Question 1

An _______ results from any action that imposes costs on others outside of any market exchange.

Accepted Answer

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

Question 2

-The marginal benefit of studying economics when the student is at 4 hours is _______ points and the marginal cost is ________ points.

Accepted Answer

A) 30; 30 
B) 20; 10 
C) 20; 20 
D) 30; 10 
A) 30; 30 
B) 20; 10 
C) 20; 20 
D) 30; 10

Question 3

The buffalo nearly became extinct because:

Accepted Answer

A) buffalo hunters were evil and greedy. 
B) the buffalo was stupid and did not know how to defend itself. 
C) no one owned the buffalo. 
D) the Sierra Club did not exist in the 1800s. 
A) buffalo hunters were evil and greedy. 
B) the buffalo was stupid and did not know how to defend itself. 
C) no one owned the buffalo. 
D) the Sierra Club did not exist in the 1800s.

Question 4

-(Exhibit: Measuring Consumer Surplus)If pizzas are $4 each, your consumer surplus is:

Accepted Answer

A) $4. 
B) $6. 
C) $12. 
D) $18. 
A) $4. 
B) $6. 
C) $12. 
D) $18.

Question 5

The best example of a public good, produced by the government and for which exclusion is not possible, is:

Accepted Answer

A) legal services. 
B) national defense. 
C) a municipal library. 
D) cable television broadcasting. 
A) legal services. 
B) national defense. 
C) a municipal library. 
D) cable television broadcasting.

Question 6

The marginal decision rule requires that for an individual to maximize utility, MB>MC.

Accepted Answer

A) True 
 B)False

Question 7

Making a statement about an equitable or inequitable distribution of income:

Accepted Answer

A) requires a value judgment. 
B) involves efficiency judgments. 
C) involves positive judgments. 
D) requires the measurement of demand and supply curves. 
A) requires a value judgment. 
B) involves efficiency judgments. 
C) involves positive judgments. 
D) requires the measurement of demand and supply curves.

Question 8

Which of the following is not true?

Accepted Answer

A) In a competitive market, in the long run, price will equal marginal cost. 
B) For resource allocation to be efficient, property rights must be exclusive and nontransferable. 
C) A common property resource is unlikely to be allocated efficiently in the marketplace. 
D) All of the above are true. 
A) In a competitive market, in the long run, price will equal marginal cost. 
B) For resource allocation to be efficient, property rights must be exclusive and nontransferable. 
C) A common property resource is unlikely to be allocated efficiently in the marketplace. 
D) All of the above are true.

Question 9

An efficient allocation of resources is one that achieves the maximum net benefit from all activities.

Accepted Answer

A) True 
 B)False

Question 10

Free riders consume a public good without paying for it.

Accepted Answer

A) True 
 B)False

Question 11

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $10 to spend and decide to purchase 20 bags of peanuts, the maximum quantity of popcorn that you can purchase is _______ boxes.

Accepted Answer

A) 8 
B) 10 
C) 12 
D) 16 
A) 8 
B) 10 
C) 12 
D) 16

Question 12

If the marginal benefit received from a good is greater 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 can be improved if production decreases. 
C) society's well-being cannot be improved by changing production. 
D) the market is producing too much of the good. 
A) society's well-being can be improved if production increases. 
B) society's well-being can be improved if production decreases. 
C) society's well-being cannot be improved by changing production. 
D) the market is producing too much of the good.

Question 13

The market will respond _______ to the preferences of a wealthy person as/than a poor one.

Accepted Answer

A) the same 
B) more 
C) less 
D) less equitably 
A) the same 
B) more 
C) less 
D) less equitably

Question 14

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, the opportunity (or marginal)cost in terms of your accounting score of spending the first hour studying economics ________.

Accepted Answer

A) 0 
B) 5 
C) 10 
D) 15 
A) 0 
B) 5 
C) 10 
D) 15

Question 15

The difference between a firm's total revenue and its total economic cost is:

Accepted Answer

A) production. 
B) utility. 
C) efficiency. 
D) profit. 
A) production. 
B) utility. 
C) efficiency. 
D) profit.

