Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Property rights are defined as a set of rules that:

Accepted Answer

A) specify how consumers buy a product. 
B) allows owners to use their property any way they choose. 
C) determine the value of property. 
D) specify the ways in which an owner can use a resource. 
A) specify how consumers buy a product. 
B) allows owners to use their property any way they choose. 
C) determine the value of property. 
D) specify the ways in which an owner can use a resource.

Question 3

The total benefit of an activity minus its total cost 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.

Question 4

An _______ results from any action that creates benefits for others outside of any market exchange.

Accepted Answer

A) external benefit 
B) outside benefit 
C) internal benefit 
D) endogenous benefit 
A) external benefit 
B) outside benefit 
C) internal benefit 
D) endogenous benefit

Question 5

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

Accepted Answer

A) less 
B) the same amount 
C) more 
D) none 
A) less 
B) the same amount 
C) more 
D) none

Question 6

Maximization of the net benefit of an activity occurs when:

Accepted Answer

A) MB = MC. B) MB > MC. C) MB < MC. D) MB approaches MC. A) MB = MC. B) MB > MC. C) MB < MC. D) MB approaches MC.

Question 7

Free riders are people or firms that consume a private good without paying for it.

Accepted Answer

A) True 
 B)False

Question 8

Water is an example of a public good.

Accepted Answer

A) True 
 B)False

Question 9

-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit)In Panel (b)at activity level E, _______ , and in Panel (c)at activity level J, _______ .

Accepted Answer

A) MB  MC; MB < MC 
C) net benefit is ABGF; net benefit is ABC. 
D) there is no deadweight loss; deadweight loss is CHI 
A) MB  MC; MB < MC 
C) net benefit is ABGF; net benefit is ABC. 
D) there is no deadweight loss; deadweight loss is CHI

Question 10

Regardless of whether they pay for them, people cannot be excluded from receiving the benefits of:

Accepted Answer

A) private goods. 
B) public goods. 
C) merit goods. 
D) either private or public goods. 
A) private goods. 
B) public goods. 
C) merit goods. 
D) either private or public goods.

Question 11

Utility is the difference between a firm's revenue and its total economic cost.

Accepted Answer

A) True 
 B)False

Question 12

Because individuals are unlikely to reveal their demand for public goods, private firms will produce a _______ quantity of public goods than is _______ .

Accepted Answer

A) smaller; efficient 
B) smaller; inefficient 
C) greater; efficient 
D) greater; inefficient 
A) smaller; efficient 
B) smaller; inefficient 
C) greater; efficient 
D) greater; inefficient

Question 13

A characteristic of public goods is that:

Accepted Answer

A) people pay for them in proportion to the benefits received. 
B) the costs of producing them are less than if they were private goods. 
C) their benefits cannot be withheld from anyone, regardless of whether the person pays for them. 
D) they are produced only by the public sector, not by the private sector. 
A) people pay for them in proportion to the benefits received. 
B) the costs of producing them are less than if they were private goods. 
C) their benefits cannot be withheld from anyone, regardless of whether the person pays for them. 
D) they are produced only by the public sector, not by the private sector.

Question 14

An example of a public good is:

Accepted Answer

A) a state university. 
B) food. 
C) fire protection. 
D) the Ramada Inn. 
A) a state university. 
B) food. 
C) fire protection. 
D) the Ramada Inn.

Question 15

The text suggests that the African elephant is in danger of disappearing because:

Accepted Answer

A) local hunters just don't like elephants. 
B) of the lack of clearly defined property rights. 
C) the governments of countries with elephants did not try to save them. 
D) hunters do not respond to their own self-interest. 
A) local hunters just don't like elephants. 
B) of the lack of clearly defined property rights. 
C) the governments of countries with elephants did not try to save them. 
D) hunters do not respond to their own self-interest.

Question 16

A public good is a good or service for which exclusion:

Accepted Answer

A) is possible and for which marginal cost of an additional user is zero. 
B) is possible and for which marginal cost of an additional user is positive. 
C) cannot be applied and for which marginal cost of an additional user is zero. 
D) cannot be applied and for which marginal cost of an additional user is positive. 
A) is possible and for which marginal cost of an additional user is zero. 
B) is possible and for which marginal cost of an additional user is positive. 
C) cannot be applied and for which marginal cost of an additional user is zero. 
D) cannot be applied and for which marginal cost of an additional user is positive.

Question 17

A good for which exclusion cannot be applied and for which the marginal cost of another user is zero is a _______ good.

Accepted Answer

A) private 
B) free 
C) market 
D) public 
A) private 
B) free 
C) market 
D) public

Question 18

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 and decide to purchase 6 boxes of popcorn, the maximum quantity of peanuts that you can purchase is _______ bags.

Accepted Answer

A) 4 
B) 8 
C) 10 
D) 12 
A) 4 
B) 8 
C) 10 
D) 12

Question 19

-(Exhibit: Model of a Competitive Market)If a tax is imposed on sellers, the equilibrium price will _______ and the equilibrium quantity will _______ .

Accepted Answer

A) increase; decrease 
B) remain the same; increase 
C) remain the same; decrease 
D) increase; increase 
A) increase; decrease 
B) remain the same; increase 
C) remain the same; decrease 
D) increase; increase

Question 20

Utility is the:

Accepted Answer

A) difference between a firm's total revenue and its total economic cost. 
B) good not adequately provided by a free market and usually provided by the government. 
C) satisfaction consumers derive from their consumption of goods and services. 
D) lowest price that buyers are willing to pay for a given quantity of a good. 
A) difference between a firm's total revenue and its total economic cost. 
B) good not adequately provided by a free market and usually provided by the government. 
C) satisfaction consumers derive from their consumption of goods and services. 
D) lowest price that buyers are willing to pay for a given quantity of a good.

Exam 6: Measuring Total Output and Income

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

Property rights are defined as a set of rules that:

The total benefit of an activity minus its total cost is:

An _______ results from any action that creates benefits for others outside of any market exchange.

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

Maximization of the net benefit of an activity occurs when:

Free riders are people or firms that consume a private good without paying for it.

Water is an example of a public good.

-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit)In Panel (b)at activity level E, _______ , and in Panel (c)at activity level J, _______ .

Regardless of whether they pay for them, people cannot be excluded from receiving the benefits of:

Utility is the difference between a firm's revenue and its total economic cost.

Because individuals are unlikely to reveal their demand for public goods, private firms will produce a _______ quantity of public goods than is _______ .

A characteristic of public goods is that:

An example of a public good is:

The text suggests that the African elephant is in danger of disappearing because:

A public good is a good or service for which exclusion:

A good for which exclusion cannot be applied and for which the marginal cost of another user is zero is a _______ good.

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 and decide to purchase 6 boxes of popcorn, the maximum quantity of peanuts that you can purchase is _______ bags.

-(Exhibit: Model of a Competitive Market)If a tax is imposed on sellers, the equilibrium price will _______ and the equilibrium quantity will _______ .

Utility is the:

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: Marginal Benefit, Marginal Cost, and Net Benefit)In Panel (b)at activity level E, _ , and in Panel (c)at activity level J, _ .

Because individuals are unlikely to reveal their demand for public goods, private firms will produce a _ quantity of public goods than is _ .

-(Exhibit: Model of a Competitive Market)If a tax is imposed on sellers, the equilibrium price will _ and the equilibrium quantity will _ .