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 and decide to purchase 8 boxes of popcorn, the maximum quantity of peanuts that you can purchase is _______ bags.

To be effective, property rights must be:

-(Exhibit: Markets and Efficiency)Referring to Panel (a):

-(Exhibit: Marginal Benefits and Marginal Costs)In the exhibit, more time spent studying economics adds points to economics scores but subtracts points from accounting scores.The marginal benefit of studying economics when the student is at 2 hours is _______ points and the marginal cost is _______ points.

Suppose that the expected exam scores from studying economics for 0, 1, 2, or 3 hours are 65, 80, 90, and 95 points, respectively, while the expected exam scores for studying 0, 1, 2, or 3 hours of accounting are 50, 65, 70, and 70 points, respectively.With 3 total hours of study time, your combined scores can be maximized by spending _______ hours studying economics.

-(Exhibit: Model of a Competitive Market)If there are no external benefits or costs, the output at Q will be:

-(Exhibit: Markets and Efficiency)The exhibit illustrates that the marketplace can be thought of as a:

The definition of a public good or private good depends on the _______ of the good and not on whether it is provided by the _______ or _______ sector.

It can be inferred that when firms and consumers respond to changing price signals in a competitive market with well-defined and transferable property rights:

Property rights are a set of rules that specify the ways in which the resource for which they are defined may be used.

If the MB of an activity exceeds the MC, the activity should be increased.

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 1 dozen golf balls are purchased for $18 per dozen.Consumer surplus is:

According to the marginal decision rule, if marginal benefit:

Market failure occurs when:

In the production of peanut butter, if Peanuts 'R' Us, Inc.discards broken peanut shells onto an adjacent recreational area, this situation will most likely lead to the market failure of:

Public goods are private goods produced by government.

Market failure occurs because market participants face the full costs and benefits of their choices.

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 2 dozen golf balls are purchased for $16 per dozen.Consumer surplus is:

Net benefit is maximized when marginal benefit _______ marginal cost.

If the MC of an activity exceeds the MB, the activity should be increased.