Question 1

The opportunity cost to the consumer of purchasing and consuming one more unit of a good is called the marginal benefit.

Accepted Answer

A) True 
 B)False

Question 2

-In the above figure, suppose that the government sets a limit to production at 10 units of output and the price rises to $4. In comparison to a competitive market the consumer surplus would fall by

Accepted Answer

A)  $0. 
B)  $10. 
C)  $15. 
D)  $20. 
A)  $0. 
B)  $10. 
C)  $15. 
D)  $20.

Question 3

-In the above figure, 300,000 purses per month is

Accepted Answer

A)  the efficient amount to produce because at 300,000 purses marginal social benefit equals marginal social cost. 
B)  the efficient amount to produce because at 300,000 purses marginal social benefit is greater than marginal social cost. 
C)  an inefficient amount to produce because at 300,000 purses marginal social benefit equals marginal social cost. 
D)  an inefficient amount to produce because producing 500,000 purses sets the marginal social benefit equal to zero. 
A)  the efficient amount to produce because at 300,000 purses marginal social benefit equals marginal social cost. 
B)  the efficient amount to produce because at 300,000 purses marginal social benefit is greater than marginal social cost. 
C)  an inefficient amount to produce because at 300,000 purses marginal social benefit equals marginal social cost. 
D)  an inefficient amount to produce because producing 500,000 purses sets the marginal social benefit equal to zero.

Question 4

-The above figure shows the competitive market for turkey. The consumer surplus for the 300 millionth pound of turkey is

Accepted Answer

A)  $2.00 per pound. 
B)  $225 million. 
C)  $0.80 per pound. 
D)  $0.50 per pound. 
A)  $2.00 per pound. 
B)  $225 million. 
C)  $0.80 per pound. 
D)  $0.50 per pound.

Question 5

The market demand curve for iPads is the ________ of all the individual demand curves for iPads.

Accepted Answer

A)  horizontal product 
B)  horizontal sum 
C)  vertical sum 
D)  vertical product 
A)  horizontal product 
B)  horizontal sum 
C)  vertical sum 
D)  vertical product

Question 6

At the quantity of 1000 tacos, the marginal social benefit of a taco is $.50 and the marginal social cost is $.60. To produce the efficient quantity of tacos

Accepted Answer

A)  more tacos should be produced. 
B)  fewer tacos should be produced 
C)  there should be no change in the amount of tacos produced. 
D)  More information on production costs is needed to determine the efficient level of tacos. 
A)  more tacos should be produced. 
B)  fewer tacos should be produced 
C)  there should be no change in the amount of tacos produced. 
D)  More information on production costs is needed to determine the efficient level of tacos.

Question 7

-Given the individual demands for video downloads in the above table, and assuming that these three people are the only ones in the market, which of the following statements is NOT true about market demand for video downloads?

Accepted Answer

A)  The market quantity demanded at a price of $5 is 10. 
B)  The height of the market demand curve at a quantity demanded of 22 is $3. 
C)  The height of the market demand curve at a quantity demanded of 16 is $5. 
D)  The market quantity demanded at a price of $2 is 28. 
A)  The market quantity demanded at a price of $5 is 10. 
B)  The height of the market demand curve at a quantity demanded of 22 is $3. 
C)  The height of the market demand curve at a quantity demanded of 16 is $5. 
D)  The market quantity demanded at a price of $2 is 28.

Question 8

The producer surplus from a good is equal to the

Accepted Answer

A)  maximum amount a consumer is willing to pay for the good minus the price that actually must be paid summed over the quantity sold. 
B)  actual price of the good minus the maximum amount a consumer is willing to pay for the good. 
C)  opportunity cost of producing the good minus its price summed over the quantity sold. 
D)  price of the good minus its opportunity cost of production summed over the quantity sold. 
A)  maximum amount a consumer is willing to pay for the good minus the price that actually must be paid summed over the quantity sold. 
B)  actual price of the good minus the maximum amount a consumer is willing to pay for the good. 
C)  opportunity cost of producing the good minus its price summed over the quantity sold. 
D)  price of the good minus its opportunity cost of production summed over the quantity sold.

Question 9

Considering all costs of production, the marginal cost of producing a hot dog is $1.00. The price of a hot dog is $1.50. Thus, the producer surplus from this hot dog is

Accepted Answer

A)  $1.50. 
B)  $1.00. 
C)  $.50. 
D)  Zero, because $1.50 is the most anyone would pay for a hot dog. 
A)  $1.50. 
B)  $1.00. 
C)  $.50. 
D)  Zero, because $1.50 is the most anyone would pay for a hot dog.

Question 10

Explain how the invisible hand delivers an efficient market outcome.

Accepted Answer

The invisible hand concepts claims that

Question 11

When there are external costs of production, such as when electric utilities burn coal, a competitive market will produce an inefficient level of output.

Accepted Answer

A) True 
 B)False

Question 12

Jason wants to hire Maria to tutor him in economics. Jason is willing to pay $30 for the first hour of tutoring, $25 for the second, $20 for the third, $15 for the fourth, and $10 for the fifth. Maria has an opportunity cost per hour of $6 for the first, $9 for the second, $12 for the third, $15 for the fourth, and $18 for the fifth. The initial equilibrium price for tutoring is $15 an hour and hence Maria tutors Jason for 4 hours. Now, Maria realizes that she is the only economics tutor because all the other tutors have graduated. Because she is the only tutor, she has a monopoly and, as a monopolist, Maria decides to charge a price of $25 instead of $15 an hour.
a) At the price of $25 an hour, how many hours will Maria tutor Jason?
b) At the initial equilibrium price of $15 an hour, what was Jason's total consumer surplus and Maria's total producer surplus?
c) At the price of $25 an hour, what is Jason's total consumer surplus and Maria's total producer surplus?
d) How does the sum of Jason's consumer surplus plus Maria's producer surplus compare at the initial equilibrium price of $15 an hour (part b) and at the new price of $25 an hour (part c)? Comment on any difference.

Accepted Answer

a) Maria will tutor Jason for 2 hours.
b

Question 13

-The table gives the demand and supply schedules for milk in Cowburg. Assume that the only people who benefit from milk are the people who consume it and the only people who bear the cost of milk are the people who produce it.
a) Draw the market demand and market supply curves. What are the equilibrium price and equilibrium quantity of milk? Is this equilibrium efficient? Explain.
b) What is the maximum price that consumers are willing to pay for the 500th gallon? What is the minimum price that producers are willing to accept for the 500th gallon? Explain.
c) Are 500 gallons a day less than or greater than the efficient quantity? Explain your answer.
d) If the market for milk is efficient, what is the consumer surplus? Show it on your graph. What is the producer surplus? Show it on your graph.
e) If farmers produce 500 gallons a day, is there a deadweight loss? If yes, what is it? Explain your answer using your graph.

Accepted Answer

@#IMG-DLM& a) The figure above shows the demand an

Question 14

A public good can be consumed by

Accepted Answer

A)  only one person who does not have to pay for it. 
B)  only one person who has to pay for it. 
C)  everyone simultaneously, as long as they pay for it. 
D)  everyone simultaneously, even if they do not pay for it. 
A)  only one person who does not have to pay for it. 
B)  only one person who has to pay for it. 
C)  everyone simultaneously, as long as they pay for it. 
D)  everyone simultaneously, even if they do not pay for it.

Question 15

Maria helps tutor students taking economics. The equilibrium price for tutoring is $15 per hour. Maria has determined her opportunity cost per hour to be $6 for the first, $9 for the second, $12 for the third, $15 for the fourth, and $18 for the fifth. How many hours will Maria tutor? Why this amount of hours? What, if any, is Maria's producer surplus?

Accepted Answer

Maria will tutor for 4 hours. For all of

Question 16

The principle that states that we should strive to achieve the greatest happiness for the greatest number is called

Accepted Answer

A)  the big tradeoff. 
B)  the symmetry principle. 
C)  utilitarianism. 
D)  efficiency. 
A)  the big tradeoff. 
B)  the symmetry principle. 
C)  utilitarianism. 
D)  efficiency.

