Question 1

Which of the following is TRUE?

Accepted Answer

A)  Lotteries work best when a resource can serve just one user at a time in a sequence. 
B)  A market price always allocates resources better than a command system. 
C)  In the United States, how tax dollars are allocated among competing uses is an example of how resources are allocated by majority rule. 
D)  Force has never played an important role in allocating scarce resources. 
A)  Lotteries work best when a resource can serve just one user at a time in a sequence. 
B)  A market price always allocates resources better than a command system. 
C)  In the United States, how tax dollars are allocated among competing uses is an example of how resources are allocated by majority rule. 
D)  Force has never played an important role in allocating scarce resources.

Question 2

Suppose consumers decide they value a product more highly than before. Then the efficient quantity to produce of that product

Accepted Answer

A)  increases. 
B)  does not change. 
C)  decreases. 
D)  perhaps changes, but without more information the direction of the change cannot be told. 
A)  increases. 
B)  does not change. 
C)  decreases. 
D)  perhaps changes, but without more information the direction of the change cannot be told.

Question 3

-The figure above shows the market for milk. If the population increases, then the efficient quantity of milk ________ and the producer surplus ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 4

If the marginal cost of producing every quantity decreases, all the following occur EXCEPT

Accepted Answer

A)  minimum supply price does not change. 
B)  the marginal social benefit of the last unit bought changes. 
C)  the consumer surplus increases. 
D)  the efficient quantity increases. 
A)  minimum supply price does not change. 
B)  the marginal social benefit of the last unit bought changes. 
C)  the consumer surplus increases. 
D)  the efficient quantity increases.

Question 5

Farmer Jones knows that the marginal cost to produce a bushel of tomatoes is $5 per bushel. He also knows that a consumer is willing to pay a maximum of $9 for the bushel. The price of the bushel is $6 and Farmer Jones sells his bushel for $6. On this bushel, Farmer Jones earns a producer surplus equal to

Accepted Answer

A)  $1. 
B)  $3. 
C)  $5. 
D)  $6. 
A)  $1. 
B)  $3. 
C)  $5. 
D)  $6.

Question 6

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the total surplus?

Accepted Answer

A)  $0 
B)  $12,000 
C)  $24,000 
D)  $16,000 
A)  $0 
B)  $12,000 
C)  $24,000 
D)  $16,000

Question 7

-The figure above shows the market for coffee. If the government pays the coffee producers a subsidy and production increases to 30 million pounds per day, the market is

Accepted Answer

A)  efficient because the marginal social benefit from the last pound of coffee exceeds its marginal social cost. 
B)  efficient because the total social benefit from coffee exceed the total social cost. 
C)  inefficient because the marginal social benefit from the last pound of coffee exceeds its marginal social cost. 
D)  inefficient because the marginal social cost of the last pound of coffee exceeds its marginal social benefit. 
A)  efficient because the marginal social benefit from the last pound of coffee exceeds its marginal social cost. 
B)  efficient because the total social benefit from coffee exceed the total social cost. 
C)  inefficient because the marginal social benefit from the last pound of coffee exceeds its marginal social cost. 
D)  inefficient because the marginal social cost of the last pound of coffee exceeds its marginal social benefit.

Question 8

The figure shows the competitive market for milk.
-In the figure above, when the market is in equilibrium, what is the total surplus?

Accepted Answer

A)  $1,000 
B)  $800 
C)  $200 
D)  $1,600 
A)  $1,000 
B)  $800 
C)  $200 
D)  $1,600

Question 9

The value of one more unit of a good or service is the

Accepted Answer

A)  marginal benefit. 
B)  minimum price that people are willing to pay for another unit of the good or service. 
C)  marginal cost. 
D)  opportunity cost of producing one more unit of a good or service. 
A)  marginal benefit. 
B)  minimum price that people are willing to pay for another unit of the good or service. 
C)  marginal cost. 
D)  opportunity cost of producing one more unit of a good or service.

Question 10

-Jill and Jed have individual demand curves for tennis rackets given in the table above and are the only two demanders in the market. What is the market quantity demanded at the price of $30?

Accepted Answer

A)  2 
B)  5 
C)  11 
D)  18 
A)  2 
B)  5 
C)  11 
D)  18

Question 11

Nick can purchase each milkshake for $2. For the first milkshake purchased Nick is willing to pay $4, for the second milkshake $3, for the third milkshake $2 and for the fourth milkshake $1. What is the value of Nick's consumer surplus for the milkshakes he buys?

Accepted Answer

A)  $2 
B)  $9 
C)  $3 
D)  $10 
A)  $2 
B)  $9 
C)  $3 
D)  $10

Question 12

Fitness is a magazine for women about health and exercise. Fitness offers year subscriptions for $12 on their website. Jess, Ania, Mandy, and Chloe exercise together and each enjoy reading Fitness. Jess is willing to pay $10, Ania is willing to pay $16, Mandy is willing to pay $24, and Chloe is willing to pay $12 for a subscription to the magazine. What is the value of Ania's consumer surplus?

Accepted Answer

A)  $4 
B)  $16 
C)  $12 
D)  $6 
A)  $4 
B)  $16 
C)  $12 
D)  $6

Question 13

-In the above figure

Accepted Answer

A)  marginal social cost equals marginal social benefit when 300,000 purses are produced. 
B)  500,000 purses should be sold for $50 each for an efficient outcome. 
C)  it is impossible to determine the efficient quantity of purses. 
D)  None of the above answers is correct. 
A)  marginal social cost equals marginal social benefit when 300,000 purses are produced. 
B)  500,000 purses should be sold for $50 each for an efficient outcome. 
C)  it is impossible to determine the efficient quantity of purses. 
D)  None of the above answers is correct.

Question 14

What are the two views of fairness? How does each view redistribution of income from the rich to the poor?

Accepted Answer

One view is that "it's not fair if the r

Question 15

American Idol is a popular television program where contestants compete to win a $1 million record deal. To determine the winner, fans either dial the number or send a text message indicating their favorite contestant. The contestant with the highest number of texts and phone calls wins. What is the scarce resource in this example?

Accepted Answer

A)  $1 million record deal 
B)  television ratings 
C)  phone calls and text messages 
D)  fans 
A)  $1 million record deal 
B)  television ratings 
C)  phone calls and text messages 
D)  fans

Question 16

Charlie's consumer surplus from the first slice of pizza he buys is greater than the consumer surplus from the second slice because of

Accepted Answer

A)  decreasing marginal benefits. 
B)  increasing marginal benefits. 
C)  decreasing marginal costs. 
D)  increasing marginal cost. 
A)  decreasing marginal benefits. 
B)  increasing marginal benefits. 
C)  decreasing marginal costs. 
D)  increasing marginal cost.

Question 17

What is allocative efficiency?

Accepted Answer

Allocative efficiency is a sit

Question 18

Which of the following statements is TRUE?

Accepted Answer

A)  At the efficient quantity, marginal social benefit equals marginal social cost. 
B)  Marginal social cost increases as the quantity produced decreases. 
C)  Marginal social benefit decreases as the quantity consumed decreases. 
D)  If marginal social benefit exceeds marginal social cost by as much as possible, production is efficient. 
A)  At the efficient quantity, marginal social benefit equals marginal social cost. 
B)  Marginal social cost increases as the quantity produced decreases. 
C)  Marginal social benefit decreases as the quantity consumed decreases. 
D)  If marginal social benefit exceeds marginal social cost by as much as possible, production is efficient.

Question 19

What approach to fairness argues in favor of government policies that redistribute income so that there is more equality of income?

Accepted Answer

The general approach to fairness that ar

Question 20

Sal likes to eat pizza. The ________ is the maximum amount that Sal is willing to pay for one more piece of pizza.

Accepted Answer

A)  efficient price 
B)  efficient amount 
C)  marginal benefit 
D)  marginal cost 
A)  efficient price 
B)  efficient amount 
C)  marginal benefit 
D)  marginal cost

Which of the following is TRUE?

Suppose consumers decide they value a product more highly than before. Then the efficient quantity to produce of that product

-The figure above shows the market for milk. If the population increases, then the efficient quantity of milk and the producer surplus .

If the marginal cost of producing every quantity decreases, all the following occur EXCEPT

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the total surplus?

-The figure above shows the market for coffee. If the government pays the coffee producers a subsidy and production increases to 30 million pounds per day, the market is

The figure shows the competitive market for milk. -In the figure above, when the market is in equilibrium, what is the total surplus?

The value of one more unit of a good or service is the

-Jill and Jed have individual demand curves for tennis rackets given in the table above and are the only two demanders in the market. What is the market quantity demanded at the price of $30?

Nick can purchase each milkshake for $2. For the first milkshake purchased Nick is willing to pay $4, for the second milkshake $3, for the third milkshake $2 and for the fourth milkshake $1. What is the value of Nick's consumer surplus for the milkshakes he buys?

-In the above figure

What are the two views of fairness? How does each view redistribution of income from the rich to the poor?

Charlie's consumer surplus from the first slice of pizza he buys is greater than the consumer surplus from the second slice because of

What is allocative efficiency?

Which of the following statements is TRUE?

What approach to fairness argues in favor of government policies that redistribute income so that there is more equality of income?

Sal likes to eat pizza. The ________ is the maximum amount that Sal is willing to pay for one more piece of pizza.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 5: Efficiency and Equity

Which of the following is TRUE?

Suppose consumers decide they value a product more highly than before. Then the efficient quantity to produce of that product

-The figure above shows the market for milk. If the population increases, then the efficient quantity of milk ________ and the producer surplus ________.

If the marginal cost of producing every quantity decreases, all the following occur EXCEPT

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the total surplus?

-The figure above shows the market for coffee. If the government pays the coffee producers a subsidy and production increases to 30 million pounds per day, the market is

The figure shows the competitive market for milk. -In the figure above, when the market is in equilibrium, what is the total surplus?

The value of one more unit of a good or service is the

-Jill and Jed have individual demand curves for tennis rackets given in the table above and are the only two demanders in the market. What is the market quantity demanded at the price of $30?

Nick can purchase each milkshake for $2. For the first milkshake purchased Nick is willing to pay $4, for the second milkshake $3, for the third milkshake $2 and for the fourth milkshake $1. What is the value of Nick's consumer surplus for the milkshakes he buys?

-In the above figure

What are the two views of fairness? How does each view redistribution of income from the rich to the poor?

Charlie's consumer surplus from the first slice of pizza he buys is greater than the consumer surplus from the second slice because of

What is allocative efficiency?

Which of the following statements is TRUE?

What approach to fairness argues in favor of government policies that redistribute income so that there is more equality of income?

Sal likes to eat pizza. The ________ is the maximum amount that Sal is willing to pay for one more piece of pizza.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

-The figure above shows the market for milk. If the population increases, then the efficient quantity of milk and the producer surplus .