Question 1

When a scarce resource is allocated to someone who is the winner,the method of resource allocation is

Accepted Answer

A) a lottery. 
B) a contest. 
C) first-come,first-served. 
D) force. 
E) personal characteristics. 
A) a lottery. 
B) a contest. 
C) first-come,first-served. 
D) force. 
E) personal characteristics.

Question 2

The marginal cost for Morgan's Marvellous Movies is given in the following table: Table 5.2.2
$$\begin{array} { c c } 
\hline\begin{array} { c } 
\text { Quantity } \
\text { (number of movies) }
\end{array} & \begin{array} { c } 
\text { Marginal cost } \
\text { (dollars) }
\end{array} \
\hline 1 & 4.00 \
2 & 4.50 \
3 & 5.00 \
4 & 5.50 \
5 & 6.00 \
\hline
\end{array}$$ If the firm sells the fifth movie at a price of $7,what is the producer surplus on that movie?

Accepted Answer

A) $28 
B) $3 
C) $7 
D) $6 
E) $1 
A) $28 
B) $3 
C) $7 
D) $6 
E) $1

Question 3

In the Canadian economy,the command system

Accepted Answer

A) is not used at all. 
B) is used occasionally inside firms and government departments. 
C) is used only by private companies. 
D) is used extensively in place of markets. 
E) is used extensively inside firms and government departments. 
A) is not used at all. 
B) is used occasionally inside firms and government departments. 
C) is used only by private companies. 
D) is used extensively in place of markets. 
E) is used extensively inside firms and government departments.

Question 4

Use the figure below to answer the following questions.
   Figure 5.3.1
-Refer to Figure 5.3.1.The efficient quantity is

Accepted Answer

A) 250 units. 
B) 200 units. 
C) 150 units. 
D) 100 units. 
E) 50 units. 
A) 250 units. 
B) 200 units. 
C) 150 units. 
D) 100 units. 
E) 50 units.

Question 5

Deadweight loss is

Accepted Answer

A) borne entirely by consumers. 
B) gained by producers. 
C) the social loss from inefficiency. 
D) not a problem with overproduction. 
E) all of the above. 
A) borne entirely by consumers. 
B) gained by producers. 
C) the social loss from inefficiency. 
D) not a problem with overproduction. 
E) all of the above.

Question 6

Sally and Eric are the only people in an economy.Sally buys 3 bottles of water when the price is $2 a bottle and 4 bottles of water when the price is $1 a bottle.Eric buys 10 bottles of water when the price is $0.50 a bottle and 5 bottles of water when the price is $1 a bottle.In the market for water,the quantity demanded ________.

Accepted Answer

A) increases as the price rises 
B) is 4 bottles at a price of $1 a bottle 
C) increases as the price falls 
D) is 8 bottles at a price of $2 a bottle 
E) is 15 bottles at a price of $0.50 a bottle 
A) increases as the price rises 
B) is 4 bottles at a price of $1 a bottle 
C) increases as the price falls 
D) is 8 bottles at a price of $2 a bottle 
E) is 15 bottles at a price of $0.50 a bottle

Question 7

Table 5.2.4
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (dollars per } \
\text { slice) }
\end{array} & \begin{array} { c } 
\text { Abby's } \
\text { quantity } \
\text { demanded } \
\text { (slices per } \
\text { month) }
\end{array} & \begin{array} { c } 
\text { Barry's } \
\text { quantity } \
\text { demanded } \
\text { slices per } \
\text { month) }
\end{array} \
\hline 2.50 & 25 & 50 \
\hline 3.00 & 20 & 40 \
\hline 3.50 & 15 & 30 \
\hline 4.00 & 10 & 20 \
\hline 4.50 & 5 & 10 \
\hline 5.00 & 0 & 0 \
\hline
\end{array}$$ Table 5.2.4 shows the demand schedules for pizza for Abby and Barry who are the only buyers in the market.
-Refer to Table 5.2.4.What is the marginal social benefit from the 45th slice of pizza?

Accepted Answer

A) $3.50 
B) $4.00 
C) $2.50 
D) $5.00 
E) $4.50 
A) $3.50 
B) $4.00 
C) $2.50 
D) $5.00 
E) $4.50

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 provides the state with an effective method of transferring wealth from the rich to the poor. 
E) When resources are allocated by force,people with the "right" characteristics get the resources. 
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 provides the state with an effective method of transferring wealth from the rich to the poor. 
E) When resources are allocated by force,people with the "right" characteristics get the resources.