Question 17

A market is allocatively efficient if

Accepted Answer

A)  the sum of the consumer surplus and the producer surplus has been maximized. 
B)  consumer surplus has been maximized. 
C)  producer surplus has been maximized. 
D)  profit has been maximized. 
A)  the sum of the consumer surplus and the producer surplus has been maximized. 
B)  consumer surplus has been maximized. 
C)  producer surplus has been maximized. 
D)  profit has been maximized.

Question 18

Competitive markets will generally produce

Accepted Answer

A)  too much of a public good. 
B)  too little of a public good. 
C)  the efficient amount of a public good. 
D)  the efficient amount of a public good in the short run, but not in the long run. 
A)  too much of a public good. 
B)  too little of a public good. 
C)  the efficient amount of a public good. 
D)  the efficient amount of a public good in the short run, but not in the long run.

Question 19

-In the above figure, if output is 30 units, then the total deadweight loss is

Accepted Answer

A)  $5. 
B)  $10. 
C)  $20. 
D)  $60. 
A)  $5. 
B)  $10. 
C)  $20. 
D)  $60.

Question 20

-The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then the maximum that Dana is willing to pay for the 8th gallon of ice cream is

Accepted Answer

A)  $1. 
B)  $2. 
C)  $3. 
D)  $5. 
A)  $1. 
B)  $2. 
C)  $3. 
D)  $5.

The opportunity cost to the consumer of purchasing and consuming one more unit of a good is called the marginal benefit.

-In the above figure, suppose that the government sets a limit to production at 10 units of output and the price rises to $4. In comparison to a competitive market the consumer surplus would fall by

-In the above figure, 300,000 purses per month is

-The above figure shows the competitive market for turkey. The consumer surplus for the 300 millionth pound of turkey is

The market demand curve for iPads is the ________ of all the individual demand curves for iPads.

At the quantity of 1000 tacos, the marginal social benefit of a taco is $.50 and the marginal social cost is $.60. To produce the efficient quantity of tacos

-Given the individual demands for video downloads in the above table, and assuming that these three people are the only ones in the market, which of the following statements is NOT true about market demand for video downloads?

The producer surplus from a good is equal to the

Considering all costs of production, the marginal cost of producing a hot dog is $1.00. The price of a hot dog is $1.50. Thus, the producer surplus from this hot dog is

Explain how the invisible hand delivers an efficient market outcome.

When there are external costs of production, such as when electric utilities burn coal, a competitive market will produce an inefficient level of output.

A public good can be consumed by

The principle that states that we should strive to achieve the greatest happiness for the greatest number is called

A market is allocatively efficient if

Competitive markets will generally produce

-In the above figure, if output is 30 units, then the total deadweight loss is

-The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then the maximum that Dana is willing to pay for the 8th gallon of ice cream is

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

The opportunity cost to the consumer of purchasing and consuming one more unit of a good is called the marginal benefit.

-In the above figure, suppose that the government sets a limit to production at 10 units of output and the price rises to $4. In comparison to a competitive market the consumer surplus would fall by

-In the above figure, 300,000 purses per month is

-The above figure shows the competitive market for turkey. The consumer surplus for the 300 millionth pound of turkey is

The market demand curve for iPads is the ________ of all the individual demand curves for iPads.

At the quantity of 1000 tacos, the marginal social benefit of a taco is $.50 and the marginal social cost is $.60. To produce the efficient quantity of tacos

-Given the individual demands for video downloads in the above table, and assuming that these three people are the only ones in the market, which of the following statements is NOT true about market demand for video downloads?

The producer surplus from a good is equal to the

Considering all costs of production, the marginal cost of producing a hot dog is $1.00. The price of a hot dog is $1.50. Thus, the producer surplus from this hot dog is

Explain how the invisible hand delivers an efficient market outcome.

When there are external costs of production, such as when electric utilities burn coal, a competitive market will produce an inefficient level of output.

A public good can be consumed by

The principle that states that we should strive to achieve the greatest happiness for the greatest number is called

A market is allocatively efficient if

Competitive markets will generally produce

-In the above figure, if output is 30 units, then the total deadweight loss is

-The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then the maximum that Dana is willing to pay for the 8th gallon of ice cream is

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