Question 1

Resource use is efficient when production is such that marginal social benefit is

Accepted Answer

A)  greater than marginal social cost. 
B)  equal to marginal social cost. 
C)  less than marginal social cost. 
D)  at its maximum value. 
A)  greater than marginal social cost. 
B)  equal to marginal social cost. 
C)  less than marginal social cost. 
D)  at its maximum value.

Question 2

A market demand curve can be constructed by

Accepted Answer

A)  adding the prices all consumers will pay for any given quantity. 
B)  adding the quantities that all consumers buy at each price. 
C)  adding the quantities that a consumer buys at the highest price. 
D)  None of the above answers is correct. 
A)  adding the prices all consumers will pay for any given quantity. 
B)  adding the quantities that all consumers buy at each price. 
C)  adding the quantities that a consumer buys at the highest price. 
D)  None of the above answers is correct.

Question 3

Nick can purchase each milkshake for $2. For the first milkshake purchased Nick is willing to pay $4, for the second milkshake $3, for the third milkshake $2 and for the fourth milkshake $1. What is the value of Nick's consumer surplus for the milkshakes he buys?

Accepted Answer

A)  $2 
B)  $9 
C)  $3 
D)  $10 
A)  $2 
B)  $9 
C)  $3 
D)  $10

Question 4

The opportunity cost to the firm of producing one more unit of output is also called marginal cost.

Accepted Answer

A) True 
 B)False

Question 5

-The figure above shows Clara's demand for CDs. If the price of a CD were to increase from $15 to $25, Clara's total consumer surplus for all the CDs she buys would

Accepted Answer

A)  decrease by $40. 
B)  remain unchanged. 
C)  decrease by $90. 
D)  increase by $80. 
A)  decrease by $40. 
B)  remain unchanged. 
C)  decrease by $90. 
D)  increase by $80.

Question 6

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. Who will subscribe to the magazine?

Accepted Answer

A)  Ania, Mandy, and Chloe 
B)  Jess, Ania, Mandy, and Chloe 
C)  Jess, Ania, and Chloe 
D)  Mandy and Chloe 
A)  Ania, Mandy, and Chloe 
B)  Jess, Ania, Mandy, and Chloe 
C)  Jess, Ania, and Chloe 
D)  Mandy and Chloe

Question 7

What is the "big tradeoff"?

Accepted Answer

The "big tradeoff" is the tradeoff betwe

Question 8

Which of the following is true?

Accepted Answer

A)  When resources are allocated on the basis of personal characteristics, all people who are willing and able to pay the price get the resource. 
B)  When the range of activities to be monitored is large and complex, a command system allocates resources better than a market price. 
C)  When a market price allocates resources, some people who are willing and able to pay that price don't get the resource. 
D)  Force helps support the legal system on which markets function. 
A)  When resources are allocated on the basis of personal characteristics, all people who are willing and able to pay the price get the resource. 
B)  When the range of activities to be monitored is large and complex, a command system allocates resources better than a market price. 
C)  When a market price allocates resources, some people who are willing and able to pay that price don't get the resource. 
D)  Force helps support the legal system on which markets function.

Question 9

Suppose there are four firms that are each willing to sell one unit of a good. Each firm has a different minimum price that they are willing to sell for: Firm A $6, Firm B $7, Firm C $10, and Firm D $12. If the market price is $11 then the market supply for this good will be

Accepted Answer

A)  3 units. 
B)  4 units. 
C)  1 unit. 
D)  2 units. 
A)  3 units. 
B)  4 units. 
C)  1 unit. 
D)  2 units.

Question 10

-The figure illustrates the market for haircuts. Curve A is the ________ curve, and curve B is the ________ curve.

Accepted Answer

A)  marginal social cost; marginal social benefit 
B)  total social cost; total social benefit 
C)  opportunity cost; opportunity benefit 
D)  marginal social benefit; marginal social cost 
A)  marginal social cost; marginal social benefit 
B)  total social cost; total social benefit 
C)  opportunity cost; opportunity benefit 
D)  marginal social benefit; marginal social cost

Question 11

Farmer Jones knows that the marginal cost to produce a bushel of tomatoes is $5 per bushel. He also knows that a consumer is willing to pay a maximum of $9 for the bushel. The price of the bushel is $6 and Farmer Jones sells his bushel for $6. On this bushel, Farmer Jones earns a producer surplus equal to

Accepted Answer

A)  $1. 
B)  $3. 
C)  $5. 
D)  $6. 
A)  $1. 
B)  $3. 
C)  $5. 
D)  $6.

