Question 1

Consumer surplus

Accepted Answer

A) will definitely be low for inexpensive goods. 
B) will definitely be high for inexpensive goods. 
C) will definitely be low for expensive goods. 
D) will definitely be high for expensive goods. 
E) may be low or high for any type of good,expensive or inexpensive,depending on the characteristics of demand. 
A) will definitely be low for inexpensive goods. 
B) will definitely be high for inexpensive goods. 
C) will definitely be low for expensive goods. 
D) will definitely be high for expensive goods. 
E) may be low or high for any type of good,expensive or inexpensive,depending on the characteristics of demand.

Question 2

Producer surplus is

Accepted Answer

A) the value producers place on a good minus the price of the good. 
B) the price of the good minus the value producers place on it. 
C) zero if price equals marginal cost. 
D) greater the more elastic the supply of the good. 
E) none of the above. 
A) the value producers place on a good minus the price of the good. 
B) the price of the good minus the value producers place on it. 
C) zero if price equals marginal cost. 
D) greater the more elastic the supply of the good. 
E) none of the above.

Question 3

Lotteries allocate resources to

Accepted Answer

A) those who work for the government. 
B) those who come up lucky in a gaming system. 
C) those who work for private firms. 
D) people who are employed by gaming corporations. 
E) those who are in command. 
A) those who work for the government. 
B) those who come up lucky in a gaming system. 
C) those who work for private firms. 
D) people who are employed by gaming corporations. 
E) those who are in command.

Question 4

Use the figure below to answer the following questions.
   Figure 5.3.1
-Refer to Figure 5.3.1.If the quantity produced is 200,

Accepted Answer

A) a deadweight loss exists. 
B) the sum of consumer surplus and producer surplus is maximized. 
C) production is efficient. 
D) the sum of consumer surplus and producer surplus is zero. 
E) deadweight loss is minimized. 
A) a deadweight loss exists. 
B) the sum of consumer surplus and producer surplus is maximized. 
C) production is efficient. 
D) the sum of consumer surplus and producer surplus is zero. 
E) deadweight loss is minimized.

Question 5

Producer surplus is

Accepted Answer

A) the difference between the maximum price consumers are willing to pay and the minimum price producers are willing to accept. 
B) the excess of the amount received from the sale of a good or service over the cost of producing it. 
C) equal to the marginal cost of production. 
D) equal to the area under the supply curve. 
E) the total amount paid for the good. 
A) the difference between the maximum price consumers are willing to pay and the minimum price producers are willing to accept. 
B) the excess of the amount received from the sale of a good or service over the cost of producing it. 
C) equal to the marginal cost of production. 
D) equal to the area under the supply curve. 
E) the total amount paid for the good.

Question 6

At current output,the marginal social benefit from Furbys is greater than marginal social cost.To achieve an efficient allocation,which of the following must occur? (1)Furby output must increase.(2)Furby output must decrease.(3)the marginal social benefit of Furbys will rise.(4)the marginal social cost of Furbys will fall.

Accepted Answer

A) 1 and 3 
B) 1 and 4 
C) 2 and 3 
D) 2 and 4 
E) 1 only 
A) 1 and 3 
B) 1 and 4 
C) 2 and 3 
D) 2 and 4 
E) 1 only

Question 7

What is the producer surplus for the market from the production of the 100th unit of a good?

Accepted Answer

A) the marginal cost of producing the 100th unit 
B) the marginal benefit from the 100th unit 
C) the opportunity cost of producing the 100th unit 
D) the marginal social benefit from the 100th unit minus the marginal cost of producing the 100th unit 
E) the price paid for the 100th unit minus the marginal social cost of producing the 100th unit 
A) the marginal cost of producing the 100th unit 
B) the marginal benefit from the 100th unit 
C) the opportunity cost of producing the 100th unit 
D) the marginal social benefit from the 100th unit minus the marginal cost of producing the 100th unit 
E) the price paid for the 100th unit minus the marginal social cost of producing the 100th unit

Question 8

Which of the following ideas describes the concept of "utilitarianism"? I.Utilitarianism was introduced in the 1930s.
II.Utilitarians believed that a society should strive to make as many people as happy as possible.
III.Utilitarians claimed that taking money from rich people and giving it to poorer people would not make an economy better off.

