Question 1

Diamonds are sold by a monopoly firm that maximizes profits.It then follows that:

Accepted Answer

A) the marginal social benefit of diamonds exceeds its marginal social cost. 
B) the marginal social cost of diamonds exceeds its marginal social benefit. 
C) the price of diamonds equals its marginal social cost. 
D) the price of diamonds exceeds its marginal social benefit. 
A) the marginal social benefit of diamonds exceeds its marginal social cost. 
B) the marginal social cost of diamonds exceeds its marginal social benefit. 
C) the price of diamonds equals its marginal social cost. 
D) the price of diamonds exceeds its marginal social benefit.

Question 2

All points on a utility possibility curve are efficient but differ in terms of the distribution of well-being.

Accepted Answer

A) True 
 B)False

Question 3

The marginal social cost of bread exceeds the marginal social benefit at the current weekly output.Therefore,

Accepted Answer

A) the marginal net benefit of bread is positive. 
B) the output of bread is efficient. 
C) a reduction in weekly output of bread is necessary to achieve efficiency. 
D) an increase in weekly output of bread is necessary to achieve efficiency. 
A) the marginal net benefit of bread is positive. 
B) the output of bread is efficient. 
C) a reduction in weekly output of bread is necessary to achieve efficiency. 
D) an increase in weekly output of bread is necessary to achieve efficiency.

Question 4

An efficient level of output means:

Accepted Answer

A) the total social benefit less the total social cost is maximized. 
B) the total social benefit is below the total social cost. 
C) the total social cost equals the total social benefit. 
D) the total social benefit less the total social cost can be improved. 
A) the total social benefit less the total social cost is maximized. 
B) the total social benefit is below the total social cost. 
C) the total social cost equals the total social benefit. 
D) the total social benefit less the total social cost can be improved.

Question 5

Suppose the efficient output currently prevails in the market for ice cream.A tax on ice cream con?sumption will:

Accepted Answer

A) allow efficiency to continue to prevail in the market. 
B) result in more than the efficient output in the market. 
C) result in less than the efficient output in the market. 
D) cause the marginal social cost of ice cream to exceed its marginal social benefit at the market equilibrium output. 
A) allow efficiency to continue to prevail in the market. 
B) result in more than the efficient output in the market. 
C) result in less than the efficient output in the market. 
D) cause the marginal social cost of ice cream to exceed its marginal social benefit at the market equilibrium output.

Question 6

The extra benefit on one more unit of a good or service is its:

Accepted Answer

A) marginal cost. 
B) marginal benefit. 
C) total benefit. 
D) total cost. 
A) marginal cost. 
B) marginal benefit. 
C) total benefit. 
D) total cost.

Question 7

A tax on a product shifts the demand curve.

Accepted Answer

A) True 
 B)False

Question 8

Government programs can achieve efficiency when the gains to gainers from those policies exceed the losses to those who bear the costs.

Accepted Answer

A) True 
 B)False

Question 9

If the efficient output of computers is achieved this year, then market price of computers is equal to:

Accepted Answer

A) the marginal social benefit of computers. 
B) the marginal social cost of computers. 
C) the total social benefit of computers. 
D) both (a) and (b) are correct 
A) the marginal social benefit of computers. 
B) the marginal social cost of computers. 
C) the total social benefit of computers. 
D) both (a) and (b) are correct

Question 10

If a government desires to increase production beyond the current competitively determined efficient level, the government should:

Accepted Answer

A) tax the good. 
B) subsidize the good at a price higher than its current price. 
C) set the price below its current price. 
D) impose a fixed fee whenever the good is purchased. 
A) tax the good. 
B) subsidize the good at a price higher than its current price. 
C) set the price below its current price. 
D) impose a fixed fee whenever the good is purchased.

Question 11

Points on a utility possibility curve represent:

Accepted Answer

A) a given distribution of well-being between two persons. 
B) an efficient allocation of resources. 
C) the maximum well-being of any one person, given the resources available and the well-being of another person. 
D) all of these are correct. 
A) a given distribution of well-being between two persons. 
B) an efficient allocation of resources. 
C) the maximum well-being of any one person, given the resources available and the well-being of another person. 
D) all of these are correct.

Question 12

Positive economic analysis is based on underlying value judgments.

Accepted Answer

A) True 
 B)False

Question 13

The total social benefit of automobiles equals the total social cost at current annual output.It then follows that:

Accepted Answer

A) the annual output of automobiles is efficient. 
B) the annual output of automobiles exceeds the efficient amount. 
C) less than the efficient annual output of automobiles is produced. 
D) it is not possible to make buyers of automobiles better off without harming sellers. 
A) the annual output of automobiles is efficient. 
B) the annual output of automobiles exceeds the efficient amount. 
C) less than the efficient annual output of automobiles is produced. 
D) it is not possible to make buyers of automobiles better off without harming sellers.

Question 14

Efficient outcomes are often viewed as inequitable.

Accepted Answer

A) True 
 B)False

Question 15

Points lying below a utility possibility curve are efficient.

