Exam 6: Measuring Total Output and Income

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $5 to spend on both goods, the maximum quantity of peanuts that you can purchase is _______ bags.

If the marginal benefit received from a good is greater than the marginal cost of production, then:

The Demand for Golf Balls Demand Price (per dozen) Quantity (dozen) 20 0 18 1 16 2 14 3 12 4 10 5 -(Exhibit: The Demand for Golf Balls)Assume that 4 dozen golf balls are purchased for $12 per dozen.Consumer surplus is:

If the marginal benefit received from a good is equal to the marginal cost of production, then:

Adam Smith, a Scottish economist, established the proposition that individuals should not pursue their own self-interest.

Profit is the:

Which of the following is a private good?

Whenever MB < MC, the decisionmaker should do _______ of the activity.

An allocation of resources that does not achieve the maximum net benefit from one or more activities is:

If a coal-powered electrical generator discharges smoke into the air and causes uncompensated costs and discomfort to residents of a town, this situation is an example of a(n):

The costs economists use in the concept of economic profit are:

-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit)In Panel (b), if the activity level is at E, then there will be a deadweight loss shown by the area:

The efficient way to deal with an external cost is to let markets allocate resources without government intervention.

The efficiency condition requires that:

External costs occur because:

A common property resource has exclusive property rights.

An external cost is imposed when an action imposes costs on others outside the context of market exchange.

-(Exhibit: Surplus and Supply)The difference between the total revenue received by sellers and their total cost is called _______ surplus, and for output level OE is depicted by the area enclosed in _______ .

The market failure of external cost is most likely to result if Peanuts 'R' Us:

As consumers make choices in the marketplace, they reveal information about their: