Question 1

Marginal cost is the

Accepted Answer

A)  extra benefit that people receive from producing one more unit of a good or service. 
B)  maximum amount consumers are willing to pay for one more unit of a good or service. 
C)  opportunity cost of producing one more unit of a good or service. 
D)  None of the above answers is correct. 
A)  extra benefit that people receive from producing one more unit of a good or service. 
B)  maximum amount consumers are willing to pay for one more unit of a good or service. 
C)  opportunity cost of producing one more unit of a good or service. 
D)  None of the above answers is correct.

Question 2

Allocative efficiency occurs when

Accepted Answer

A)  marginal social cost exceeds marginal social benefit. 
B)  marginal social benefit exceeds marginal social cost. 
C)  marginal social benefit equals marginal social cost. 
D)  total social benefit exceeds total social cost. 
A)  marginal social cost exceeds marginal social benefit. 
B)  marginal social benefit exceeds marginal social cost. 
C)  marginal social benefit equals marginal social cost. 
D)  total social benefit exceeds total social cost.

Question 3

Command system allocates resources by the order of someone in authority.

Accepted Answer

A) True 
 B)False

Question 4

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

Question 5

-The above table gives the market demand and market supply schedules for soda. What is the maximum price consumers are willing to pay for the 400th can of soda?

Accepted Answer

A)  $0.80 per can 
B)  $0.70 per can 
C)  $0.60 per can 
D)  $0.50 per can 
A)  $0.80 per can 
B)  $0.70 per can 
C)  $0.60 per can 
D)  $0.50 per can

Question 6

Using the "It's not fair if the result isn't fair" principle of fairness, an income tax designed to transfer wealth from the rich to the poor

Accepted Answer

A)  increases efficiency and equity. 
B)  increases efficiency and does not affect equity. 
C)  decreases efficiency and increases equity. 
D)  decreases efficiency and equity. 
A)  increases efficiency and equity. 
B)  increases efficiency and does not affect equity. 
C)  decreases efficiency and increases equity. 
D)  decreases efficiency and equity.

Question 7

In 2012 a severe drought raised the price of corn. For a farmer in Canada who harvested a normal crop because the farm was not affected directly by the drought, the increase in the price of corn

Accepted Answer

A)  increases the farmer's producer surplus. 
B)  decreases the farmer's producer surplus. 
C)  does not affect the producer surplus because this change is a movement along the farmer's supply curve and not a shift of the farmer's supply curve. 
D)  increases producer surplus only if the farmer's supply is completely inelastic. 
A)  increases the farmer's producer surplus. 
B)  decreases the farmer's producer surplus. 
C)  does not affect the producer surplus because this change is a movement along the farmer's supply curve and not a shift of the farmer's supply curve. 
D)  increases producer surplus only if the farmer's supply is completely inelastic.

Question 8

Quantity of tennis
rackets demanded  
-Jill and Jed have individual demand curves for tennis rackets given in the table above and are the only two demanders in the market. What is the market quantity demanded at the price of $30?

Accepted Answer

A)  2 
B)  5 
C)  11 
D)  18 
A)  2 
B)  5 
C)  11 
D)  18

Question 9

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 market consumer surplus?

Accepted Answer

A)  $16 
B)  $52 
C)  $40 
D)  $12 
A)  $16 
B)  $52 
C)  $40 
D)  $12

Question 10

If the marginal social cost of a television exceeds the marginal social benefit of a television, it would increase society's total surplus to decrease production of televisions.

Accepted Answer

A) True 
 B)False

Question 11

Hummel is a line of figurines based on the artistic style of German nun Maria Innocentia Hummel and have become a collector's item. The Hummel figurines are almost uniformly "cute." Lukas, Felix, Anya, and Hannah sell Hummel figurines through the internet. Their willingness to sell price for one figurine is: Lukas $240, Felix $180, Anya $150, Hannah $130. Suppose the price of a Hummel figurine is $150, who will sell their figurine?

Accepted Answer

A)  Anya and Hannah 
B)  Lukas, Felix, and Anya 
C)  Felix, Anya, and Hannah 
D)  Hannah 
A)  Anya and Hannah 
B)  Lukas, Felix, and Anya 
C)  Felix, Anya, and Hannah 
D)  Hannah

Question 12

The symmetry principle is the requirement that:

Accepted Answer

A)  people in similar situations be treated similarly. 
B)  Society's income be distributed symmetrically among its members. 
C)  the poorest 20 percent of households should receive the same total income as the richest 10 percent of households. 
D)  the average person be made as well off as possible. 
A)  people in similar situations be treated similarly. 
B)  Society's income be distributed symmetrically among its members. 
C)  the poorest 20 percent of households should receive the same total income as the richest 10 percent of households. 
D)  the average person be made as well off as possible.

