Exam 5: Efficiency and Equity

-Using the above figure, which of the following quantities of CDs has the largest deadweight loss?

If you increase your consumption of soda by one additional can a week, your marginal benefit of this last can is $1.00. The ________ of this last can of soda is $1.00.

For many years short wave radios were a way of getting news from faraway places and in difficult conditions. But as new technologies have spread, the people listening to these devices has decreased. (Source: The Economist, July 7, 2012) As new technology creates substitutes for short-wave radios, the demand for short-wave radios ________ and the consumer surplus from short-wave radios ________.

-In the above figure, at the equilibrium price and quantity, producer surplus is ________.

-In the above figure, when the efficient quantity of gloves is produced, the total consumer surplus is

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. What is the marginal social benefit from the 300th dozen doughnuts each day?

When the amount of output is such that marginal social benefit exceeds marginal social cost, then to reach the efficient quantity,

Although the efficient quantity to produce of any good is located where marginal social benefit and marginal social cost are equal, there will usually be other quantities where the sum of consumer and producer surplus are greater.

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

It is efficient to produce an additional shirt if the

A contest is a good way to allocate scarce resources when

-In the above figure suppose there is only one milk producer who chooses to restrict milk production to two million gallons per day. What is the size of the deadweight loss? (Hint: It is equal to the triangular area of consumer and producer surplus that is lost because of the reduction in output.)

As a method of resource allocation, market price

-The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. When 400 pounds of coffee are produced and consumed in Kaffenia each day, that is

One problem with the utilitarian principle is that it ignores

Currently tire producers must receive a price of $50 per tire to produce 5000 tires. If the supply curve of tires is upward sloping, then to produce one additional tire, tire producers will need to receive a price of

If the marginal social benefit of ice cream curve shifts rightward because people now like ice cream better than before, the marginal social cost curve of ice cream will shift leftward.

One of the obstacles to efficiency is monopoly.

A cost borne not by the producer but by other people is called ________ cost.

-In the above figure, at the efficient quantity of CDs,