Question 12

-The figure above shows the market for milk. If 100 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; $3.00 
C)  maximum; $4.00 
D)  minimum; $4.00 
A)  maximum; $2.50 
B)  minimum; $3.00 
C)  maximum; $4.00 
D)  minimum; $4.00

Question 13

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

Accepted Answer

A)  either 100 pounds or 250 pounds can be produced each day. 
B)  no chocolate is produced. 
C)  150 pounds will be produced each day. 
D)  any quantity up to 150 pounds will be efficient. 
A)  either 100 pounds or 250 pounds can be produced each day. 
B)  no chocolate is produced. 
C)  150 pounds will be produced each day. 
D)  any quantity up to 150 pounds will be efficient.

Question 14

-In the above figure, as output increases from 0 units to 10 units to 20 units to 30 units, the deadweight loss

Accepted Answer

A)  falls. 
B)  falls at first, then rises. 
C)  rises. 
D)  rises at first, then falls. 
A)  falls. 
B)  falls at first, then rises. 
C)  rises. 
D)  rises at first, then falls.

Question 15

The market demand curve also is

Accepted Answer

A)  a marginal social cost curve. 
B)  a marginal social benefit curve. 
C)  an opportunity cost curve. 
D)  a consumer surplus curve. 
A)  a marginal social cost curve. 
B)  a marginal social benefit curve. 
C)  an opportunity cost curve. 
D)  a consumer surplus curve.

Question 16

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. Who will sell their couch?

Accepted Answer

A)  Raj, Emily, Nara, and Sergio 
B)  Raj, Nara, and Sergio 
C)  Emily, Nara, and Sergio 
D)  Emily 
A)  Raj, Emily, Nara, and Sergio 
B)  Raj, Nara, and Sergio 
C)  Emily, Nara, and Sergio 
D)  Emily

Question 17

-In the above figure, the deadweight loss is zero if output is

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 18

A market demand curve is constructed by

Accepted Answer

A)  a horizontal summation of each individual demand curve. 
B)  averaging each individual demand curve. 
C)  dividing one individual demand curve by the number of consumers in the market. 
D)  a vertical summation of each individual demand curve. 
A)  a horizontal summation of each individual demand curve. 
B)  averaging each individual demand curve. 
C)  dividing one individual demand curve by the number of consumers in the market. 
D)  a vertical summation of each individual demand curve.

Question 19

If a person will rent an apartment only to married couples over 30 years old, that person is allocating resources using a ________ allocation method.

Accepted Answer

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

Question 20

Producer surplus is the

Accepted Answer

A)  cost of the good summed over the quantity sold. 
B)  demand for a good minus the supply summed over the quantity sold. 
C)  price of a good minus the marginal cost of producing it summed over the quantity sold. 
D)  marginal cost of producing it summed over the quantity sold. 
A)  cost of the good summed over the quantity sold. 
B)  demand for a good minus the supply summed over the quantity sold. 
C)  price of a good minus the marginal cost of producing it summed over the quantity sold. 
D)  marginal cost of producing it summed over the quantity sold.

Exam 5: Efficiency and Equity

Resource use is efficient when production is such that marginal social benefit is

A market demand curve can be constructed by

Nick can purchase each milkshake for $2. For the first milkshake purchased Nick is willing to pay $4, for the second milkshake $3, for the third milkshake $2 and for the fourth milkshake $1. What is the value of Nick's consumer surplus for the milkshakes he buys?

The opportunity cost to the firm of producing one more unit of output is also called marginal cost.

-The figure above shows Clara's demand for CDs. If the price of a CD were to increase from $15 to $25, Clara's total consumer surplus for all the CDs she buys would

What is the "big tradeoff"?

Which of the following is true?

Suppose there are four firms that are each willing to sell one unit of a good. Each firm has a different minimum price that they are willing to sell for: Firm A $6, Firm B $7, Firm C $10, and Firm D $12. If the market price is $11 then the market supply for this good will be

-The figure illustrates the market for haircuts. Curve A is the ________ curve, and curve B is the ________ curve.

-The figure above shows the market for milk. If 100 gallons of milk a day are available, the ________ price that consumers are willing to pay for the last gallon is ________.

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

-In the above figure, as output increases from 0 units to 10 units to 20 units to 30 units, the deadweight loss

The market demand curve also is

-In the above figure, the deadweight loss is zero if output is

A market demand curve is constructed by

If a person will rent an apartment only to married couples over 30 years old, that person is allocating resources using a ________ allocation method.

Producer surplus is the

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 illustrates the market for haircuts. Curve A is the curve, and curve B is the curve.

-The figure above shows the market for milk. If 100 gallons of milk a day are available, the price that consumers are willing to pay for the last gallon is .