Question 13

-Jason hires Maria to tutor him in economics. Jason is willing to pay $30 for the first hour of tutoring, $25 for the second, $20 for the third, $15 for the fourth, and $10 for the fifth. Maria has an opportunity cost per hour of $6 for the first, $9 for the second, $12 for the third, $15 for the fourth, and $18 for the fifth. What will be the equilibrium quantity of hours tutored and the equilibrium price? Explain why this quantity and price is the equilibrium. What is Jason's consumer surplus and what is Maria's producer surplus?

Accepted Answer

The equilibrium quantity will be 4 hours

Question 14

-The figure above shows Clara's demand for CDs. The price for a CD is $15. Which statement is true?

Accepted Answer

A)  When Clara buys 6 CDs, she receives $15 of consumer surplus on her 6th CD. 
B)  When Clara buys 6 CDs, she receives a total of $15 of consumer surplus. 
C)  When Clara buys 6 CDs, she receives a total of $30 of consumer surplus. 
D)  When Clara buys 6 CDs, she receives a total of $45 of consumer surplus. 
A)  When Clara buys 6 CDs, she receives $15 of consumer surplus on her 6th CD. 
B)  When Clara buys 6 CDs, she receives a total of $15 of consumer surplus. 
C)  When Clara buys 6 CDs, she receives a total of $30 of consumer surplus. 
D)  When Clara buys 6 CDs, she receives a total of $45 of consumer surplus.

Question 15

-In the above figure, when the efficient quantity is produced the marginal social benefit of the last magazine is

Accepted Answer

A)  $1. 
B)  $3. 
C)  $5. 
D)  some amount not given in the above three answers. 
A)  $1. 
B)  $3. 
C)  $5. 
D)  some amount not given in the above three answers.

Question 16

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. When the marginal social benefit of the last dozen doughnuts is equal to the marginal social cost,

Accepted Answer

A)  the efficient quantity is being produced and consumed. 
B)  200 dozen doughnuts are produced and consumed each day. 
C)  an increase in production and consumption would increase efficiency. 
D)  Both answers A and B are correct. 
A)  the efficient quantity is being produced and consumed. 
B)  200 dozen doughnuts are produced and consumed each day. 
C)  an increase in production and consumption would increase efficiency. 
D)  Both answers A and B are correct.

Question 17

"If the price of a ticket to Sea World exceeds the marginal cost of the ticket by $13, a producer surplus exists for Sea World." Is this statement true or false?

Accepted Answer

The statement is True. Anytime

Question 18

-Suppose the marginal cost of producing a good falls so that the marginal social cost curve shifts downward. Then the efficient quantity to produce of that product

Accepted Answer

A)  increases. 
B)  does not change. 
C)  decreases. 
D)  could increase, stay the same, or decrease. 
A)  increases. 
B)  does not change. 
C)  decreases. 
D)  could increase, stay the same, or decrease.

Question 19

-In the figure above, when production is 3 units with a price of $3, the producer surplus in this market equals

Accepted Answer

A)  b + g. 
B)  f + g. 
C)  a + b + f + g. 
D)  a + b + f + g + h + i. 
A)  b + g. 
B)  f + g. 
C)  a + b + f + g. 
D)  a + b + f + g + h + i.

Question 20

-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. 
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.

Exam 5: Efficiency and Equity

Marginal cost is the

Allocative efficiency occurs when

Command system allocates resources by the order of someone in authority.

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

-The above table gives the market demand and market supply schedules for soda. What is the maximum price consumers are willing to pay for the 400th can of soda?

Using the "It's not fair if the result isn't fair" principle of fairness, an income tax designed to transfer wealth from the rich to the poor

In 2012 a severe drought raised the price of corn. For a farmer in Canada who harvested a normal crop because the farm was not affected directly by the drought, the increase in the price of corn

Quantity of tennis rackets demanded -Jill and Jed have individual demand curves for tennis rackets given in the table above and are the only two demanders in the market. What is the market quantity demanded at the price of $30?

If the marginal social cost of a television exceeds the marginal social benefit of a television, it would increase society's total surplus to decrease production of televisions.

The symmetry principle is the requirement that:

-The figure above shows Clara's demand for CDs. The price for a CD is $15. Which statement is true?

-In the above figure, when the efficient quantity is produced the marginal social benefit of the last magazine is

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. When the marginal social benefit of the last dozen doughnuts is equal to the marginal social cost,

"If the price of a ticket to Sea World exceeds the marginal cost of the ticket by $13, a producer surplus exists for Sea World." Is this statement true or false?

-Suppose the marginal cost of producing a good falls so that the marginal social cost curve shifts downward. Then the efficient quantity to produce of that product

-In the figure above, when production is 3 units with a price of $3, the producer surplus in this market equals

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

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