Question 1

"If the marginal social benefit of a car exceeds the marginal social cost of a car, we are producing too many cars." True or false? Explain.

Accepted Answer

A) True 
 B)False

Question 2

Jane is willing to pay $4 for the first cup of coffee a day, $2.50 for the second cup, and $1 for the third cup, after which she won't buy any coffee. The price of a cup of coffee is $2.40. Jane's consumer surplus from the coffee she buys is ________ per day.

Accepted Answer

A)  $1.60 
B)  $1.70 
C)  $4.80 
D)  $6.50 
A)  $1.60 
B)  $1.70 
C)  $4.80 
D)  $6.50

Question 3

Which of the following can prevent markets from reaching efficiency? I. decreasing marginal benefit
II) taxes
III) quantity regulations that limit the quantity that may be produced

Accepted Answer

A)  I and II 
B)  I and III 
C)  II and III 
D)  I, II and III 
A)  I and II 
B)  I and III 
C)  II and III 
D)  I, II and III

Question 4

Why is a competitive market efficient?

Accepted Answer

Efficiency is attained when production i

Question 5

-The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. What is the efficient quantity of coffee to produce each day?

Accepted Answer

A)  one hundred pounds 
B)  two hundred pounds 
C)  three hundred pounds 
D)  four hundred pounds 
A)  one hundred pounds 
B)  two hundred pounds 
C)  three hundred pounds 
D)  four hundred pounds

Question 6

The marginal cost curve

Accepted Answer

A)  shows the maximum price that a producer must receive to induce it to produce a unit of a good or service. 
B)  shows the minimum price sellers must receive to produce a unit of a good or service. 
C)  is the same as the demand curve. 
D)  shows what buyers are willing to give up to get one more unit of a good or service. 
A)  shows the maximum price that a producer must receive to induce it to produce a unit of a good or service. 
B)  shows the minimum price sellers must receive to produce a unit of a good or service. 
C)  is the same as the demand curve. 
D)  shows what buyers are willing to give up to get one more unit of a good or service.

Question 7

If the demand for a good does not change, how will an increase in the price of that good affect the consumer surplus from it?

Accepted Answer

The consumer surplus equals the differen

Question 8

A public good can be consumed by

Accepted Answer

A)  only one person who does not have to pay for it. 
B)  only one person who has to pay for it. 
C)  everyone simultaneously, as long as they pay for it. 
D)  everyone simultaneously, even if they do not pay for it. 
A)  only one person who does not have to pay for it. 
B)  only one person who has to pay for it. 
C)  everyone simultaneously, as long as they pay for it. 
D)  everyone simultaneously, even if they do not pay for it.

Question 9

If the market for diamonds is a monopoly, then

Accepted Answer

A)  there is an inefficient amount of resources allocated to the diamond market. 
B)  the prices of diamonds are too low. 
C)  diamond production is at the amount where the marginal social benefit equals the marginal social cost. 
D)  the diamond market is efficient. 
A)  there is an inefficient amount of resources allocated to the diamond market. 
B)  the prices of diamonds are too low. 
C)  diamond production is at the amount where the marginal social benefit equals the marginal social cost. 
D)  the diamond market is efficient.

Question 10

According to the "fair rules" view of fairness, are taxes fair? Explain.

Accepted Answer

Taxes are unfair according to the fair r

Question 11

-The figure above shows the market for milk. If 250 gallons of milk a day are available, the ________ price that consumers are willing to pay for the last gallon is ________.

Accepted Answer

A)  maximum; $2.50 
B)  minimum; $2.50 
C)  maximum; $3.25 
D)  minimum; $3.25 
A)  maximum; $2.50 
B)  minimum; $2.50 
C)  maximum; $3.25 
D)  minimum; $3.25

Question 12

-In the figure above, when the market is in equilibrium, total consumer surplus on all the CDs bought will be

Accepted Answer

A)  greater than $30 million. 
B)  less than at any other price. 
C)  $20 million. 
D)  less than $15 million. 
A)  greater than $30 million. 
B)  less than at any other price. 
C)  $20 million. 
D)  less than $15 million.

Question 13

Explain the modified version of utilitarianism proposed in the book entitled "A Theory of Justice," by the philosopher John Rawls and its relationship to the "big tradeoff."

Accepted Answer

Rawls was aware that extensive redistrib

Question 14

-In the above figure, the lowest price for which the firm will sell its second ton of wheat is

Accepted Answer

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

Question 15

The symmetry principle in economics means that

Accepted Answer

A)  all individuals must have similar outcomes. 
B)  all similar individuals must be treated similarly. 
C)  individuals must have opposite outcomes. 
D)  similar individuals must have similar outcomes. 
A)  all individuals must have similar outcomes. 
B)  all similar individuals must be treated similarly. 
C)  individuals must have opposite outcomes. 
D)  similar individuals must have similar outcomes.

