Question 1

Suppose you're willing to tutor a student for $10 an hour.The student pays you $15 an hour.What is your producer surplus?

Accepted Answer

A)  $5 an hour 
B)  $10 an hour 
C)  $15 an hour 
D)  $25 an hour 
E)  More than $25 an hour 
A)  $5 an hour 
B)  $10 an hour 
C)  $15 an hour 
D)  $25 an hour 
E)  More than $25 an hour

Question 2

Subsidies ________ the price paid by the buyer and ________ the price received by the seller.

Accepted Answer

A)  increase, increase 
B)  increase, decrease 
C)  decrease, increase 
D)  decrease, decrease 
E)  do not change; increase 
A)  increase, increase 
B)  increase, decrease 
C)  decrease, increase 
D)  decrease, decrease 
E)  do not change; increase

Question 3

Any point on the production possibility frontier is

Accepted Answer

A)  attainable and might be allocatively inefficient. 
B)  attainable and must be allocatively efficient. 
C)  less production efficient than a point in the interior of the PPF. 
D)  always allocatively efficient but might or might not be production efficient. 
E)  always production efficient and always allocatively efficient. 
A)  attainable and might be allocatively inefficient. 
B)  attainable and must be allocatively efficient. 
C)  less production efficient than a point in the interior of the PPF. 
D)  always allocatively efficient but might or might not be production efficient. 
E)  always production efficient and always allocatively efficient.

Question 4

At a competitive market equilibrium,if there are no taxes,subsidies,price regulations,quantity regulations,or externalities,
i.consumer surplus is minimized.
ii.marginal cost equals marginal benefit.
iii.resources are efficiently used.
iv.producer surplus is minimized.

Accepted Answer

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

Question 5

The marginal benefit of the first hotdog consumed is ________ the marginal benefit of the fifth hotdog consumed.

Accepted Answer

A)  equal to 
B)  less than 
C)  greater than 
D)  the inverse of 
E)  equal to 5 times 
A)  equal to 
B)  less than 
C)  greater than 
D)  the inverse of 
E)  equal to 5 times

Question 6

If the marginal benefit of a hot dog is greater than its marginal cost,then to increase efficiency,

Accepted Answer

A)  more hot dogs should be produced. 
B)  fewer hot dogs should be produced. 
C)  nothing should be done if the marginal benefit is greater than the marginal cost by the maximum amount because in this case the efficient quantity of hot dogs is being produced. 
D)  production should be halted. 
E)  More information is needed about the price of a hot dog in order to determine if production should be increased, decreased, or not changed. 
A)  more hot dogs should be produced. 
B)  fewer hot dogs should be produced. 
C)  nothing should be done if the marginal benefit is greater than the marginal cost by the maximum amount because in this case the efficient quantity of hot dogs is being produced. 
D)  production should be halted. 
E)  More information is needed about the price of a hot dog in order to determine if production should be increased, decreased, or not changed.

Question 7

When production moves from the efficient quantity to a point of overproduction,

Accepted Answer

A)  consumer surplus definitely increases. 
B)  the sum of producer surplus and consumer surplus increases. 
C)  there is a deadweight loss. 
D)  consumers definitely lose and producers definitely gain. 
E)  consumers definitely gain and producers definitely lose. 
A)  consumer surplus definitely increases. 
B)  the sum of producer surplus and consumer surplus increases. 
C)  there is a deadweight loss. 
D)  consumers definitely lose and producers definitely gain. 
E)  consumers definitely gain and producers definitely lose.

Question 8

To a seller,the cost of a good or service is ________,and the price is ________.

Accepted Answer

A)  what must be given up to produce the good or service; what is received for the good or service 
B)  what is received for the good or service; what must be given up to produce the good or service 
C)  the producer surplus the seller receives; the consumer surplus the buyer receives 
D)  the producer surplus the buyer receives; the consumer surplus the seller receives 
E)  None of the above answers is correct. 
A)  what must be given up to produce the good or service; what is received for the good or service 
B)  what is received for the good or service; what must be given up to produce the good or service 
C)  the producer surplus the seller receives; the consumer surplus the buyer receives 
D)  the producer surplus the buyer receives; the consumer surplus the seller receives 
E)  None of the above answers is correct.

Question 9

-The figure above shows the market for brooms.If 400 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 greater than marginal benefit. 
E)  consumer surplus equals zero. 
A)  consumer surplus is maximized. 
B)  producer surplus is maximized. 
C)  market failure and a deadweight loss occur. 
D)  marginal cost is greater than marginal benefit. 
E)  consumer surplus equals zero.

Question 10

In a figure that shows a supply curve and a demand curve,producer surplus is the area

Accepted Answer

A)  below the demand curve and above the market price. 
B)  below the supply curve and above the market price. 
C)  above the demand curve and below the market price. 
D)  above the supply curve and below the market price. 
E)  between the demand curve and the supply curve. 
A)  below the demand curve and above the market price. 
B)  below the supply curve and above the market price. 
C)  above the demand curve and below the market price. 
D)  above the supply curve and below the market price. 
E)  between the demand curve and the supply curve.

Question 11

If the price of a pizza is $10 per pizza,the consumer surplus from the first pizza consumed ________ the consumer surplus from the second pizza consumed.

Accepted Answer

A)  is greater than 
B)  equals 
C)  is less than 
D)  cannot be compared to 
E)  None of the above answers is correct because more information is needed about the marginal cost of producing the pizzas to answer the question. 
A)  is greater than 
B)  equals 
C)  is less than 
D)  cannot be compared to 
E)  None of the above answers is correct because more information is needed about the marginal cost of producing the pizzas to answer the question.

Question 12

the quantity demanded at a given price.In this view,the curve is a demand curve;

Accepted Answer

Demand curves can be used to find either

Question 13

The marginal cost curves slope upward because of the principle of

Accepted Answer

A)  decreasing marginal benefits. 
B)  increasing marginal cost. 
C)  increasing marginal benefits. 
D)  decreasing marginal cost. 
E)  decreasing total benefit. 
A)  decreasing marginal benefits. 
B)  increasing marginal cost. 
C)  increasing marginal benefits. 
D)  decreasing marginal cost. 
E)  decreasing total benefit.

Question 14

In general,the marginal benefit curve

Accepted Answer

A)  has a positive slope. 
B)  has a negative slope. 
C)  is horizontal. 
D)  is vertical. 
E)  is concave. 
A)  has a positive slope. 
B)  has a negative slope. 
C)  is horizontal. 
D)  is vertical. 
E)  is concave.

Question 15

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 16

-The figure above shows Diane's demand curve for soda.The price of a soda is $1.00.Diane's consumer surplus from her 15th soda is

Accepted Answer

A)  $0.00. 
B)  $0.50. 
C)  $1.00. 
D)  $1.50. 
E)  $2.50. 
A)  $0.00. 
B)  $0.50. 
C)  $1.00. 
D)  $1.50. 
E)  $2.50.

Question 17

-In the above figure,if the market quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied,then the producer surplus is equal to

Accepted Answer

A)  area D + area F. 
B)  area C + area E. 
C)  area A + area B + area C. 
D)  area A + area B. 
E)  area B + area D + area F. 
A)  area D + area F. 
B)  area C + area E. 
C)  area A + area B + area C. 
D)  area A + area B. 
E)  area B + area D + area F.

Question 18

The marginal benefit from buying a particular unit of a good

Accepted Answer

A)  is the amount paid for the unit plus the consumer surplus of the unit. 
B)  increases as market price increases. 
C)  is the difference between the amount paid for the unit and the market price of the unit. 
D)  is the difference between the total benefit of the unit and the marginal cost of producing that unit. 
E)  None of the above answers is correct. 
A)  is the amount paid for the unit plus the consumer surplus of the unit. 
B)  increases as market price increases. 
C)  is the difference between the amount paid for the unit and the market price of the unit. 
D)  is the difference between the total benefit of the unit and the marginal cost of producing that unit. 
E)  None of the above answers is correct.

Question 19

-The figure above shows the market for pants.If 6 million pairs of pants are produced,the deadweight loss is

Accepted Answer

A)  zero. 
B)  the triangle ABE. 
C)  the triangle BCE. 
D)  the triangle ACE. 
E)  the triangle BCE minus the triangle ABE. 
A)  zero. 
B)  the triangle ABE. 
C)  the triangle BCE. 
D)  the triangle ACE. 
E)  the triangle BCE minus the triangle ABE.

