Question 1

The value of one more unit of a good or service is its marginal benefit.

Accepted Answer

A) True 
 B)False

Question 2

-The table above gives the demand and supply schedules for bottled spring water in Springsboro. Assume that the only people who benefit from spring water are the people who drink it and the only people who bear the cost of bottled spring water are the people who produce it.
a) Draw the market demand and market supply curves. What are the equilibrium price and equilibrium quantity of spring water? Is this equilibrium efficient? Explain.
b) What is the maximum price that consumers are willing to pay for the 400th bottle? What is the minimum price that producers are willing to accept for the 400th bottle? Explain.
c) Are 400 bottles a day less than or greater than the efficient quantity? Explain your answer.
d) If the market for spring water is efficient, what is the consumer surplus? Show it on your graph. What is the producer surplus? Show it on your graph.
e) If spring water bottlers produce 400 bottles a day, is there a deadweight loss? If yes, what is it? Explain your answer using your graph.

Accepted Answer

@#IMG-DLM& a) The figure above shows the supply an

Question 3

Fitness is a magazine for women about health and exercise. Fitness offers year subscriptions for $12 on their website. Jess, Ania, Mandy, and Chloe exercise together and each enjoy reading Fitness. Jess is willing to pay $10, Ania is willing to pay $16, Mandy is willing to pay $24, and Chloe is willing to pay $12 for a subscription to the magazine. What is the value of Ania's consumer surplus?

Accepted Answer

A)  $4 
B)  $16 
C)  $12 
D)  $6 
A)  $4 
B)  $16 
C)  $12 
D)  $6

Question 4

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the consumer surplus?

Accepted Answer

A)  $30 
B)  $9,000 
C)  $18,000 
D)  $16,000 
A)  $30 
B)  $9,000 
C)  $18,000 
D)  $16,000

Question 5

-The table gives the demand and supply schedules for ice cream in Sweetsville in July and November. Assume that the only people who benefit from ice cream are the people who consume it and the only people who bear the cost of ice cream are the people who produce it.
a) Draw the market demand and market supply curves. What are the equilibrium price and equilibrium quantity of ice cream in July and November? Is the allocation of resources efficient in July? Is it efficient in November? Explain.
b) What is the maximum price that consumers are willing to pay for the 100th gallon of ice cream in July? In November? What is the minimum price that producers are willing to accept for the 100th gallon in July and November? Explain.
c) What happens to consumer surplus and producer surplus in November compared to July? Why?

Accepted Answer

@#IMG-DLM& a) The figure is shown above. In July,

Question 6

-In the above table, what is the minimum price that producers must be offered to produce the 200th brownie?

Accepted Answer

A)  0 
B)  20¢ 
C)  60¢ 
D)  80¢ 
A)  0 
B)  20¢ 
C)  60¢ 
D)  80¢

Question 7

-In the above figure, what is the total consumer surplus from all the milk bought if the price of milk is $3.00 per gallon?

Accepted Answer

A)  $16 million 
B)  $12 million 
C)  $4 million 
D)  $2 million 
A)  $16 million 
B)  $12 million 
C)  $4 million 
D)  $2 million

Question 8

"If there is an inefficient level of nursing care in South America, a deadweight loss exists." Is this statement true or false?

Accepted Answer

The statement is True. Anytime

Question 9

The market demand curve for coffee is the same as the

Accepted Answer

A)  marginal social cost curve of coffee. 
B)  marginal social benefit curve of coffee. 
C)  opportunity cost curve of coffee. 
D)  marginal social benefit curve minus the marginal social cost curve of coffee. 
A)  marginal social cost curve of coffee. 
B)  marginal social benefit curve of coffee. 
C)  opportunity cost curve of coffee. 
D)  marginal social benefit curve minus the marginal social cost curve of coffee.

Question 10

Susan thinks the only fair outcome is one in which she has three slices of pizza a week. Susan is using a(n) ________ concept of fairness.

Accepted Answer

A)  "it's not fair if the result isn't fair" 
B)  "it's not fair if the rules aren't fair" 
C)  "big tradeoff" 
D)  "Novak principle" 
A)  "it's not fair if the result isn't fair" 
B)  "it's not fair if the rules aren't fair" 
C)  "big tradeoff" 
D)  "Novak principle"

Question 11

Which of the following is true?

Accepted Answer

A)  When a market price allocates resources, everyone who is able to pay the price gets the resource. 
B)  A command system works well when the lines of authority and responsibility are clear. 
C)  When the government decides how to allocate tax dollars among competing uses, resources are allocated by command. 
D)  When a manager offers everyone in the company the opportunity to win a prize, resources are allocated by a market price. 
A)  When a market price allocates resources, everyone who is able to pay the price gets the resource. 
B)  A command system works well when the lines of authority and responsibility are clear. 
C)  When the government decides how to allocate tax dollars among competing uses, resources are allocated by command. 
D)  When a manager offers everyone in the company the opportunity to win a prize, resources are allocated by a market price.

