii,and iii 
E) ii only 
A) i only 
B) i and ii 
C) ii and iii 
D) i,ii,and iii 
E) ii only

Question 10

Marginal benefit equals the

Accepted Answer

A) benefit that a person receives from consuming another unit of a good. 
B) additional efficiency from producing another unit of a good. 
C) increase in profit from producing another unit of a good. 
D) cost of producing another unit of a good. 
E) total benefit from consuming all the units of the good or service. 
A) benefit that a person receives from consuming another unit of a good. 
B) additional efficiency from producing another unit of a good. 
C) increase in profit from producing another unit of a good. 
D) cost of producing another unit of a good. 
E) total benefit from consuming all the units of the good or service.

Question 11

To determine how much of a good to produce to achieve allocative efficiency,we

Accepted Answer

A) construct a production possibilities frontier and choose the midpoint. 
B) construct a production possibilities frontier and choose any point on it. 
C) must produce on the PPF and at the point where the marginal benefit and marginal cost of the good are equal. 
D) must produce on the PPF and at the point where the marginal benefit exceeds by any amount the marginal cost of the good. 
E) must produce on the PPF and at the point where the marginal benefit exceeds by as much as possible the marginal cost of the good. 
A) construct a production possibilities frontier and choose the midpoint. 
B) construct a production possibilities frontier and choose any point on it. 
C) must produce on the PPF and at the point where the marginal benefit and marginal cost of the good are equal. 
D) must produce on the PPF and at the point where the marginal benefit exceeds by any amount the marginal cost of the good. 
E) must produce on the PPF and at the point where the marginal benefit exceeds by as much as possible the marginal cost of the good.

Question 12

-In the above figure,if the quantity is equal to 2,500,000 units,the deadweight loss is equal to

Accepted Answer

A) area B + area F. 
B) area D + area I. 
C) area C. 
D) area G + area H. 
E) None of the above answers is correct because the deadweight loss is equal to zero. 
A) area B + area F. 
B) area D + area I. 
C) area C. 
D) area G + area H. 
E) None of the above answers is correct because the deadweight loss is equal to zero.

Question 13

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

Accepted Answer

A) lottery 
B) contest 
C) sharing equally 
D) market price 
E) personal characteristics 
A) lottery 
B) contest 
C) sharing equally 
D) market price 
E) personal characteristics

Question 14

A cost not borne by the producer but borne by other people is known as ________ cost.

Accepted Answer

A) a marginal 
B) an internal 
C) an external 
D) a nonessential 
E) a subsidized 
A) a marginal 
B) an internal 
C) an external 
D) a nonessential 
E) a subsidized

Question 15

Producer surplus

Accepted Answer

A) increases if market price rises and the supply curve does not shift. 
B) decreases if market price rises and the supply curve does not shift. 
C) is equal to the maximum price consumers are willing to pay. 
D) is the same as the marginal cost. 
E) always must equal consumer surplus. 
A) increases if market price rises and the supply curve does not shift. 
B) decreases if market price rises and the supply curve does not shift. 
C) is equal to the maximum price consumers are willing to pay. 
D) is the same as the marginal cost. 
E) always must equal consumer surplus.

Question 16

Why is a competitive market efficient?

Accepted Answer

Efficiency is attained when production i

Question 17

When society must decrease the production of something in order to produce more of another good or service,society has necessarily achieved

Accepted Answer

A) only production efficiency. 
B) only allocative efficiency. 
C) both production efficiency and allocative efficiency. 
D) a free lunch. 
E) the maximum opportunity cost.. 
A) only production efficiency. 
B) only allocative efficiency. 
C) both production efficiency and allocative efficiency. 
D) a free lunch. 
E) the maximum opportunity cost..

Question 18

Allocative efficiency refers to

Accepted Answer

A) producing the goods and services most highly valued. 
B) using the least amount of labor to produce output. 
C) producing the maximum possible amount of output. 
D) obtaining the least output with the most inputs. 
E) producing at any point on the PPF. 
A) producing the goods and services most highly valued. 
B) using the least amount of labor to produce output. 
C) producing the maximum possible amount of output. 
D) obtaining the least output with the most inputs. 
E) producing at any point on the PPF.

Question 19

-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?

Accepted Answer

a.40,000 pizzas is the efficient quantit

Question 20

What must be true for a producer to obtain a producer surplus from the sale of a unit of a good?

Accepted Answer

The price must be gr

Production efficiency requires that

When the cost of producing a product is paid,at least in part,by someone other than the producer,the cost is referred to as

Which of the following is true? I.Production efficiency occurs only when resources are used to produce the combination of goods that has the greatest value. Ii.Allocative efficiency occurs when marginal benefit equals marginal cost. Iii.A demand curve is a marginal cost curve.

-The figure above shows the market for brooms.If 800 brooms are produced,

Allocative efficiency occurs

John has a marginal benefit of $7 for 1 slice of pizza,$5 for a second slice,$3 for a third slice,$1 for a fourth slice,and $0.50 for a fifth slice.The price of pizza is $1.50 per slice.Which of the following statements is correct?

An unequal distribution of income is considered fair according to Robert Nozick if

Marginal benefit equals the

To determine how much of a good to produce to achieve allocative efficiency,we

-In the above figure,if the quantity is equal to 2,500,000 units,the deadweight loss is equal to

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

A cost not borne by the producer but borne by other people is known as ________ cost.

Producer surplus

Why is a competitive market efficient?

When society must decrease the production of something in order to produce more of another good or service,society has necessarily achieved

Allocative efficiency refers to

What must be true for a producer to obtain a producer surplus from the sale of a unit of a good?

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 6: Efficiency and Fairness of Markets

Production efficiency requires that

When the cost of producing a product is paid,at least in part,by someone other than the producer,the cost is referred to as

Which of the following is true? I.Production efficiency occurs only when resources are used to produce the combination of goods that has the greatest value. Ii.Allocative efficiency occurs when marginal benefit equals marginal cost. Iii.A demand curve is a marginal cost curve.

-The figure above shows the market for brooms.If 800 brooms are produced,

Allocative efficiency occurs

John has a marginal benefit of $7 for 1 slice of pizza,$5 for a second slice,$3 for a third slice,$1 for a fourth slice,and $0.50 for a fifth slice.The price of pizza is $1.50 per slice.Which of the following statements is correct?

An unequal distribution of income is considered fair according to Robert Nozick if

Marginal benefit equals the

To determine how much of a good to produce to achieve allocative efficiency,we

-In the above figure,if the quantity is equal to 2,500,000 units,the deadweight loss is equal to

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

A cost not borne by the producer but borne by other people is known as ________ cost.

Producer surplus

Why is a competitive market efficient?

When society must decrease the production of something in order to produce more of another good or service,society has necessarily achieved

Allocative efficiency refers to

What must be true for a producer to obtain a producer surplus from the sale of a unit of a good?

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters