Question 1

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 2

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 3

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 4

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 5

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 6

Use the figure below to answer the following questions.
   
Figure 5.3.1
-Refer to Figure 5.3.1.If the price is $15 a unit,

Accepted Answer

A) production is efficient. 
B) marginal social benefit equals marginal social cost. 
C) deadweight loss is zero. 
D) the sum of consumer surplus and producer surplus is maximized. 
E) all of the above. 
A) production is efficient. 
B) marginal social benefit equals marginal social cost. 
C) deadweight loss is zero. 
D) the sum of consumer surplus and producer surplus is maximized. 
E) all of the above.

Question 7

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 8

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 9

Use the figure below to answer the following questions.
   
Figure 5.3.1
-Refer to Figure 5.3.1.If the quantity produced is 100,

Accepted Answer

A) marginal social benefit exceeds marginal social cost. 
B) marginal social cost exceeds marginal social benefit. 
C) production is efficient. 
D) marginal social benefit is minimized. 
E) deadweight loss is zero. 
A) marginal social benefit exceeds marginal social cost. 
B) marginal social cost exceeds marginal social benefit. 
C) production is efficient. 
D) marginal social benefit is minimized. 
E) deadweight loss is zero.

Question 10

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 11

When the efficient quantity is produced

Accepted Answer

A) total consumer surplus is zero. 
B) total producer surplus is zero. 
C) consumer surplus exceeds producer surplus by the greatest possible amount. 
D) producer surplus exceeds consumer surplus by the greatest possible amount. 
E) the sum of consumer surplus and producer surplus is maximized. 
A) total consumer surplus is zero. 
B) total producer surplus is zero. 
C) consumer surplus exceeds producer surplus by the greatest possible amount. 
D) producer surplus exceeds consumer surplus by the greatest possible amount. 
E) the sum of consumer surplus and producer surplus is maximized.

Question 12

Lotteries work best

Accepted Answer

A) under any circumstances. 
B) under the first-come, first served allocation method. 
C) when there is no effective way to distinguish among potential users of a scarce resource. 
D) when potential users of scarce resources are unknown. 
E) under a command system. 
A) under any circumstances. 
B) under the first-come, first served allocation method. 
C) when there is no effective way to distinguish among potential users of a scarce resource. 
D) when potential users of scarce resources are unknown. 
E) under a command system.

Question 13

If resources are allocated efficiently,

Accepted Answer

A) consumer surplus exceeds producer surplus. 
B) producer surplus exceeds consumer surplus. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) marginal social benefit is maximized. 
E) marginal social cost is minimized. 
A) consumer surplus exceeds producer surplus. 
B) producer surplus exceeds consumer surplus. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) marginal social benefit is maximized. 
E) marginal social cost is minimized.

Question 14

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 15

As a method of resource allocation,force

Accepted Answer

A) plays a crucial negative role but not a positive role. 
B) plays a crucial positive role but not a negative role. 
C) plays a crucial role for both good and ill. 
D) is always better than majority rule. 
E) is always better than first-come, first-served. 
A) plays a crucial negative role but not a positive role. 
B) plays a crucial positive role but not a negative role. 
C) plays a crucial role for both good and ill. 
D) is always better than majority rule. 
E) is always better than first-come, first-served.

Question 16

A modified version of utilitarism proposed by John Rawls could be summarized as

Accepted Answer

A) transfer everything to the poor. 
B) transfer everything to the rich. 
C) expand the size of government. 
D) minimize the size of government. 
E) make the poorest as well off as possible. 
A) transfer everything to the poor. 
B) transfer everything to the rich. 
C) expand the size of government. 
D) minimize the size of government. 
E) make the poorest as well off as possible.

Question 17

Sunscreen factories are required to limit production to 100 bottles a day,which is less than the efficient quantity.The 100 bottles could be allocated to beachgoers by ________,which is ________ by the fair rules idea of fairness and ________ by the fair results idea of fairness.

Accepted Answer

A) first-come first-served;fair;unfair 
B) personal characteristics;fair;fair 
C) force;unfair;fair 
D) majority rule;fair;fair 
E) first-come first-served;fair;fair 
A) first-come first-served;fair;unfair 
B) personal characteristics;fair;fair 
C) force;unfair;fair 
D) majority rule;fair;fair 
E) first-come first-served;fair;fair

Question 18

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 19

If production is not at an efficient level,which of the following must be true?

Accepted Answer

A) Marginal social benefit exceeds marginal social cost. 
B) Marginal social cost exceeds marginal social benefit. 
C) Production will increase. 
D) Production will decrease. 
E) none of the above 
A) Marginal social benefit exceeds marginal social cost. 
B) Marginal social cost exceeds marginal social benefit. 
C) Production will increase. 
D) Production will decrease. 
E) none of the above

Question 20

Use the figure below to answer the following question.
   
Figure 5.3.4
-Refer to Figure 5.3.4.The graph shows the market for cell phones.When production is efficient,total surplus is ________ and the cost of producing the cell phones sold is ________.

Accepted Answer

A) $2,250;$2,250 
B) $2,250;$3,000 
C) $1,500;$750 
D) $750;$1,500 
E) $1,500;$2,250 
A) $2,250;$2,250 
B) $2,250;$3,000 
C) $1,500;$750 
D) $750;$1,500 
E) $1,500;$2,250

Exam 5: Efficiency and Equity

When demand is perfectly elastic,then consumer surplus is

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

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?

If we produce one more bottle of water

Consumer surplus

Use the figure below to answer the following questions. Figure 5.3.1 -Refer to Figure 5.3.1.If the price is $15 a unit,

Producer surplus is

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

Use the figure below to answer the following questions. Figure 5.3.1 -Refer to Figure 5.3.1.If the quantity produced is 100,

Market demand is the

When the efficient quantity is produced

Lotteries work best

If resources are allocated efficiently,

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

As a method of resource allocation,force

A modified version of utilitarism proposed by John Rawls could be summarized as

Sunscreen factories are required to limit production to 100 bottles a day,which is less than the efficient quantity.The 100 bottles could be allocated to beachgoers by ________,which is ________ by the fair rules idea of fairness and ________ by the fair results idea of fairness.

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?

If production is not at an efficient level,which of the following must be true?

Use the figure below to answer the following question. Figure 5.3.4 -Refer to Figure 5.3.4.The graph shows the market for cell phones.When production is efficient,total surplus is ________ and the cost of producing the cell phones sold is ________.

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

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Sunscreen factories are required to limit production to 100 bottles a day,which is less than the efficient quantity.The 100 bottles could be allocated to beachgoers by ,which is by the fair rules idea of fairness and by the fair results idea of fairness.

Use the figure below to answer the following question. Figure 5.3.4 -Refer to Figure 5.3.4.The graph shows the market for cell phones.When production is efficient,total surplus is and the cost of producing the cell phones sold is .