Question 1

When there is a cost or benefit that affects someone other than the seller and buyer,then there is

Accepted Answer

A)  a tax. 
B)  a subsidy. 
C)  a quantity regulation. 
D)  a price regulation. 
E)  an externality. 
A)  a tax. 
B)  a subsidy. 
C)  a quantity regulation. 
D)  a price regulation. 
E)  an externality.

Question 2

-In the above figure,what is the marginal cost of the 8th pizza?

Accepted Answer

A)  $1.50 
B)  $12 
C)  $6 
D)  $96 
E)  8 pizzas 
A)  $1.50 
B)  $12 
C)  $6 
D)  $96 
E)  8 pizzas

Question 3

What must be true for a consumer to enjoy a consumer surplus from a unit of a good?

Accepted Answer

The marginal benefit to the co

Question 4

Which of the following is necessary for allocative efficiency to be achieved?

Accepted Answer

A)  Marginal benefit must be maximized. 
B)  Marginal cost must be minimized. 
C)  Marginal benefit must equal marginal cost. 
D)  The difference between marginal benefit and marginal cost must be maximized. 
E)  Production must be at a point inside the production possibilities frontier. 
A)  Marginal benefit must be maximized. 
B)  Marginal cost must be minimized. 
C)  Marginal benefit must equal marginal cost. 
D)  The difference between marginal benefit and marginal cost must be maximized. 
E)  Production must be at a point inside the production possibilities frontier.

Question 5

A point on the demand curve shows the

Accepted Answer

A)  minimum price that people are willing to pay for another unit of a good. 
B)  dollars' worth of other goods that people must sacrifice to consume another unit of the good. 
C)  maximum price that people are willing to pay for another unit of a good. 
D)  consumer surplus a person gains from consuming a unit of a good. 
E)  marginal benefit minus the consumer surplus from consuming another unit of a good. 
A)  minimum price that people are willing to pay for another unit of a good. 
B)  dollars' worth of other goods that people must sacrifice to consume another unit of the good. 
C)  maximum price that people are willing to pay for another unit of a good. 
D)  consumer surplus a person gains from consuming a unit of a good. 
E)  marginal benefit minus the consumer surplus from consuming another unit of a good.

Question 6

-The table above shows the production possibilities for an economy.When the economy produces a combination of 900 books and 50 loaves of bread,

Accepted Answer

A)  production efficiency occurs because resources are not overused. 
B)  allocative efficiency is achieved because both goods are produced. 
C)  production efficiency is not achieved. 
D)  allocative and production efficiency are both achieved. 
E)  production efficiency is not achieved but allocative efficiency might be achieved. 
A)  production efficiency occurs because resources are not overused. 
B)  allocative efficiency is achieved because both goods are produced. 
C)  production efficiency is not achieved. 
D)  allocative and production efficiency are both achieved. 
E)  production efficiency is not achieved but allocative efficiency might be achieved.

Question 7

What allocation method is the primary method used in the United States?

Accepted Answer

While all the different allocation metho

Question 8

A benefit that accrues to people other than the buyer of a good is known as ________ benefit.

Accepted Answer

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

Question 9

The value of a slice of pizza to a consumer is equal to

Accepted Answer

A)  its marginal benefit. 
B)  the maximum price the consumer is willing to pay. 
C)  the consumer surplus. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct. 
A)  its marginal benefit. 
B)  the maximum price the consumer is willing to pay. 
C)  the consumer surplus. 
D)  Both answers A and B are correct. 
E)  Both answers B and C are correct.

Question 10

Redistributing income from the rich to the poor creates inefficiency because

Accepted Answer

A)  of wasteful expenditures by people receiving welfare grants. 
B)  of the administrative costs to operate the government redistribution agencies. 
C)  the redistribution creates an incentive to produce less output. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct. 
A)  of wasteful expenditures by people receiving welfare grants. 
B)  of the administrative costs to operate the government redistribution agencies. 
C)  the redistribution creates an incentive to produce less output. 
D)  Both answers B and C are correct. 
E)  Both answers A and C are correct.

Question 11

The producer surplus of making and selling 10 chairs is found by

Accepted Answer

A)  multiplying the selling price by 10. 
B)  subtracting the marginal cost from the selling price for each chair and summing the differences for all 10 chairs. 
C)  subtracting from the total revenue the cost of producing one chair multiplied by 10. 
D)  adding the marginal cost and the price of all 10 chairs. 
E)  None of the above answers is correct. 
A)  multiplying the selling price by 10. 
B)  subtracting the marginal cost from the selling price for each chair and summing the differences for all 10 chairs. 
C)  subtracting from the total revenue the cost of producing one chair multiplied by 10. 
D)  adding the marginal cost and the price of all 10 chairs. 
E)  None of the above answers is correct.

Question 12

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 13

In general,as the consumption of a good or service increases,the marginal benefit from consuming that good or service

Accepted Answer

A)  increases. 
B)  decreases. 
C)  stays the same. 
D)  at first increases and then decreases. 
E)  at first decreases and then increases. 
A)  increases. 
B)  decreases. 
C)  stays the same. 
D)  at first increases and then decreases. 
E)  at first decreases and then increases.

Question 14

-The figure above represents the competitive market for slices of key lime pie.When the price is $3,the total producer surplus equals

Accepted Answer

A)  $0. 
B)  $60. 
C)  $90. 
D)  $120. 
E)  None of the above answers is correct. 
A)  $0. 
B)  $60. 
C)  $90. 
D)  $120. 
E)  None of the above answers is correct.

Question 15

Which of the following describes the economic meanings of cost and price?

