Question 1

If society can produce more of one good but must forgo some of another good to do so,it is definitely achieving

Accepted Answer

A)  both production and allocative efficiency. 
B)  only production efficiency. 
C)  only allocative efficiency. 
D)  neither production nor allocative efficiency. 
E)  None of the above answers is correct because when society must forgo another good to produce more of one good, then society might be production efficient or it might be allocatively efficient. 
A)  both production and allocative efficiency. 
B)  only production efficiency. 
C)  only allocative efficiency. 
D)  neither production nor allocative efficiency. 
E)  None of the above answers is correct because when society must forgo another good to produce more of one good, then society might be production efficient or it might be allocatively efficient.

Question 2

-In the figure above,the equilibrium market price is $20.The producer surplus is shown by the area

Accepted Answer

A)  A. 
B)  B. 
C)  A + B. 
D)  A ÷ B. 
E)  A - B. 
A)  A. 
B)  B. 
C)  A + B. 
D)  A ÷ B. 
E)  A - B.

Question 3

Explain the difference between the words "value," "price," and "cost."

Accepted Answer

Value refers to the marginal benefit of

Question 4

Why is a competitive market efficient?

Accepted Answer

Efficiency is attained when production i

Question 5

What is the impact of a government subsidy to producers?

Accepted Answer

A)  Less is produced relative to the efficient level, creating a deadweight loss. 
B)  More is produced relative to the efficient level, creating a deadweight loss. 
C)  Producer surplus is increased, which creates a larger consumer surplus. 
D)  Producers are able to sell the product at a higher price. 
E)  Consumers must pay a higher price for the good. 
A)  Less is produced relative to the efficient level, creating a deadweight loss. 
B)  More is produced relative to the efficient level, creating a deadweight loss. 
C)  Producer surplus is increased, which creates a larger consumer surplus. 
D)  Producers are able to sell the product at a higher price. 
E)  Consumers must pay a higher price for the good.

Question 6

When there is market failure so that a market produces less than the efficient amount,

Accepted Answer

A)  consumer surplus definitely is larger than when the efficient quantity is produced. 
B)  the sum of producer surplus and consumer surplus is larger than when the efficient quantity is produced. 
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 is larger than when the efficient quantity is produced. 
B)  the sum of producer surplus and consumer surplus is larger than when the efficient quantity is produced. 
C)  there is a deadweight loss. 
D)  consumers definitely lose and producers definitely gain. 
E)  consumers definitely gain and producers definitely lose.

Question 7

Consumer surplus is equal to

Accepted Answer

A)  marginal benefit minus price summed over the quantity consumed. 
B)  price minus marginal benefit summed over the quantity consumed. 
C)  marginal benefit summed over the quantity consumed. 
D)  price multiplied by the quantity consumed. 
E)  marginal benefit plus price summed over the quantity consumed. 
A)  marginal benefit minus price summed over the quantity consumed. 
B)  price minus marginal benefit summed over the quantity consumed. 
C)  marginal benefit summed over the quantity consumed. 
D)  price multiplied by the quantity consumed. 
E)  marginal benefit plus price summed over the quantity consumed.

Question 8

-In the figure above,if the market is at equilibrium,then the total consumer surplus equals the area ________ and the total producer surplus equals the area ________.

Accepted Answer

A)  A; B 
B)  B; C 
C)  C; B 
D)  A; C 
E)  A + B; C 
A)  A; B 
B)  B; C 
C)  C; B 
D)  A; C 
E)  A + B; C

Question 9

Graphically,producer surplus is the area under the

Accepted Answer

A)  demand curve and above the supply curve, up to the relevant quantity. 
B)  price and above the demand curve, up to the relevant quantity. 
C)  price and above the supply curve, up to the relevant quantity. 
D)  price and above the quantity axis, up to the relevant quantity. 
E)  demand curve and above the price, up to the relevant quantity. 
A)  demand curve and above the supply curve, up to the relevant quantity. 
B)  price and above the demand curve, up to the relevant quantity. 
C)  price and above the supply curve, up to the relevant quantity. 
D)  price and above the quantity axis, up to the relevant quantity. 
E)  demand curve and above the price, up to the relevant quantity.

