Question 1

-(Exhibit: Markets and Efficiency)What is the marginal benefit to a producer of an extra pound of apples in Panel (a)?

Accepted Answer

A) It is the price the producer receives. 
B) It is the price the consumer receives. 
C) It is the price the producer pays. 
D) It is all of the above. 
A) It is the price the producer receives. 
B) It is the price the consumer receives. 
C) It is the price the producer pays. 
D) It is all of the above.

Question 2

-(Exhibit: Markets and Efficiency)The price and marginal cost in Panel(a)are equal because of:

Accepted Answer

A) the marginal decision rule. 
B) the law of demand. 
C) the law of supply. 
D) the law of increasing cost. 
A) the marginal decision rule. 
B) the law of demand. 
C) the law of supply. 
D) the law of increasing cost.

Question 3

-(Exhibit: Surplus and Supply)At output level OE, the total costs to sellers is _______ , the total revenues to sellers is _______ , and the producer surplus is _______ .

Accepted Answer

A) OADE; OBDE; ABD 
B) OBDE; OADE; ABD 
C) OADE; OBDE; OAFE 
D) OBDE; OADE; OAFE 
A) OADE; OBDE; ABD 
B) OBDE; OADE; ABD 
C) OADE; OBDE; OAFE 
D) OBDE; OADE; OAFE

Question 4

The free-rider problem is a direct result of:

Accepted Answer

A) the inability to exclude nonpayers. 
B) marginal-cost pricing. 
C) full-cost pricing. 
D) horizontally summed supply curves. 
A) the inability to exclude nonpayers. 
B) marginal-cost pricing. 
C) full-cost pricing. 
D) horizontally summed supply curves.

Question 5

People or firms who consume a public good without paying for them are called _______ by economists.

Accepted Answer

A) deadbeats 
B) free riders 
C) public consumers 
D) tax evaders 
A) deadbeats 
B) free riders 
C) public consumers 
D) tax evaders

Question 6

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 popcorn that you can purchase is _______ boxes.

Accepted Answer

A) 5 
B) 10 
C) 20 
D) 40 
A) 5 
B) 10 
C) 20 
D) 40

Question 7

-(Exhibit: Net Benefit)Net benefit to society is maximized at point _______ , where consumer surplus is the area _______ , and producer surplus is the area _______ .

Accepted Answer

A) J; BCD; ABD 
B) D; ABD; BCD 
C) G; BCD; ABD 
D) D; BCD; ABD 
A) J; BCD; ABD 
B) D; ABD; BCD 
C) G; BCD; ABD 
D) D; BCD; ABD

Question 8

Activities that generate external costs will likely be carried out at levels that _______ those that would be efficient.

Accepted Answer

A) equal to 
B) are less than 
C) exceed 
D) compete with 
A) equal to 
B) are less than 
C) exceed 
D) compete with

Question 9

In the context of public goods and government efforts to correct market failure, economists may tend to be critical of the Endangered Species Act because:

Accepted Answer

A) economists don't generally care about the environment. 
B) species have no economic value. 
C) the Act eliminates many activities that would contribute to the total output of the economy. 
D) the Act does not generally provide for a weighing of the costs and the benefits of species preservation. 
A) economists don't generally care about the environment. 
B) species have no economic value. 
C) the Act eliminates many activities that would contribute to the total output of the economy. 
D) the Act does not generally provide for a weighing of the costs and the benefits of species preservation.

Question 10

All of the following are examples of external cost EXCEPT:

Accepted Answer

A) smoke nuisance of a factory. 
B) zoning restrictions on your property. 
C) land defilement from strip mining. 
D) weeds on your next-door neighbor's lawn. 
A) smoke nuisance of a factory. 
B) zoning restrictions on your property. 
C) land defilement from strip mining. 
D) weeds on your next-door neighbor's lawn.

Question 11

The models of demand and supply assume:

Accepted Answer

A) competitive markets. 
B) no one in the market has power over equilibrium price. 
C) each market participant takes the price as given. 
D) all of the above. 
A) competitive markets. 
B) no one in the market has power over equilibrium price. 
C) each market participant takes the price as given. 
D) all of the above.

Question 12

A resource for which no exclusive property rights exist is called a _______ resource.

Accepted Answer

A) shared property 
B) communal property 
C) nonowner 
D) common property 
A) shared property 
B) communal property 
C) nonowner 
D) common property

Question 13

An inequitable allocation of resources implies an equitable distribution of wealth.

Accepted Answer

A) True 
 B)False

Question 14

In our society, a good for which exclusion is NOT possible is:

Accepted Answer

A) medical services. 
B) military defense. 
C) toll highways. 
D) buses and trains. 
A) medical services. 
B) military defense. 
C) toll highways. 
D) buses and trains.

Question 15

The best example of a private good, exchanged in competitive markets and for which exclusion is possible, is:

Accepted Answer

A) an automobile. 
B) public education. 
C) national defense. 
D) law enforcement. 
A) an automobile. 
B) public education. 
C) national defense. 
D) law enforcement.

Question 16

The marginal benefit is the amount by which an additional unit of activity increases total benefit.

Accepted Answer

A) True 
 B)False

Question 17

Activities of consumers and firms:

Accepted Answer

A) have benefits but not costs. 
B) have costs but not benefits. 
C) have both costs and benefits. 
D) are too complex to be analyzed with economic theory. 
A) have benefits but not costs. 
B) have costs but not benefits. 
C) have both costs and benefits. 
D) are too complex to be analyzed with economic theory.

Question 18

Economic theory suggests that market failure is a result of:

Accepted Answer

A) the quantity demanded exceeding the quantity supplied. 
B) the quantity supplied exceeding the quantity demanded. 
C) prices that are too high or too low. 
D) markets not reflecting and revealing the full costs and benefits of choices. 
A) the quantity demanded exceeding the quantity supplied. 
B) the quantity supplied exceeding the quantity demanded. 
C) prices that are too high or too low. 
D) markets not reflecting and revealing the full costs and benefits of choices.

Question 19

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

Accepted Answer

A) society's well-being can be improved if production increases. 
B) society's well-being cannot be improved by changing production. 
C) the market is producing too much of the good. 
D) the market is producing too little of the good. 
A) society's well-being can be improved if production increases. 
B) society's well-being cannot be improved by changing production. 
C) the market is producing too much of the good. 
D) the market is producing too little of the good.

Question 20

The amount by which an additional unit of an activity increases total benefit is:

Accepted Answer

A) net benefit. 
B) marginal benefit. 
C) marginal cost. 
D) utility. 
A) net benefit. 
B) marginal benefit. 
C) marginal cost. 
D) utility.

Exam 6: Measuring Total Output and Income

-(Exhibit: Markets and Efficiency)What is the marginal benefit to a producer of an extra pound of apples in Panel (a)?

-(Exhibit: Markets and Efficiency)The price and marginal cost in Panel(a)are equal because of:

-(Exhibit: Surplus and Supply)At output level OE, the total costs to sellers is _______ , the total revenues to sellers is _______ , and the producer surplus is _______ .

The free-rider problem is a direct result of:

People or firms who consume a public good without paying for them are called _______ by economists.

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 popcorn that you can purchase is _______ boxes.

-(Exhibit: Net Benefit)Net benefit to society is maximized at point _______ , where consumer surplus is the area _______ , and producer surplus is the area _______ .

Activities that generate external costs will likely be carried out at levels that _______ those that would be efficient.

In the context of public goods and government efforts to correct market failure, economists may tend to be critical of the Endangered Species Act because:

All of the following are examples of external cost EXCEPT:

The models of demand and supply assume:

A resource for which no exclusive property rights exist is called a _______ resource.

An inequitable allocation of resources implies an equitable distribution of wealth.

In our society, a good for which exclusion is NOT possible is:

The best example of a private good, exchanged in competitive markets and for which exclusion is possible, is:

The marginal benefit is the amount by which an additional unit of activity increases total benefit.

Activities of consumers and firms:

Economic theory suggests that market failure is a result of:

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

The amount by which an additional unit of an activity increases total benefit is:

Economics: the Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Demand and Supply

Macroeconomics: the Big Picture

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Inflation and Unemployment

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Macroeconomics: the Big Picture

Measuring Total Income and Output

Aggregate Demand and Aggregate Supply

Economic Growth

The Nature and Creation of Money

Financial Markets and the Economy

Monetary Policy and the Fed

Government and Fiscal Policy

Consumption and the Aggregate Expenditures Model

Investment and Economic Activity

Net Exports and International Finance

Macro Inflation and Unemployment

Macro a Brief History of Macroeconomic Thought and Policy

Economic Development

Socialist Economies in Transition

Filters

-(Exhibit: Surplus and Supply)At output level OE, the total costs to sellers is ___ , the total revenues to sellers is _ , and the producer surplus is _____ .

-(Exhibit: Net Benefit)Net benefit to society is maximized at point ___ , where consumer surplus is the area _ , and producer surplus is the area _____ .