Question 9

In competitive equilibrium,which of the following statements is false?

Accepted Answer

A) Marginal social benefit equals marginal social cost. 
B) Willingness to pay equals marginal cost of production. 
C) The sum of consumer surplus and producer surplus is maximized. 
D) Deadweight loss is maximized. 
E) Resources are used efficiently to produce goods and services that people value most highly. 
A) Marginal social benefit equals marginal social cost. 
B) Willingness to pay equals marginal cost of production. 
C) The sum of consumer surplus and producer surplus is maximized. 
D) Deadweight loss is maximized. 
E) Resources are used efficiently to produce goods and services that people value most highly.

Question 10

When demand is perfectly elastic,then consumer surplus is

Accepted Answer

A) infinite. 
B) zero. 
C) 1.00. 
D) -1.00. 
E) between zero and 1.00. 
A) infinite. 
B) zero. 
C) 1.00. 
D) -1.00. 
E) between zero and 1.00.

Question 11

Consumer surplus is

Accepted Answer

A) the difference between the market price of the good and the cost of the good. 
B) greater on the last unit sold than on the first unit sold. 
C) greater on the first unit sold than on the last unit sold. 
D) equal to price multiplied by quantity sold. 
E) equal to the area below the demand curve. 
A) the difference between the market price of the good and the cost of the good. 
B) greater on the last unit sold than on the first unit sold. 
C) greater on the first unit sold than on the last unit sold. 
D) equal to price multiplied by quantity sold. 
E) equal to the area below the demand curve.

Question 12

If we produce one more bottle of water

Accepted Answer

A) we cannot be acting efficiently. 
B) we incur a marginal cost. 
C) we must move away from market equilibrium. 
D) the price of a bottle of water must rise. 
E) the marginal social benefit from bottled water increases. 
A) we cannot be acting efficiently. 
B) we incur a marginal cost. 
C) we must move away from market equilibrium. 
D) the price of a bottle of water must rise. 
E) the marginal social benefit from bottled water increases.

Question 13

The maximum price a consumer is willing to pay for a good is the

Accepted Answer

A) consumer surplus. 
B) value of the good. 
C) opportunity cost of producing the good. 
D) minimum supply-price. 
E) marginal cost of the good. 
A) consumer surplus. 
B) value of the good. 
C) opportunity cost of producing the good. 
D) minimum supply-price. 
E) marginal cost of the good.

Question 14

The first-come,first-served method of resource allocation allocates resources to

Accepted Answer

A) the wealthiest. 
B) people who are willing to take risks. 
C) people who are not willing to take risks. 
D) the first in line. 
E) honest,hard-working people. 
A) the wealthiest. 
B) people who are willing to take risks. 
C) people who are not willing to take risks. 
D) the first in line. 
E) honest,hard-working people.

Question 15

Use the figure below to answer the following questions.
   Figure 5.2.1
-Consider Figure 5.2.1.If the price is $4,what is the consumer surplus from the third unit of the good?

Accepted Answer

A) $0 
B) $1 
C) $2 
D) $3 
E) $4 
A) $0 
B) $1 
C) $2 
D) $3 
E) $4

Question 16

Market demand is the

Accepted Answer

A) sum of the prices that each individual is willing to pay for each quantity demanded. 
B) sum of the quantity demanded by each individual at each price. 
C) sum of the consumer surplus of each individual. 
D) difference between the maximum amount each individual is willing to pay for a good and the market price. 
E) difference between the market price and the maximum amount each individual is willing to pay for a good. 
A) sum of the prices that each individual is willing to pay for each quantity demanded. 
B) sum of the quantity demanded by each individual at each price. 
C) sum of the consumer surplus of each individual. 
D) difference between the maximum amount each individual is willing to pay for a good and the market price. 
E) difference between the market price and the maximum amount each individual is willing to pay for a good.

Question 17

Use the information below to answer the following question.
   Figure 5.2.3
-Consider the demand and supply curves in Figure 5.2.3.If the market is at the competitive equilibrium,which area in the diagram indicates the cost of producing the quantity sold?