Question 10

At a competitive equilibrium with no externalities,taxes,subsidies,public goods,common resources,or high transactions costs,which of the following occurs?
i.an efficient outcome
ii.definitely a fair outcome when judged by the fair-results approach
iii.marginal cost equals marginal benefit
iv.producer surplus equals consumer surplus

Accepted Answer

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

Question 11

In a competitive market with no externalities,

Accepted Answer

A)  the consumer surplus is equal to zero because of competition. 
B)  buyers cannot control the price, so the consumer surplus is zero. 
C)  at the equilibrium price, marginal benefit exceeds marginal cost. 
D)  at the equilibrium price, marginal benefit equals marginal cost. 
E)  at the equilibrium price, the total amount of consumer surplus equals the total amount of producer surplus. 
A)  the consumer surplus is equal to zero because of competition. 
B)  buyers cannot control the price, so the consumer surplus is zero. 
C)  at the equilibrium price, marginal benefit exceeds marginal cost. 
D)  at the equilibrium price, marginal benefit equals marginal cost. 
E)  at the equilibrium price, the total amount of consumer surplus equals the total amount of producer surplus.

Question 12

The figure above shows the market for pizza.
-In the figure above,if pizza production is restricted to 5,000 pizzas a day,the deadweight loss is

Accepted Answer

A)  $45,000 per day. 
B)  $12,500 per day. 
C)  $22,500 per day. 
D)  $90,000 per day. 
E)  zero. 
A)  $45,000 per day. 
B)  $12,500 per day. 
C)  $22,500 per day. 
D)  $90,000 per day. 
E)  zero.

Question 13

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

Accepted Answer

A)  marginal cost exceeds marginal benefit. 
B)  a deadweight loss does not occur because everyone who wants to buy a broom can. 
C)  the "big tradeoff" occurs. 
D)  value exceeds price. 
E)  the "fair results" approach to fairness is definitely not violated. 
A)  marginal cost exceeds marginal benefit. 
B)  a deadweight loss does not occur because everyone who wants to buy a broom can. 
C)  the "big tradeoff" occurs. 
D)  value exceeds price. 
E)  the "fair results" approach to fairness is definitely not violated.

Question 14

The concept of "the invisible hand" suggests that markets

Accepted Answer

A)  do not produce the efficient quantity. 
B)  are always fair. 
C)  produce the efficient quantity. 
D)  are unfair. 
E)  allocate resources unfairly and inefficiently. 
A)  do not produce the efficient quantity. 
B)  are always fair. 
C)  produce the efficient quantity. 
D)  are unfair. 
E)  allocate resources unfairly and inefficiently.

Question 15

-The figure above shows Lauren's demand curve for Barbie dolls and the market price for Barbie dolls.In order for Lauren to avoid paying more for dolls than they are worth to her,she must not purchase any more than

Accepted Answer

A)  0 dolls. 
B)  1 doll. 
C)  3 dolls. 
D)  5 dolls. 
E)  4 dolls. 
A)  0 dolls. 
B)  1 doll. 
C)  3 dolls. 
D)  5 dolls. 
E)  4 dolls.

Question 16

When the price rises and the supply curve does not shift,the firms' producer surplus ________.When the price falls and the supply curve does not shift,the firms' producer surplus ________.

Accepted Answer

A)  increases; decreases 
B)  decreases; increases 
C)  decreases; decreases 
D)  increases; increases 
E)  does not change; does not change 
A)  increases; decreases 
B)  decreases; increases 
C)  decreases; decreases 
D)  increases; increases 
E)  does not change; does not change

Question 17

The idea that unequal incomes are unfair generally uses the ________ principle of fairness.

Accepted Answer

A)  big tradeoff 
B)  involuntary exchange 
C)  voluntary exchange 
D)  it's not fair if the result isn't fair 
E)  it's not fair if the rules aren't fair 
A)  big tradeoff 
B)  involuntary exchange 
C)  voluntary exchange 
D)  it's not fair if the result isn't fair 
E)  it's not fair if the rules aren't fair

Question 18

A supply curve shows the marginal

Accepted Answer

A)  benefit consumers receive from consuming a good. 
B)  profit businesses earn from selling a good. 
C)  cost of producing the good. 
D)  price paid for a good. 
E)  benefit sellers receive from selling a good. 
A)  benefit consumers receive from consuming a good. 
B)  profit businesses earn from selling a good. 
C)  cost of producing the good. 
D)  price paid for a good. 
E)  benefit sellers receive from selling a good.

