Question 1

Which of the following is a correct statement?

Accepted Answer

A)  Producer surplus is an external benefit. 
B)  Consumer surplus is an external benefit. 
C)  A government subsidy paid to a producer is an external benefit. 
D)  None of the above statements are correct. 
A)  Producer surplus is an external benefit. 
B)  Consumer surplus is an external benefit. 
C)  A government subsidy paid to a producer is an external benefit. 
D)  None of the above statements are correct.

Question 2

What other curve is the same as the market supply curve? Why are the curves the same?

Accepted Answer

The market supply curve is the same as t

Question 3

-The figure above shows the market for ink-jet printers.
a) What are the equilibrium price and equilibrium quantity of printers? Is this equilibrium efficient? Explain.
b) Calculate the total amount consumers paid for printers bought.
c) Calculate the consumer surplus.
d) Calculate the producer surplus.

Accepted Answer

a) The equilibrium price is $100 and the

Question 4

The reduction in consumer and producer surplus that results from underproduction is called

Accepted Answer

A)  an internal cost. 
B)  a deadweight loss. 
C)  a quantity loss. 
D)  None of the above answers is correct. 
A)  an internal cost. 
B)  a deadweight loss. 
C)  a quantity loss. 
D)  None of the above answers is correct.

Question 5

A deadweight loss

Accepted Answer

A)  is possible only if the good is underproduced but is not possible if the good is overproduced. 
B)  subtracts only from producer surplus. 
C)  is a loss to consumers and a gain to producers. 
D)  is a loss inflicted on the entire society. 
A)  is possible only if the good is underproduced but is not possible if the good is overproduced. 
B)  subtracts only from producer surplus. 
C)  is a loss to consumers and a gain to producers. 
D)  is a loss inflicted on the entire society.

Question 6

-In the above figure, of the quantities listed below, for which is the total deadweight loss the largest?

Accepted Answer

A)  0 units 
B)  10 units 
C)  20 units 
D)  30 units 
A)  0 units 
B)  10 units 
C)  20 units 
D)  30 units

Question 7

When 2,000 hamburgers per day are produced, the marginal social benefit is $1.50 and the marginal social cost is $1.00. And when 7,500 hamburgers per day are produced, the marginal social benefit is $1.00 and the marginal social cost is $1.50. The efficient production quantity of hamburgers is ________ a day.

Accepted Answer

A)  more than 7,500 
B)  7,500 
C)  between 2,000 and 7,500 
D)  2,000 
A)  more than 7,500 
B)  7,500 
C)  between 2,000 and 7,500 
D)  2,000

Question 8

-In the above figure, what is the marginal social benefit of the four-hundredth pretzel?

Accepted Answer

A)  $0 
B)  $2.00 
C)  $3.00 
D)  $4.00 
A)  $0 
B)  $2.00 
C)  $3.00 
D)  $4.00

Question 9

The drought in the Midwest over the summer has decreased the supply of corn and, as a result, brought a sharp increase in the price of corn. (Source: The Economist, August 4, 2012) The increase in the price of corn

Accepted Answer

A)  always increases consumer surplus. 
B)  always decreases consumer surplus. 
C)  does not affect consumer surplus because this change reflects only a movement along the demand curve. 
D)  increases consumer surplus if demand is elastic and decreases consumer surplus if demand is inelastic. 
A)  always increases consumer surplus. 
B)  always decreases consumer surplus. 
C)  does not affect consumer surplus because this change reflects only a movement along the demand curve. 
D)  increases consumer surplus if demand is elastic and decreases consumer surplus if demand is inelastic.

Question 10

Consumer surplus is the value of a good minus the cost of producing it, summed over the quantity bought.

Accepted Answer

A) True 
 B)False

Question 11

-The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. There is no external benefit. What is the marginal benefit to the citizen of Kaffenia who consumes the four hundredth pound of coffee each day?

Accepted Answer

A)  $1.00 per pound 
B)  $2.00 per pound 
C)  $3.00 per pound 
D)  $4.00 per pound 
A)  $1.00 per pound 
B)  $2.00 per pound 
C)  $3.00 per pound 
D)  $4.00 per pound

Question 12

-The figure above shows the market for umbrellas in Sunville. Suppose the quantity of umbrellas currently traded in Sunville is 199 per day. If one more umbrella is sold, the total surplus in Sunville will

Accepted Answer

A)  decrease by $26.67. 
B)  increase by $26.67. 
C)  increase by $50.00. 
D)  not change. 
A)  decrease by $26.67. 
B)  increase by $26.67. 
C)  increase by $50.00. 
D)  not change.