Accepted Answer

A) ABC 
B) AEC 
C) EBC 
D) 0BCD 
E) 0ECD 
A) ABC 
B) AEC 
C) EBC 
D) 0BCD 
E) 0ECD

Question 18

When the efficient quantity is produced

Accepted Answer

A) marginal social benefit equals marginal social cost. 
B) the quantity demanded equals the quantity supplied. 
C) resources are used in the activities in which they are most highly valued. 
D) the sum of consumer surplus and producer surplus is maximized. 
E) all of the above. 
A) marginal social benefit equals marginal social cost. 
B) the quantity demanded equals the quantity supplied. 
C) resources are used in the activities in which they are most highly valued. 
D) the sum of consumer surplus and producer surplus is maximized. 
E) all of the above.

Question 19

According to the "big tradeoff,"

Accepted Answer

A) income transfers reduce efficiency. 
B) efficiency requires income transfers. 
C) a more equally shared pie results in a larger pie. 
D) property rights and voluntary exchange insure equality of opportunity. 
E) income transfers should make the poorest person as well off as possible. 
A) income transfers reduce efficiency. 
B) efficiency requires income transfers. 
C) a more equally shared pie results in a larger pie. 
D) property rights and voluntary exchange insure equality of opportunity. 
E) income transfers should make the poorest person as well off as possible.

Question 20

The demand curve for a good is the same as the

Accepted Answer

A) marginal cost curve of that good. 
B) marginal benefit curve for that good. 
C) consumer surplus curve of that good. 
D) production possibilities frontier (PPF). 
E) none of the above. 
A) marginal cost curve of that good. 
B) marginal benefit curve for that good. 
C) consumer surplus curve of that good. 
D) production possibilities frontier (PPF). 
E) none of the above.

When a scarce resource is allocated to someone who is the winner,the method of resource allocation is

The marginal cost for Morgan's Marvellous Movies is given in the following table: Table 5.2.2 Quantity (number of movies) Marginal cost (dollars) 1 4.00 2 4.50 3 5.00 4 5.50 5 6.00 If the firm sells the fifth movie at a price of $7,what is the producer surplus on that movie?

In the Canadian economy,the command system

Use the figure below to answer the following questions. Figure 5.3.1 -Refer to Figure 5.3.1.The efficient quantity is

Deadweight loss is

Which of the following is true?

In competitive equilibrium,which of the following statements is false?

When demand is perfectly elastic,then consumer surplus is

Consumer surplus is

If we produce one more bottle of water

The maximum price a consumer is willing to pay for a good is the

The first-come,first-served method of resource allocation allocates resources to

Use the figure below to answer the following questions. Figure 5.2.1 -Consider Figure 5.2.1.If the price is $4,what is the consumer surplus from the third unit of the good?

Market demand is the

Use the information below to answer the following question. Figure 5.2.3 -Consider the demand and supply curves in Figure 5.2.3.If the market is at the competitive equilibrium,which area in the diagram indicates the cost of producing the quantity sold?

When the efficient quantity is produced

According to the "big tradeoff,"

The demand curve for a good is the same as 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

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 5: Efficiency and Equity

When a scarce resource is allocated to someone who is the winner,the method of resource allocation is

The marginal cost for Morgan's Marvellous Movies is given in the following table: Table 5.2.2 Quantity (number of movies) Marginal cost (dollars) 1 4.00 2 4.50 3 5.00 4 5.50 5 6.00 If the firm sells the fifth movie at a price of $7,what is the producer surplus on that movie?

In the Canadian economy,the command system

Use the figure below to answer the following questions. Figure 5.3.1 -Refer to Figure 5.3.1.The efficient quantity is

Deadweight loss is

Which of the following is true?

In competitive equilibrium,which of the following statements is false?

When demand is perfectly elastic,then consumer surplus is

Consumer surplus is

If we produce one more bottle of water

The maximum price a consumer is willing to pay for a good is the

The first-come,first-served method of resource allocation allocates resources to

Use the figure below to answer the following questions. Figure 5.2.1 -Consider Figure 5.2.1.If the price is $4,what is the consumer surplus from the third unit of the good?

Market demand is the

Use the information below to answer the following question. Figure 5.2.3 -Consider the demand and supply curves in Figure 5.2.3.If the market is at the competitive equilibrium,which area in the diagram indicates the cost of producing the quantity sold?

When the efficient quantity is produced

According to the "big tradeoff,"

The demand curve for a good is the same as 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

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters