Question 1

-The figure above shows the market for coffee. If one firm owns all the coffee outlets and sells 10 million pounds of coffee a month,

Accepted Answer

A)  the market is efficient because the marginal social benefit from coffee exceeds its marginal social cost. 
B)  the market is efficient because the total social benefit from coffee exceed the total social cost. 
C)  there is a deadweight loss because the marginal social benefit from the last pound of coffee exceeds its marginal social cost. 
D)  there is a deadweight loss because the marginal social cost of the last pound of coffee exceeds its marginal social benefit. 
A)  the market is efficient because the marginal social benefit from coffee exceeds its marginal social cost. 
B)  the market is efficient because the total social benefit from coffee exceed the total social cost. 
C)  there is a deadweight loss because the marginal social benefit from the last pound of coffee exceeds its marginal social cost. 
D)  there is a deadweight loss because the marginal social cost of the last pound of coffee exceeds its marginal social benefit.

Question 2

-In the above figure, the efficient quantity of magazines to produce per day is

Accepted Answer

A)  0, because that is where the marginal social benefit exceeds the marginal social cost by as much as possible. 
B)  more than 0 and less than 300,000 magazines. 
C)  300,000 magazines. 
D)  more than 300,000 magazines. 
A)  0, because that is where the marginal social benefit exceeds the marginal social cost by as much as possible. 
B)  more than 0 and less than 300,000 magazines. 
C)  300,000 magazines. 
D)  more than 300,000 magazines.

Question 3

Utilitarianism is based on the argument that

Accepted Answer

A)  the greater a person's income, the smaller is the marginal benefit of a dollar. 
B)  by transferring a dollar from a millionaire to a poor person, more is lost than gained. 
C)  taxing people's income from employment makes them work less. 
D)  a dollar taken from a rich person does not end up as a dollar in the hands of a poorer person. 
A)  the greater a person's income, the smaller is the marginal benefit of a dollar. 
B)  by transferring a dollar from a millionaire to a poor person, more is lost than gained. 
C)  taxing people's income from employment makes them work less. 
D)  a dollar taken from a rich person does not end up as a dollar in the hands of a poorer person.

Question 4

-The figure above shows the market for milk. If the population increases, then the efficient quantity of milk ________ and the producer 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

Question 5

Asian women lag far behind the West in their representation in management level positions. A recent report by the consulting company McKinsey suggests that there is an opportunity for companies to recruit under-utilized female talent and do well financially as a result. (Source: The Economist, July 7, 2012) The fact that Asian women are currently less likely to be hired as managers is a result of the allocation system using which of the following methods for hiring?

Accepted Answer

A)  Lottery 
B)  Auction 
C)  First-Come, First-Served 
D)  Personal Characteristics 
A)  Lottery 
B)  Auction 
C)  First-Come, First-Served 
D)  Personal Characteristics

Question 6

-The figure above shows the market supply and market demand for pizza.
a) What is the efficient quantity of pizzas?
b) If 70,000 pizzas are produced, what area represents the deadweight loss?
c) Why does the deadweight loss in part (b) occur?
d) If 20,000 pizzas are produced, what area represents the deadweight loss?
e) Why does the deadweight loss in part (d) occur?

Accepted Answer

a) 40,000 pizzas is the efficient quanti

Question 7

Jane is willing to pay $50 for a pair of shoes. The actual price of the shoes is $30. Her consumer surplus on this pair of shoes is

Accepted Answer

A)  $20. 
B)  $50. 
C)  $30. 
D)  $80. 
A)  $20. 
B)  $50. 
C)  $30. 
D)  $80.

Question 8

A market demand curve measures

Accepted Answer

A)  how much a consumer is willing to pay for an additional unit of the good. 
B)  the marginal social benefit of an additional unit of the good. 
C)  the marginal social cost of an additional unit of the good. 
D)  Both answers A and B are correct. 
A)  how much a consumer is willing to pay for an additional unit of the good. 
B)  the marginal social benefit of an additional unit of the good. 
C)  the marginal social cost of an additional unit of the good. 
D)  Both answers A and B are correct.

Question 9

If the marginal social cost exceeds the marginal social benefit for the last pair of shoes produced, then the economy is producing more than the efficient amount.

Accepted Answer

A) True 
 B)False

Question 10

-Which area in the above figure is the deadweight loss if 100 snowboards are produced?

Accepted Answer

A)  A + B + C 
B)  D + E + F 
C)  C + E 
D)  There is no deadweight loss when 100 snowboards are produced. 
A)  A + B + C 
B)  D + E + F 
C)  C + E 
D)  There is no deadweight loss when 100 snowboards are produced.

Question 11

Consumer surplus is the

Accepted Answer

A)  value of a good expressed in dollars. 
B)  price of a good expressed in dollars. 
C)  value of a good minus the price paid for it summed over the quantity bought. 
D)  value of a good plus the price paid for it summed over the quantity bought. 
A)  value of a good expressed in dollars. 
B)  price of a good expressed in dollars. 
C)  value of a good minus the price paid for it summed over the quantity bought. 
D)  value of a good plus the price paid for it summed over the quantity bought.