Accepted Answer

A) I only 
B) II only 
C) I and III 
D) II and III 
E) I,II,and III 
A) I only 
B) II only 
C) I and III 
D) II and III 
E) I,II,and III

Question 9

Suppose that the Hot Dog House can produce hotdogs at a constant cost of $0.25 each.If the Hot Dog House sells hotdogs for $0.50 each,then the Hot Dog House

Accepted Answer

A) receives a producer surplus. 
B) will raise the price of hot dogs. 
C) will allow consumers to receive a consumer surplus. 
D) has no producer surplus. 
E) has an opportunity cost of $0.50 a hot dog. 
A) receives a producer surplus. 
B) will raise the price of hot dogs. 
C) will allow consumers to receive a consumer surplus. 
D) has no producer surplus. 
E) has an opportunity cost of $0.50 a hot dog.

Question 10

Use the information below to answer the following question.
   Figure 5.3.3
-Consider the demand and supply curves in Figure 5.3.3.If the market is at the competitive equilibrium,which area in the diagram indicates producer surplus?

Accepted Answer

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

Question 11

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

Accepted Answer

A) $32.50 
B) $25.00 
C) $20.00 
D) $12.50 
E) none of the above 
A) $32.50 
B) $25.00 
C) $20.00 
D) $12.50 
E) none of the above

Question 12

A contest allocates resources to

Accepted Answer

A) a winner or a group of winners. 
B) an athlete. 
C) a gambler. 
D) the government. 
E) private firms. 
A) a winner or a group of winners. 
B) an athlete. 
C) a gambler. 
D) the government. 
E) private firms.

Question 13

Markets may not achieve an efficient allocation of resources when there are

Accepted Answer

A) public goods. 
B) external benefits. 
C) monopolies. 
D) subsidies. 
E) all of the above. 
A) public goods. 
B) external benefits. 
C) monopolies. 
D) subsidies. 
E) all of the above.

Question 14

The market for strawberries is perfectly competitive.Joe and Haley are consuming the same amount of strawberries,but Joe's demand is much more elastic than Haley's.Which statement is true?

Accepted Answer

A) Joe's consumer surplus exceeds Haley's. 
B) Haley's consumer surplus equals Joe's. 
C) Haley's consumer surplus exceeds Joe's. 
D) In comparing consumer surpluses,no statement can be made. 
E) Any comparison of consumer surplus depends on the price of strawberries. 
A) Joe's consumer surplus exceeds Haley's. 
B) Haley's consumer surplus equals Joe's. 
C) Haley's consumer surplus exceeds Joe's. 
D) In comparing consumer surpluses,no statement can be made. 
E) Any comparison of consumer surplus depends on the price of strawberries.

Question 15

Restaurants don't use market price to allocate their tables because ________.

Accepted Answer

A) they would have to watch the price of a table at other restaurants to keep competitive 
B) restaurants would have to advertise the price 
C) the price of a table would fluctuate hourly,customer uncertainty would deter patrons,and lower demand would bring lower profit 
D) they would have to continually change the supply of tables to keep the price constant 
E) the price of a table would eventually fall to zero and restaurants would incur a loss 
A) they would have to watch the price of a table at other restaurants to keep competitive 
B) restaurants would have to advertise the price 
C) the price of a table would fluctuate hourly,customer uncertainty would deter patrons,and lower demand would bring lower profit 
D) they would have to continually change the supply of tables to keep the price constant 
E) the price of a table would eventually fall to zero and restaurants would incur a loss

Question 16

A used truck has a sticker price of $21,000.Arthur decided that he would pay no more than $19,500 for this truck.He bought the truck for $19,250.Arthur obtained a consumer surplus of

Accepted Answer

A) $21,000. 
B) $19,500. 
C) $19,250. 
D) $1,750. 
E) $250. 
A) $21,000. 
B) $19,500. 
C) $19,250. 
D) $1,750. 
E) $250.

Question 17

Economists tend to

Accepted Answer

A) agree about efficiency and about fairness. 
B) agree about efficiency but disagree about fairness. 
C) disagree about efficiency but agree about fairness. 
D) be more agreeable than philosophers about fairness. 
E) be more disagreeable than philosophers about fairness. 
A) agree about efficiency and about fairness. 
B) agree about efficiency but disagree about fairness. 
C) disagree about efficiency but agree about fairness. 
D) be more agreeable than philosophers about fairness. 
E) be more disagreeable than philosophers about fairness.