Question 16

-In the above table, when 200 brownies are produced,

Accepted Answer

A)  marginal social benefit is greater than marginal social cost, and resource use is efficient. 
B)  marginal social benefit is greater than marginal social cost, and there is a deadweight loss. 
C)  marginal social benefit equals marginal social cost, and resource use is efficient. 
D)  marginal social benefit is less than marginal social cost, and there is a deadweight loss. 
A)  marginal social benefit is greater than marginal social cost, and resource use is efficient. 
B)  marginal social benefit is greater than marginal social cost, and there is a deadweight loss. 
C)  marginal social benefit equals marginal social cost, and resource use is efficient. 
D)  marginal social benefit is less than marginal social cost, and there is a deadweight loss.

Question 17

-The figure above shows the market for milk. When the efficient quantity of milk is produced, the marginal social cost of the last gallon is

Accepted Answer

A)  $3.50. 
B)  $3.00. 
C)  $2.50. 
D)  $2.00. 
A)  $3.50. 
B)  $3.00. 
C)  $2.50. 
D)  $2.00.

Question 18

-In the figure above, when the price of a CD is $8.00, total producer surplus from all the CDs will be

Accepted Answer

A)  zero. 
B)  greater than at $10.00 per CD. 
C)  $20 million. 
D)  $10 million. 
A)  zero. 
B)  greater than at $10.00 per CD. 
C)  $20 million. 
D)  $10 million.

Question 19

Which of the following is true?

Accepted Answer

A)  When a market price allocates resources, all people who are willing and able to pay that price get the resource. 
B)  A command system works well when the range of activities to be monitored is large and complex. 
C)  When the government decides how to allocate tax dollars among competing uses, resources are allocated by market prices. 
D)  When a manager offers everyone in the company the opportunity to win a prize, resources are allocated by a lottery. 
A)  When a market price allocates resources, all people who are willing and able to pay that price get the resource. 
B)  A command system works well when the range of activities to be monitored is large and complex. 
C)  When the government decides how to allocate tax dollars among competing uses, resources are allocated by market prices. 
D)  When a manager offers everyone in the company the opportunity to win a prize, resources are allocated by a lottery.

Question 20

-In the above figure, when the price of pretzels is $3.00 per pound, the total producer surplus from all the pretzels will be

Accepted Answer

A)  zero. 
B)  greater than at any other price. 
C)  less than at any other price. 
D)  the sum of the difference between $3.00 and the marginal cost of all the pounds produced. 
A)  zero. 
B)  greater than at any other price. 
C)  less than at any other price. 
D)  the sum of the difference between $3.00 and the marginal cost of all the pounds produced.

Exam 5: Efficiency and Equity

"If the marginal social benefit of a car exceeds the marginal social cost of a car, we are producing too many cars." True or false? Explain.

Jane is willing to pay $4 for the first cup of coffee a day, $2.50 for the second cup, and $1 for the third cup, after which she won't buy any coffee. The price of a cup of coffee is $2.40. Jane's consumer surplus from the coffee she buys is ________ per day.

Which of the following can prevent markets from reaching efficiency? I. decreasing marginal benefit II) taxes III) quantity regulations that limit the quantity that may be produced

Why is a competitive market efficient?

-The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. What is the efficient quantity of coffee to produce each day?

The marginal cost curve

If the demand for a good does not change, how will an increase in the price of that good affect the consumer surplus from it?

A public good can be consumed by

If the market for diamonds is a monopoly, then

According to the "fair rules" view of fairness, are taxes fair? Explain.

-The figure above shows the market for milk. If 250 gallons of milk a day are available, the ________ price that consumers are willing to pay for the last gallon is ________.

-In the figure above, when the market is in equilibrium, total consumer surplus on all the CDs bought will be

Explain the modified version of utilitarianism proposed in the book entitled "A Theory of Justice," by the philosopher John Rawls and its relationship to the "big tradeoff."

-In the above figure, the lowest price for which the firm will sell its second ton of wheat is

The symmetry principle in economics means that

-In the above table, when 200 brownies are produced,

-The figure above shows the market for milk. When the efficient quantity of milk is produced, the marginal social cost of the last gallon is

-In the figure above, when the price of a CD is $8.00, total producer surplus from all the CDs will be

Which of the following is true?

-In the above figure, when the price of pretzels is $3.00 per pound, the total producer surplus from all the pretzels will be

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. If 250 gallons of milk a day are available, the price that consumers are willing to pay for the last gallon is .