Question 1

Although the efficient quantity to produce of any good is located where marginal social benefit and marginal social cost are equal, there will usually be other quantities where the sum of consumer and producer surplus are greater.

Accepted Answer

A) True 
 B)False

Question 2

If a person will rent an apartment only to married couples over 30 years old, that person is allocating resources using a ________ allocation method.

Accepted Answer

A)  first-come, first-served 
B)  market price 
C)  personal characteristics 
D)  command

Question 3

-In the above figure, the total producer surplus at the efficient level of output is

Accepted Answer

A)  $4.5 million. 
B)  $9.0 million. 
C)  $2.5 million. 
D)  $3.0 million.

Question 4

-In the above figure, if five million CDs per month are produced and consumed, that is

Accepted Answer

A)  better than producing and consuming four million CDs because more is always better than less. 
B)  more than the efficient quantity because the marginal social benefit exceeds the marginal social cost. 
C)  more than the efficient quantity because the marginal social cost exceeds the marginal social benefit. 
D)  less than the efficient quantity because the opportunity cost exceeds the marginal social benefit.

Question 5

Four people each have a different willingness to pay for one unit of a good: George will pay $15, Glen will pay $12, Tom will pay $10, and Peter will pay $8. If price decreases from $9 to $8 then the consumer surplus from this unit will increase by

Accepted Answer

A)  $3. 
B)  $4. 
C)  $2. 
D)  $1.

Question 6

A market demand curve can be constructed by

Accepted Answer

A)  adding the prices all consumers will pay for any given quantity. 
B)  adding the quantities that all consumers buy at each price. 
C)  adding the quantities that a consumer buys at the highest price. 
D)  None of the above answers is correct.

Question 7

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. At Kaffenia's efficient quantity of doughnuts

Accepted Answer

A)  total consumer surplus is zero. 
B)  total producer surplus is zero. 
C)  consumer surplus exceeds producer surplus by the greatest possible amount. 
D)  the sum of consumer surplus and producer surplus is maximized.

Question 8

In the United States, resources are most often allocated by

Accepted Answer

A)  market price. 
B)  command system. 
C)  lottery. 
D)  contest.

Question 9

Marginal cost is

Accepted Answer

A)  the same as the marginal benefit because producers benefit from the money they receive when they sell the good. 
B)  the opportunity cost of producing one more unit. 
C)  the total opportunity cost of producing all the units of the good. 
D)  zero at the efficient level of production.

Question 10

Resource use is efficient when production is such that marginal social benefit is

Accepted Answer

A)  greater than marginal social cost. 
B)  equal to marginal social cost. 
C)  less than marginal social cost. 
D)  at its maximum value.

Question 11

Marginal benefit

Accepted Answer

A)  is the same as the total benefit received from consuming a good. 
B)  is the maximum amount a person is willing to pay for one more unit of a good. 
C)  increases as consumption increases. 
D)  is the difference between total benefit and total cost.

Question 12

-The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. For a consumer, the price they are willing to pay for each additional pound of coffee is

Accepted Answer

A)  always less than the economy's marginal social cost of producing that additional pound. 
B)  equal to their own marginal benefit from consuming that additional pound. 
C)  equal to their consumer surplus. 
D)  Both answers B and C are correct.

Question 13

One of the problems associated with the utilitarianism is that it does NOT recognize that

Accepted Answer

A)  taxing those with higher incomes results in less work effort. 
B)  each individual receives a different marginal benefit from a dollar's worth of income. 
C)  equity is achieved when there is no poor and no rich. 
D)  similar individuals should be treated the same.

Question 14

When scarce resources can serve only one user at a time in sequence, which method works well for allocating the scarce resources?

Accepted Answer

A)  first come, first served 
B)  lottery 
C)  contest 
D)  command system

Question 15

In the market for tablet computers, the producer surplus will decrease if

Accepted Answer

A)  the supply of tablets increases. 
B)  the price of a tablet decreases. 
C)  the marginal cost of a tablet decreases. 
D)  the price of a tablet increases.

Question 16

-In the above figure, the efficient quantity of milk is

Accepted Answer

A)  10 million gallons per day. 
B)  5 million gallons per day. 
C)  zero gallons per day. 
D)  None of the above because all of the quantities are efficient.

Question 17

-In the above table, the efficient quantity of brownies is produced when the price of a brownie is equal to

Accepted Answer

A)  0. 
B)  40¢. 
C)  60¢. 
D)  80¢.

Question 18

-In the above figure, the second ton of wheat would be produced even though the producer surplus on it is zero if the price per ton of wheat was

Accepted Answer

A)  $25. 
B)  $50. 
C)  $75. 
D)  $100.

Question 19

Which of the following statements about supply curves is CORRECT? I. A supply curve also can be a marginal cost curve.
II) A supply curve tells the quantity of other goods and services that sellers must give up to produce another unit of the good.

Accepted Answer

A)  I only 
B)  II only 
C)  both I and II 
D)  neither I nor II

Question 20

Buyers receive a consumer surplus when the price exceeds the marginal benefit.

Accepted Answer