Accepted Answer

A)  Cost is exchange worth, and price is dollar worth. 
B)  Cost is what must be given up to produce a good, and price is what a seller receives when the good is sold. 
C)  They are the same, and they both mean what is received when a good is sold. 
D)  Cost refers to what the buyers pay for the good, and price refers to what sellers receive when the good is sold. 
E)  Cost refers to the price that buyers must pay to buy the good. 
A)  Cost is exchange worth, and price is dollar worth. 
B)  Cost is what must be given up to produce a good, and price is what a seller receives when the good is sold. 
C)  They are the same, and they both mean what is received when a good is sold. 
D)  Cost refers to what the buyers pay for the good, and price refers to what sellers receive when the good is sold. 
E)  Cost refers to the price that buyers must pay to buy the good.

Question 16

-The figure above shows Cindy's demand for CDs per year.
a.What is Cindy's consumer surplus on all the CDs consumed if the price of a CD is $12?
b.What is Cindy's consumer surplus on all the CDs consumed if the price of a CD is $9?
c.What happens to Cindy's consumer surplus when the price of a CD falls?

Accepted Answer

a.Her consumer surplus when the price of

Question 17

Lauren and Katy each bought a new bike lock for $20.Both Lauren and Katy would have paid $25 for the lock.Katy's consumer surplus equaled

Accepted Answer

A)  $10. 
B)  $40. 
C)  $5. 
D)  $20. 
E)  $50. 
A)  $10. 
B)  $40. 
C)  $5. 
D)  $20. 
E)  $50.

Question 18

Efficiency in a market occurs when the production of the good is such that

Accepted Answer

A)  marginal benefit exceeds marginal cost. 
B)  marginal benefit equals marginal cost. 
C)  marginal benefit is lower than marginal cost. 
D)  the marginal cost stops increasing. 
E)  marginal benefit exceeds marginal cost by the maximum amount possible. 
A)  marginal benefit exceeds marginal cost. 
B)  marginal benefit equals marginal cost. 
C)  marginal benefit is lower than marginal cost. 
D)  the marginal cost stops increasing. 
E)  marginal benefit exceeds marginal cost by the maximum amount possible.

Question 19

For resource use to be allocatively efficient,when the marginal benefit of a slice of pizza exceeds the marginal cost,________.

Accepted Answer

A)  more slices of pizza should be produced 
B)  fewer slices of pizza should be produced 
C)  no more slices of pizza should be produced 
D)  allocative efficiency is reached only if the marginal benefit exceeds the marginal cost by as much as possible 
E)  None of the above answers is correct. 
A)  more slices of pizza should be produced 
B)  fewer slices of pizza should be produced 
C)  no more slices of pizza should be produced 
D)  allocative efficiency is reached only if the marginal benefit exceeds the marginal cost by as much as possible 
E)  None of the above answers is correct.

Question 20

Jose works at Intel.His manager tells him what work needs to be completed each month.Jose's resource,labor,is allocated with which of the following methods?

Accepted Answer

A)  command 
B)  majority rule 
C)  force 
D)  personal characteristics 
E)  lottery 
A)  command 
B)  majority rule 
C)  force 
D)  personal characteristics 
E)  lottery

When there is a cost or benefit that affects someone other than the seller and buyer,then there is

-In the above figure,what is the marginal cost of the 8th pizza?

What must be true for a consumer to enjoy a consumer surplus from a unit of a good?

Which of the following is necessary for allocative efficiency to be achieved?

A point on the demand curve shows the

-The table above shows the production possibilities for an economy.When the economy produces a combination of 900 books and 50 loaves of bread,

What allocation method is the primary method used in the United States?

A benefit that accrues to people other than the buyer of a good is known as ________ benefit.

The value of a slice of pizza to a consumer is equal to

Redistributing income from the rich to the poor creates inefficiency because

The producer surplus of making and selling 10 chairs is found by

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

In general,as the consumption of a good or service increases,the marginal benefit from consuming that good or service

-The figure above represents the competitive market for slices of key lime pie.When the price is $3,the total producer surplus equals

Which of the following describes the economic meanings of cost and price?

Lauren and Katy each bought a new bike lock for $20.Both Lauren and Katy would have paid $25 for the lock.Katy's consumer surplus equaled

Efficiency in a market occurs when the production of the good is such that

For resource use to be allocatively efficient,when the marginal benefit of a slice of pizza exceeds the marginal cost,________.

Jose works at Intel.His manager tells him what work needs to be completed each month.Jose's resource,labor,is allocated with which of the following methods?

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

When there is a cost or benefit that affects someone other than the seller and buyer,then there is

-In the above figure,what is the marginal cost of the 8th pizza?

What must be true for a consumer to enjoy a consumer surplus from a unit of a good?

Which of the following is necessary for allocative efficiency to be achieved?

A point on the demand curve shows the

-The table above shows the production possibilities for an economy.When the economy produces a combination of 900 books and 50 loaves of bread,

What allocation method is the primary method used in the United States?

A benefit that accrues to people other than the buyer of a good is known as ________ benefit.

The value of a slice of pizza to a consumer is equal to

Redistributing income from the rich to the poor creates inefficiency because

The producer surplus of making and selling 10 chairs is found by

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

In general,as the consumption of a good or service increases,the marginal benefit from consuming that good or service

-The figure above represents the competitive market for slices of key lime pie.When the price is $3,the total producer surplus equals

Which of the following describes the economic meanings of cost and price?

Lauren and Katy each bought a new bike lock for $20.Both Lauren and Katy would have paid $25 for the lock.Katy's consumer surplus equaled

Efficiency in a market occurs when the production of the good is such that

For resource use to be allocatively efficient,when the marginal benefit of a slice of pizza exceeds the marginal cost,________.

Jose works at Intel.His manager tells him what work needs to be completed each month.Jose's resource,labor,is allocated with which of the following methods?

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