Question 12

If the market for roller blades is at a competitive equilibrium, and there are no external costs or benefits, then

Accepted Answer

A)  marginal social benefit is equal to marginal social cost. 
B)  the sum of consumer surplus and producer surplus is maximized. 
C)  resources are being used efficiently. 
D)  All of the above answers are correct. 
A)  marginal social benefit is equal to marginal social cost. 
B)  the sum of consumer surplus and producer surplus is maximized. 
C)  resources are being used efficiently. 
D)  All of the above answers are correct.

Question 13

-The figure tells us about the market for red roses. The consumer surplus is ________ a day.

Accepted Answer

A)  $800 
B)  $200 
C)  $1,000 
D)  $20 
A)  $800 
B)  $200 
C)  $1,000 
D)  $20

Question 14

Often people trying to withdraw money from their bank must wait in line, which reflects a ________ allocation method.

Accepted Answer

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

Question 15

The Wii is a wildly popular home video game console released by Nintendo. The Wii system was first available in the U.S. in November, 2006 and has sold more than 30 million units as of August 2010. The Wii retails for $199. Suppose Ahmed is willing to pay $230, Lana is willing to pay $175, and Bodie is willing to pay $300 for a Wii. What is the value of Lana's consumer surplus?

Accepted Answer

A)  No consumer surplus is generated because Lana will not buy the Wii. 
B)  $249 
C)  $225 
D)  $24 
A)  No consumer surplus is generated because Lana will not buy the Wii. 
B)  $249 
C)  $225 
D)  $24

Question 16

-The above figure shows the competitive market for turkey. The consumer surplus for the 300 millionth pound of turkey is

Accepted Answer

A)  $2.00 per pound. 
B)  $225 million. 
C)  $0.80 per pound. 
D)  $0.50 per pound. 
A)  $2.00 per pound. 
B)  $225 million. 
C)  $0.80 per pound. 
D)  $0.50 per pound.

Question 17

Marginal cost is best defined as

Accepted Answer

A)  the extra cost of producing one more unit of output. 
B)  the profit earned from selling one more unit of output. 
C)  the price received from selling one more unit of output. 
D)  equal to producer surplus. 
A)  the extra cost of producing one more unit of output. 
B)  the profit earned from selling one more unit of output. 
C)  the price received from selling one more unit of output. 
D)  equal to producer surplus.

Question 18

A competitive market is always efficient.

Accepted Answer

A) True 
 B)False

Question 19

-The figure above shows the market for milk. The ________ price that producers must be offered to get them to produce 100 gallons of milk per day is ________.

Accepted Answer

A)  maximum; $2.50 
B)  minimum; $3.00 
C)  maximum; $4.00 
D)  minimum; $2.50 
A)  maximum; $2.50 
B)  minimum; $3.00 
C)  maximum; $4.00 
D)  minimum; $2.50

Question 20

-The figure above shows the market for milk. If a drought lowers the productivity of dairy cows so that they give less milk, then the efficient quantity of milk ________ and the consumer surplus ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Exam 5: Efficiency and Equity

The value of one more unit of a good or service is its marginal benefit.

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the consumer surplus?

-In the above table, what is the minimum price that producers must be offered to produce the 200th brownie?

-In the above figure, what is the total consumer surplus from all the milk bought if the price of milk is $3.00 per gallon?

"If there is an inefficient level of nursing care in South America, a deadweight loss exists." Is this statement true or false?

The market demand curve for coffee is the same as the

Susan thinks the only fair outcome is one in which she has three slices of pizza a week. Susan is using a(n) ________ concept of fairness.

Which of the following is true?

If the market for roller blades is at a competitive equilibrium, and there are no external costs or benefits, then

-The figure tells us about the market for red roses. The consumer surplus is ________ a day.

Often people trying to withdraw money from their bank must wait in line, which reflects a ________ allocation method.

-The above figure shows the competitive market for turkey. The consumer surplus for the 300 millionth pound of turkey is

Marginal cost is best defined as

A competitive market is always efficient.

-The figure above shows the market for milk. The ________ price that producers must be offered to get them to produce 100 gallons of milk per day is ________.

-The figure above shows the market for milk. If a drought lowers the productivity of dairy cows so that they give less milk, then the efficient quantity of milk ________ and the consumer surplus ________.

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 milk. The price that producers must be offered to get them to produce 100 gallons of milk per day is .

-The figure above shows the market for milk. If a drought lowers the productivity of dairy cows so that they give less milk, then the efficient quantity of milk and the consumer surplus .