Question 16

-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit)In Panel (b), if activity is restricted to activity level E, the net benefit will be shown by the area:

Accepted Answer

A) ABGF. 
B) ABCD. 
C) AEFG. 
D) ABC. 
A) ABGF. 
B) ABCD. 
C) AEFG. 
D) ABC.

Question 17

-(Exhibit: Markets and Efficiency)Using Panel (a), which of the following statements is (are)true?

Accepted Answer

A) A consumer purchasing apples sends a message to producers that tells them marginal benefit equals or exceeds marginal cost. 
B) A consumer's decision to buy apples ratifies the decisions of producers to forgo the production of other goods to produce apples. 
C) At the equilibrium price, the marginal benefit of apples to consumers is reflected by the price they are willing to pay and is equal to the marginal cost of apples. 
D) All of the above statements are true. 
A) A consumer purchasing apples sends a message to producers that tells them marginal benefit equals or exceeds marginal cost. 
B) A consumer's decision to buy apples ratifies the decisions of producers to forgo the production of other goods to produce apples. 
C) At the equilibrium price, the marginal benefit of apples to consumers is reflected by the price they are willing to pay and is equal to the marginal cost of apples. 
D) All of the above statements are true.

Question 18

If a good that involves external costs is priced to take these costs into account, then its:

Accepted Answer

A) price would fall and output would go up. 
B) price would rise and output would fall. 
C) price would not change but output would fall. 
D) price would rise but output would stay the same. 
A) price would fall and output would go up. 
B) price would rise and output would fall. 
C) price would not change but output would fall. 
D) price would rise but output would stay the same.

Question 19

-Which of the following statements is (are)true?

Accepted Answer

A) An efficient allocation of resources maximizes the net benefit of each activity. 
B) An efficient allocation of resources implies that the distribution of income is equitable. 
C) Judgments about equity are positive judgments. 
D) A and B are true. 
A) An efficient allocation of resources maximizes the net benefit of each activity. 
B) An efficient allocation of resources implies that the distribution of income is equitable. 
C) Judgments about equity are positive judgments. 
D) A and B are true.

Question 20

Which of the following is not a public good?

Accepted Answer

A) flood control provision 
B) police protection 
C) a lighthouse 
D) postal services 
A) flood control provision 
B) police protection 
C) a lighthouse 
D) postal services

Exam 6: Measuring Total Output and Income

An _______ results from any action that imposes costs on others outside of any market exchange.

-The marginal benefit of studying economics when the student is at 4 hours is _______ points and the marginal cost is ________ points.

The buffalo nearly became extinct because:

-(Exhibit: Measuring Consumer Surplus)If pizzas are $4 each, your consumer surplus is:

The best example of a public good, produced by the government and for which exclusion is not possible, is:

The marginal decision rule requires that for an individual to maximize utility, MB>MC.

Making a statement about an equitable or inequitable distribution of income:

Which of the following is not true?

An efficient allocation of resources is one that achieves the maximum net benefit from all activities.

Free riders consume a public good without paying for it.

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $10 to spend and decide to purchase 20 bags of peanuts, the maximum quantity of popcorn that you can purchase is _______ boxes.

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

The market will respond _______ to the preferences of a wealthy person as/than a poor one.

The difference between a firm's total revenue and its total economic cost is:

-(Exhibit: Marginal Benefit, Marginal Cost, and Net Benefit)In Panel (b), if activity is restricted to activity level E, the net benefit will be shown by the area:

-(Exhibit: Markets and Efficiency)Using Panel (a), which of the following statements is (are)true?

If a good that involves external costs is priced to take these costs into account, then its:

-Which of the following statements is (are)true?

Which of the following is not a public good?

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

-The marginal benefit of studying economics when the student is at 4 hours is _ points and the marginal cost is __ points.