Accepted Answer

A) True 
 B)False

Question 16

The efficient annual output of any given good is attained if that good is made available in amounts up to the point at which the total social benefit of the good equals the total social cost.

Accepted Answer

A) True 
 B)False

Question 17

Normative economics is:

Accepted Answer

A) completely free of any value system. 
B) completely objective. 
C) based on a conscious effort to implement a particular social goal. 
D) an approach that determines the effect of particular actions without judgment of the result being good or bad. 
A) completely free of any value system. 
B) completely objective. 
C) based on a conscious effort to implement a particular social goal. 
D) an approach that determines the effect of particular actions without judgment of the result being good or bad.

Question 18

"The government should abolish tariffs to achieve efficiency" is a normative statement.

Accepted Answer

A) True 
 B)False

Question 19

The normative approach to public finance prescribes certain actions to achieve predetermined criteria.

Accepted Answer

A) True 
 B)False

Question 20

Positive economics:

Accepted Answer

A) makes recommendations designed to achieve certain goals. 
B) establishes cause-and-effect relationships between economic variables. 
C) is based on value judgments. 
D) can never be used to make predictions. 
A) makes recommendations designed to achieve certain goals. 
B) establishes cause-and-effect relationships between economic variables. 
C) is based on value judgments. 
D) can never be used to make predictions.

Diamonds are sold by a monopoly firm that maximizes profits.It then follows that:

All points on a utility possibility curve are efficient but differ in terms of the distribution of well-being.

The marginal social cost of bread exceeds the marginal social benefit at the current weekly output.Therefore,

An efficient level of output means:

Suppose the efficient output currently prevails in the market for ice cream.A tax on ice cream con?sumption will:

The extra benefit on one more unit of a good or service is its:

A tax on a product shifts the demand curve.

Government programs can achieve efficiency when the gains to gainers from those policies exceed the losses to those who bear the costs.

If the efficient output of computers is achieved this year, then market price of computers is equal to:

If a government desires to increase production beyond the current competitively determined efficient level, the government should:

Points on a utility possibility curve represent:

Positive economic analysis is based on underlying value judgments.

The total social benefit of automobiles equals the total social cost at current annual output.It then follows that:

Efficient outcomes are often viewed as inequitable.

Points lying below a utility possibility curve are efficient.

The efficient annual output of any given good is attained if that good is made available in amounts up to the point at which the total social benefit of the good equals the total social cost.

Normative economics is:

"The government should abolish tariffs to achieve efficiency" is a normative statement.

The normative approach to public finance prescribes certain actions to achieve predetermined criteria.

Positive economics:

Individuals and Government

Externalities and Government Policy

Public Goods

Public Choice and the Political Process

Cost-Benefit Analysis and Government Investments

Government Subsidies and Income Support for the Poor

Social Security and Social Insurance

Government and Health Care

Introduction to Government Finance

Taxation, Prices, Efficiency, and the Distribution of Income

Budget Balance and Government Debt

The Theory of Income Taxation

Taxation of Personal Income in the United States

Taxation of Corporate Income

Taxes on Consumption and Sales

Taxes on Wealth, Property, and Estates

Fiscal Federalism and State and Local Government Finance

Filters

Exam 2: Efficiency, Markets, and Government

Diamonds are sold by a monopoly firm that maximizes profits.It then follows that:

All points on a utility possibility curve are efficient but differ in terms of the distribution of well-being.

The marginal social cost of bread exceeds the marginal social benefit at the current weekly output.Therefore,

An efficient level of output means:

Suppose the efficient output currently prevails in the market for ice cream.A tax on ice cream con?sumption will:

The extra benefit on one more unit of a good or service is its:

A tax on a product shifts the demand curve.

Government programs can achieve efficiency when the gains to gainers from those policies exceed the losses to those who bear the costs.

If the efficient output of computers is achieved this year, then market price of computers is equal to:

If a government desires to increase production beyond the current competitively determined efficient level, the government should:

Points on a utility possibility curve represent:

Positive economic analysis is based on underlying value judgments.

The total social benefit of automobiles equals the total social cost at current annual output.It then follows that:

Efficient outcomes are often viewed as inequitable.

Points lying below a utility possibility curve are efficient.

The efficient annual output of any given good is attained if that good is made available in amounts up to the point at which the total social benefit of the good equals the total social cost.

Normative economics is:

"The government should abolish tariffs to achieve efficiency" is a normative statement.

The normative approach to public finance prescribes certain actions to achieve predetermined criteria.

Positive economics:

Individuals and Government

Externalities and Government Policy

Public Goods

Public Choice and the Political Process

Cost-Benefit Analysis and Government Investments

Government Subsidies and Income Support for the Poor

Social Security and Social Insurance

Government and Health Care

Introduction to Government Finance

Taxation, Prices, Efficiency, and the Distribution of Income

Budget Balance and Government Debt

The Theory of Income Taxation

Taxation of Personal Income in the United States

Taxation of Corporate Income

Taxes on Consumption and Sales

Taxes on Wealth, Property, and Estates

Fiscal Federalism and State and Local Government Finance

Filters