Question 13

The assertion that if resources are allocated efficiently, they also are allocated fairly is made by

Accepted Answer

A)  all utilitarians. 
B)  John Rawls, who proposed making the poorest as well off as possible. 
C)  Robert Nozick, who believes that equality of opportunity is fair. 
D)  all economists who understand the big tradeoff. 
A)  all utilitarians. 
B)  John Rawls, who proposed making the poorest as well off as possible. 
C)  Robert Nozick, who believes that equality of opportunity is fair. 
D)  all economists who understand the big tradeoff.

Question 14

-The figure illustrates the market for hot dogs on Big Foot Island. The producer surplus is ________.

Accepted Answer

A)  $240 an hour 
B)  $180 an hour 
C)  $1.20 a hot dog 
D)  $60 an hour 
A)  $240 an hour 
B)  $180 an hour 
C)  $1.20 a hot dog 
D)  $60 an hour

Question 15

What is allocative efficiency?

Accepted Answer

Allocative efficiency is a sit

Question 16

A market is allocatively efficient if

Accepted Answer

A)  the sum of the consumer surplus and the producer surplus has been maximized. 
B)  consumer surplus has been maximized. 
C)  producer surplus has been maximized. 
D)  profit has been maximized. 
A)  the sum of the consumer surplus and the producer surplus has been maximized. 
B)  consumer surplus has been maximized. 
C)  producer surplus has been maximized. 
D)  profit has been maximized.

Question 17

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. There is no external benefit. What is the marginal benefit to the citizen of Kaffenia who consumes the 100th dozen doughnuts each day?

Accepted Answer

A)  $10.00 per dozen 
B)  $8.00 per dozen 
C)  $6.00 per dozen 
D)  $4.00 per dozen 
A)  $10.00 per dozen 
B)  $8.00 per dozen 
C)  $6.00 per dozen 
D)  $4.00 per dozen

Question 18

-The figure above shows the market for coffee. When the efficient quantity of coffee is produced, the marginal social benefit from the last pound is

Accepted Answer

A)  $1.00. 
B)  $2.50. 
C)  $3.00. 
D)  $4.00. 
A)  $1.00. 
B)  $2.50. 
C)  $3.00. 
D)  $4.00.

Question 19

-The figure above shows the market for coffee. The ________ price that producers must be offered to get them to produce 10 million pounds of coffee per month is ________.

Accepted Answer

A)  maximum; $2.00 
B)  maximum; $3.50 
C)  minimum; $2.00 
D)  minimum; $3.50 
A)  maximum; $2.00 
B)  maximum; $3.50 
C)  minimum; $2.00 
D)  minimum; $3.50

Question 20

The principle that states that we should strive to achieve the greatest happiness for the greatest number is called

Accepted Answer

A)  the big tradeoff. 
B)  the symmetry principle. 
C)  utilitarianism. 
D)  efficiency. 
A)  the big tradeoff. 
B)  the symmetry principle. 
C)  utilitarianism. 
D)  efficiency.

Exam 5: Efficiency and Equity

Which of the following is a correct statement?

What other curve is the same as the market supply curve? Why are the curves the same?

The reduction in consumer and producer surplus that results from underproduction is called

A deadweight loss

-In the above figure, of the quantities listed below, for which is the total deadweight loss the largest?

-In the above figure, what is the marginal social benefit of the four-hundredth pretzel?

The drought in the Midwest over the summer has decreased the supply of corn and, as a result, brought a sharp increase in the price of corn. (Source: The Economist, August 4, 2012) The increase in the price of corn

Consumer surplus is the value of a good minus the cost of producing it, summed over the quantity bought.

-The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. There is no external benefit. What is the marginal benefit to the citizen of Kaffenia who consumes the four hundredth pound of coffee each day?

-The figure above shows the market for umbrellas in Sunville. Suppose the quantity of umbrellas currently traded in Sunville is 199 per day. If one more umbrella is sold, the total surplus in Sunville will

The assertion that if resources are allocated efficiently, they also are allocated fairly is made by

-The figure illustrates the market for hot dogs on Big Foot Island. The producer surplus is ________.

What is allocative efficiency?

A market is allocatively efficient if

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. There is no external benefit. What is the marginal benefit to the citizen of Kaffenia who consumes the 100th dozen doughnuts each day?

-The figure above shows the market for coffee. When the efficient quantity of coffee is produced, the marginal social benefit from the last pound is

-The figure above shows the market for coffee. The ________ price that producers must be offered to get them to produce 10 million pounds of coffee per month is ________.

The principle that states that we should strive to achieve the greatest happiness for the greatest number is called

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

-The figure above shows the market for coffee. The price that producers must be offered to get them to produce 10 million pounds of coffee per month is .