Question 12

-Jason needs help getting ready for the next test in his economics course and would like to hire Maria, an economics tutor to help him. 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. The equilibrium price for tutoring is $15 per hour. For how many hours of tutoring will Jason hire Maria? Why this amount of hours? What is Jason's consumer surplus, if any, from the tutoring? What is Maria's consumer surplus from the tutoring?

Accepted Answer

Jason will hire Maria for 4 hours of tut

Question 13

What is the significance of the concepts "consumer surplus" and "producer surplus"?

Accepted Answer

Each is a measure of economic welfare or

Question 14

The value of a good is equal to the

Accepted Answer

A)  maximum price you are willing to pay for it. 
B)  price that you actually pay for it. 
C)  price you actually pay for it minus the maximum you are willing to pay for it. 
D)  maximum you are willing to pay for it minus the price you actually pay for it. 
A)  maximum price you are willing to pay for it. 
B)  price that you actually pay for it. 
C)  price you actually pay for it minus the maximum you are willing to pay for it. 
D)  maximum you are willing to pay for it minus the price you actually pay for it.

Question 15

Bill Gates is the world's second richest person whose net worth is estimated at $54 billion. The idea that Bill Gates marginal utility for his 54 billionth dollar is less than someone else's 1000th dollar is the

Accepted Answer

A)  "Utilitarian" principle. 
B)  "Big Tradeoff" principle. 
C)  "Make the Poorest as Well Off as Possible" principle. 
D)  "Equity" principle. 
A)  "Utilitarian" principle. 
B)  "Big Tradeoff" principle. 
C)  "Make the Poorest as Well Off as Possible" principle. 
D)  "Equity" principle.

Question 16

-In the above figure, when the efficient quantity is produced the marginal social cost 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 17

The annual Great Sofa Round-up is a collaborative event between Colorado State University and the City of Fort Collins aims to help students and neighbors get rid of unwanted furniture, while giving people in need access to inexpensive sofas. Suppose on the day of the Round-up, your friends take their couches to the main parking lot on campus where the Round-up is held. Raj will not sell his couch for less than $30, Emily will not sell her couch for less than $50, Nara will not sell her couch for less than $20, Sergio just wants to get rid of his couch and he is willing to give it away for free. At the Round-up, potential buyers think that all the couches available are basically the same and they are willing to buy a couch for $50. What is the value of Nara's producer surplus?

Accepted Answer

A)  $30 
B)  $50 
C)  $20 
D)  $10 
A)  $30 
B)  $50 
C)  $20 
D)  $10

Question 18

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

Accepted Answer

A)  $3,000 
B)  $1,000 
C)  $10 
D)  $600 
A)  $3,000 
B)  $1,000 
C)  $10 
D)  $600

Question 19

Which of the following statements is FALSE?

Accepted Answer

A)  The value of one more unit of a good is the good's marginal benefit. 
B)  A good's marginal benefit is the maximum price people are willing to pay for another unit. 
C)  The maximum price people are willing to pay for one more unit of a good is its value. 
D)  None of the above because all the statements are true. 
A)  The value of one more unit of a good is the good's marginal benefit. 
B)  A good's marginal benefit is the maximum price people are willing to pay for another unit. 
C)  The maximum price people are willing to pay for one more unit of a good is its value. 
D)  None of the above because all the statements are true.

Question 20

The symmetry principle states that

Accepted Answer

A)  the poorest person must be made as well off as possible. 
B)  income should be transferred from the rich to the poor up to the point of complete equality. 
C)  resources should be common property. 
D)  people in similar situations must be treated similarly. 
A)  the poorest person must be made as well off as possible. 
B)  income should be transferred from the rich to the poor up to the point of complete equality. 
C)  resources should be common property. 
D)  people in similar situations must be treated similarly.

Exam 5: Efficiency and Equity

-The figure above shows the market for coffee. If one firm owns all the coffee outlets and sells 10 million pounds of coffee a month,

-In the above figure, the efficient quantity of magazines to produce per day is

Utilitarianism is based on the argument that

-The figure above shows the market for milk. If the population increases, then the efficient quantity of milk ________ and the producer surplus ________.

Jane is willing to pay $50 for a pair of shoes. The actual price of the shoes is $30. Her consumer surplus on this pair of shoes is

A market demand curve measures

If the marginal social cost exceeds the marginal social benefit for the last pair of shoes produced, then the economy is producing more than the efficient amount.

-Which area in the above figure is the deadweight loss if 100 snowboards are produced?

Consumer surplus is the

What is the significance of the concepts "consumer surplus" and "producer surplus"?

The value of a good is equal to the

Bill Gates is the world's second richest person whose net worth is estimated at $54 billion. The idea that Bill Gates marginal utility for his 54 billionth dollar is less than someone else's 1000th dollar is the

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

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

Which of the following statements is FALSE?

The symmetry principle states that

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 the population increases, then the efficient quantity of milk and the producer surplus .

Bill Gates is the world's second richest person whose net worth is estimated at $54 billion. The idea that Bill Gates marginal utility for his 54 billionth dollar is less than someone else's 1000^th dollar is the