Question 20

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The ________ price that must be offered so that the 10,000th soda is produced is ________.

Accepted Answer

A)  minimum; $0.50 
B)  minimum; $1.00 
C)  maximum; $0.50 
D)  maximum; $1.00 
E)  minimum; more than $0.50 but less than $1.00 
A)  minimum; $0.50 
B)  minimum; $1.00 
C)  maximum; $0.50 
D)  maximum; $1.00 
E)  minimum; more than $0.50 but less than $1.00

Suppose you're willing to tutor a student for $10 an hour.The student pays you $15 an hour.What is your producer surplus?

Subsidies the price paid by the buyer and the price received by the seller.

Any point on the production possibility frontier is

At a competitive market equilibrium,if there are no taxes,subsidies,price regulations,quantity regulations,or externalities, i.consumer surplus is minimized. ii.marginal cost equals marginal benefit. iii.resources are efficiently used. iv.producer surplus is minimized.

The marginal benefit of the first hotdog consumed is ________ the marginal benefit of the fifth hotdog consumed.

If the marginal benefit of a hot dog is greater than its marginal cost,then to increase efficiency,

When production moves from the efficient quantity to a point of overproduction,

To a seller,the cost of a good or service is ,and the price is .

-The figure above shows the market for brooms.If 400 brooms are produced,

In a figure that shows a supply curve and a demand curve,producer surplus is the area

If the price of a pizza is $10 per pizza,the consumer surplus from the first pizza consumed ________ the consumer surplus from the second pizza consumed.

the quantity demanded at a given price.In this view,the curve is a demand curve;

The marginal cost curves slope upward because of the principle of

In general,the marginal benefit curve

Production efficiency requires that

-The figure above shows Diane's demand curve for soda.The price of a soda is $1.00.Diane's consumer surplus from her 15th soda is

-In the above figure,if the market quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied,then the producer surplus is equal to

The marginal benefit from buying a particular unit of a good

-The figure above shows the market for pants.If 6 million pairs of pants are produced,the deadweight loss is

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The price that must be offered so that the 10,000th soda is produced is .

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 6: Efficiency and Fairness of Markets

Suppose you're willing to tutor a student for $10 an hour.The student pays you $15 an hour.What is your producer surplus?

Subsidies ________ the price paid by the buyer and ________ the price received by the seller.

Any point on the production possibility frontier is

At a competitive market equilibrium,if there are no taxes,subsidies,price regulations,quantity regulations,or externalities, i.consumer surplus is minimized. ii.marginal cost equals marginal benefit. iii.resources are efficiently used. iv.producer surplus is minimized.

The marginal benefit of the first hotdog consumed is ________ the marginal benefit of the fifth hotdog consumed.

If the marginal benefit of a hot dog is greater than its marginal cost,then to increase efficiency,

When production moves from the efficient quantity to a point of overproduction,

To a seller,the cost of a good or service is ________,and the price is ________.

-The figure above shows the market for brooms.If 400 brooms are produced,

In a figure that shows a supply curve and a demand curve,producer surplus is the area

If the price of a pizza is $10 per pizza,the consumer surplus from the first pizza consumed ________ the consumer surplus from the second pizza consumed.

the quantity demanded at a given price.In this view,the curve is a demand curve;

The marginal cost curves slope upward because of the principle of

In general,the marginal benefit curve

Production efficiency requires that

-The figure above shows Diane's demand curve for soda.The price of a soda is $1.00.Diane's consumer surplus from her 15th soda is

-In the above figure,if the market quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied,then the producer surplus is equal to

The marginal benefit from buying a particular unit of a good

-The figure above shows the market for pants.If 6 million pairs of pants are produced,the deadweight loss is

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The ________ price that must be offered so that the 10,000th soda is produced is ________.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Subsidies the price paid by the buyer and the price received by the seller.

To a seller,the cost of a good or service is ,and the price is .

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The price that must be offered so that the 10,000th soda is produced is .