Question 18

Which of the following can lead to an inefficient outcome? I.Price regulations
II.Increasing marginal cost
III.Monopoly

Accepted Answer

A) I only 
B) II only 
C) I and III 
D) III only 
E) I,II,and III 
A) I only 
B) II only 
C) I and III 
D) III only 
E) I,II,and III

Question 19

Use the figure below to answer the following questions.
   Figure 5.2.2
-Refer to Figure 5.2.2 If the price falls from P1 to P0,then the change in consumer surplus is

Accepted Answer

A) A. 
B) A + B. 
C) A + B + C. 
D) B + C. 
E) A + B + D. 
A) A. 
B) A + B. 
C) A + B + C. 
D) B + C. 
E) A + B + D.

Question 20

A monopoly leads to

Accepted Answer

A) overproduction. 
B) underproduction. 
C) efficient production. 
D) maximization of consumer surplus. 
E) zero deadweight loss. 
A) overproduction. 
B) underproduction. 
C) efficient production. 
D) maximization of consumer surplus. 
E) zero deadweight loss.

Consumer surplus

Producer surplus is

Lotteries allocate resources to

Use the figure below to answer the following questions. Figure 5.3.1 -Refer to Figure 5.3.1.If the quantity produced is 200,

Producer surplus is

What is the producer surplus for the market from the production of the 100th unit of a good?

Suppose that the Hot Dog House can produce hotdogs at a constant cost of $0.25 each.If the Hot Dog House sells hotdogs for $0.50 each,then the Hot Dog House

Use the information below to answer the following question. Figure 5.3.3 -Consider the demand and supply curves in Figure 5.3.3.If the market is at the competitive equilibrium,which area in the diagram indicates producer surplus?

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

A contest allocates resources to

Markets may not achieve an efficient allocation of resources when there are

The market for strawberries is perfectly competitive.Joe and Haley are consuming the same amount of strawberries,but Joe's demand is much more elastic than Haley's.Which statement is true?

Restaurants don't use market price to allocate their tables because ________.

A used truck has a sticker price of $21,000.Arthur decided that he would pay no more than $19,500 for this truck.He bought the truck for $19,250.Arthur obtained a consumer surplus of

Economists tend to

Which of the following can lead to an inefficient outcome? I.Price regulations II.Increasing marginal cost III.Monopoly

Use the figure below to answer the following questions. Figure 5.2.2 -Refer to Figure 5.2.2 If the price falls from P₁ to P₀,then the change in consumer surplus is

A monopoly leads to

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

Consumer surplus

Producer surplus is

Lotteries allocate resources to

Use the figure below to answer the following questions. Figure 5.3.1 -Refer to Figure 5.3.1.If the quantity produced is 200,

Producer surplus is

What is the producer surplus for the market from the production of the 100th unit of a good?

Suppose that the Hot Dog House can produce hotdogs at a constant cost of $0.25 each.If the Hot Dog House sells hotdogs for $0.50 each,then the Hot Dog House

Use the information below to answer the following question. Figure 5.3.3 -Consider the demand and supply curves in Figure 5.3.3.If the market is at the competitive equilibrium,which area in the diagram indicates producer surplus?

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

A contest allocates resources to

Markets may not achieve an efficient allocation of resources when there are

The market for strawberries is perfectly competitive.Joe and Haley are consuming the same amount of strawberries,but Joe's demand is much more elastic than Haley's.Which statement is true?

Restaurants don't use market price to allocate their tables because ________.

A used truck has a sticker price of $21,000.Arthur decided that he would pay no more than $19,500 for this truck.He bought the truck for $19,250.Arthur obtained a consumer surplus of

Economists tend to

Which of the following can lead to an inefficient outcome? I.Price regulations II.Increasing marginal cost III.Monopoly

Use the figure below to answer the following questions. Figure 5.2.2 -Refer to Figure 5.2.2 If the price falls from P1 to P0,then the change in consumer surplus is

A monopoly leads to

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

Use the figure below to answer the following questions. Figure 5.2.2 -Refer to Figure 5.2.2 If the price falls from P₁ to P₀,then the change in consumer surplus is