Question 19

We allocate resources efficiently when

Accepted Answer

A)  marginal benefit is equal to marginal cost. 
B)  marginal benefit is greater than marginal cost by any amount. 
C)  marginal cost is greater than marginal benefit. 
D)  total benefit is greater than total cost. 
E)  marginal benefit is greater than marginal cost by as much as possible. 
A)  marginal benefit is equal to marginal cost. 
B)  marginal benefit is greater than marginal cost by any amount. 
C)  marginal cost is greater than marginal benefit. 
D)  total benefit is greater than total cost. 
E)  marginal benefit is greater than marginal cost by as much as possible.

Question 20

-In the above figure,the market is at its equilibrium.Area A is equal to

Accepted Answer

A)  consumer surplus. 
B)  total revenue. 
C)  marginal benefit. 
D)  producer surplus. 
E)  total surplus. 
A)  consumer surplus. 
B)  total revenue. 
C)  marginal benefit. 
D)  producer surplus. 
E)  total surplus.

If society can produce more of one good but must forgo some of another good to do so,it is definitely achieving

-In the figure above,the equilibrium market price is $20.The producer surplus is shown by the area

Explain the difference between the words "value," "price," and "cost."

Why is a competitive market efficient?

What is the impact of a government subsidy to producers?

When there is market failure so that a market produces less than the efficient amount,

Consumer surplus is equal to

-In the figure above,if the market is at equilibrium,then the total consumer surplus equals the area and the total producer surplus equals the area .

Graphically,producer surplus is the area under the

In a competitive market with no externalities,

The figure above shows the market for pizza. -In the figure above,if pizza production is restricted to 5,000 pizzas a day,the deadweight loss is

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

The concept of "the invisible hand" suggests that markets

-The figure above shows Lauren's demand curve for Barbie dolls and the market price for Barbie dolls.In order for Lauren to avoid paying more for dolls than they are worth to her,she must not purchase any more than

When the price rises and the supply curve does not shift,the firms' producer surplus .When the price falls and the supply curve does not shift,the firms' producer surplus .

The idea that unequal incomes are unfair generally uses the ________ principle of fairness.

A supply curve shows the marginal

We allocate resources efficiently when

-In the above figure,the market is at its equilibrium.Area A is equal to

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

If society can produce more of one good but must forgo some of another good to do so,it is definitely achieving

-In the figure above,the equilibrium market price is $20.The producer surplus is shown by the area

Explain the difference between the words "value," "price," and "cost."

Why is a competitive market efficient?

What is the impact of a government subsidy to producers?

When there is market failure so that a market produces less than the efficient amount,

Consumer surplus is equal to

-In the figure above,if the market is at equilibrium,then the total consumer surplus equals the area ________ and the total producer surplus equals the area ________.

Graphically,producer surplus is the area under the

In a competitive market with no externalities,

The figure above shows the market for pizza. -In the figure above,if pizza production is restricted to 5,000 pizzas a day,the deadweight loss is

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

The concept of "the invisible hand" suggests that markets

-The figure above shows Lauren's demand curve for Barbie dolls and the market price for Barbie dolls.In order for Lauren to avoid paying more for dolls than they are worth to her,she must not purchase any more than

When the price rises and the supply curve does not shift,the firms' producer surplus ________.When the price falls and the supply curve does not shift,the firms' producer surplus ________.

The idea that unequal incomes are unfair generally uses the ________ principle of fairness.

A supply curve shows the marginal

We allocate resources efficiently when

-In the above figure,the market is at its equilibrium.Area A is equal to

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

-In the figure above,if the market is at equilibrium,then the total consumer surplus equals the area and the total producer surplus equals the area .

When the price rises and the supply curve does not shift,the firms' producer surplus .When the price falls and the supply curve does not shift,the firms' producer surplus .