Question 1

At the output level corresponding to the efficient quantity of a good,

Accepted Answer

A) the value of the last unit can be negative for some consumer 
B) the value of the last unit to some consumer equals the minimum price some seller must receive for producing it 
C) the distribution of the good is fair 
D) the minimum price some consumer must pay for the last unit equals the value of the unit to some producer 
E) the price is the lowest that a typical firm would ever be willing to accept 
A) the value of the last unit can be negative for some consumer 
B) the value of the last unit to some consumer equals the minimum price some seller must receive for producing it 
C) the distribution of the good is fair 
D) the minimum price some consumer must pay for the last unit equals the value of the unit to some producer 
E) the price is the lowest that a typical firm would ever be willing to accept B

Question 2

Total net benefits gained in a market

Accepted Answer

A) minus any side payments equals total revenue from producing the good (or,equivalently,total expenditure on the good) 
B) is the sum of producer and consumer surplus in that market 
C) is the difference between consumer surplus and producer surplus in that market 
D) are maximized when the market price equals zero 
E) always exceeds the sum of total expenditure on the good and the total cost of providing it 
A) minus any side payments equals total revenue from producing the good (or,equivalently,total expenditure on the good) 
B) is the sum of producer and consumer surplus in that market 
C) is the difference between consumer surplus and producer surplus in that market 
D) are maximized when the market price equals zero 
E) always exceeds the sum of total expenditure on the good and the total cost of providing it B

Question 3

The total producer surplus enjoyed by all sellers in a market

Accepted Answer

A) exceeds the market price 
B) is measured by the area below the market supply curve 
C) is called market producer surplus 
D) is the area below the market demand curve minus the area below the market supply curve 
E) is the area below the market supply curve minus the area below the market price 
A) exceeds the market price 
B) is measured by the area below the market supply curve 
C) is called market producer surplus 
D) is the area below the market demand curve minus the area below the market supply curve 
E) is the area below the market supply curve minus the area below the market price C

Question 4

Economic efficiency

Accepted Answer

A) should be society's main goal 
B) means that no Pareto improvements are possible 
C) cannot coexist with Pareto efficiency 
D) requires that income be distributed fairly 
E) implies that goods can be reallocated in a way that benefits someone 
A) should be society's main goal 
B) means that no Pareto improvements are possible 
C) cannot coexist with Pareto efficiency 
D) requires that income be distributed fairly 
E) implies that goods can be reallocated in a way that benefits someone

Question 5

If a perfectly competitive market is in equilibrium and market demand decreases,which of the following would happen?

Accepted Answer

A) both producer and consumer surplus would increase 
B) both producer and consumer surplus would decrease 
C) producer surplus would decrease and consumer surplus would increase 
D) producer surplus would increase and consumer surplus would decrease 
E) producer and consumer surplus would remain unchanged 
A) both producer and consumer surplus would increase 
B) both producer and consumer surplus would decrease 
C) producer surplus would decrease and consumer surplus would increase 
D) producer surplus would increase and consumer surplus would decrease 
E) producer and consumer surplus would remain unchanged

Question 6

A price ceiling in a perfectly competitive market

Accepted Answer

A) creates more harm for sellers than gain for buyers 
B) creates more harm for buyers than gain for sellers 
C) is effective only it if is set above the equilibrium price 
D) can turn an inefficient outcome into an efficient outcome 
E) is a Pareto improvement 
A) creates more harm for sellers than gain for buyers 
B) creates more harm for buyers than gain for sellers 
C) is effective only it if is set above the equilibrium price 
D) can turn an inefficient outcome into an efficient outcome 
E) is a Pareto improvement

Question 7

Suppose a perfectly competitive market is in equilibrium,and then market supply increases.Which of the following would happen?

Accepted Answer

A) producer surplus would definitely increase and consumer surplus may increase or decrease 
B) producer surplus would definitely decrease and consumer surplus may increase or decrease 
C) consumer surplus would definitely decrease and producer surplus may increase or decrease 
D) consumer surplus would definitely increase and producer surplus may increase or decrease 
E) producer and consumer surplus would remain unchanged 
A) producer surplus would definitely increase and consumer surplus may increase or decrease 
B) producer surplus would definitely decrease and consumer surplus may increase or decrease 
C) consumer surplus would definitely decrease and producer surplus may increase or decrease 
D) consumer surplus would definitely increase and producer surplus may increase or decrease 
E) producer and consumer surplus would remain unchanged

Question 8

A buyer's consumer surplus on a unit of a good is its value to that buyer minus the market price.

Accepted Answer

A) True 
 B)False

Question 9

Taking money from a wealthy individual in order to feed a destitute family would be a Pareto improvement.

Accepted Answer

A) True 
 B)False

Question 10

In order for a Pareto improvement to occur,someone must suffer a loss so that others may benefit from the improvement.

Accepted Answer

A) True 
 B)False

Question 11

If the price floor of a market is raised,which of the following would happen?

Accepted Answer

A) The consumer surplus would increase,the producer surplus would decrease and the dead weight loss would decrease 
B) The consumer surplus would decrease,the producer surplus would decrease and the dead weight loss would increase 
C) The consumer surplus,the producer surplus and the dead weight loss would all decrease 
D) The consumer surplus,the producer surplus and the dead weight loss would all increase 
E) The consumer surplus would decrease,the producer surplus would increase and the dead weight loss would increase 
A) The consumer surplus would increase,the producer surplus would decrease and the dead weight loss would decrease 
B) The consumer surplus would decrease,the producer surplus would decrease and the dead weight loss would increase 
C) The consumer surplus,the producer surplus and the dead weight loss would all decrease 
D) The consumer surplus,the producer surplus and the dead weight loss would all increase 
E) The consumer surplus would decrease,the producer surplus would increase and the dead weight loss would increase

Question 12

The market demand curve indicates

Accepted Answer

A) the minimum price someone would be willing to pay for each unit of a good 
B) the cost of producing each unit of a good 
C) the price someone pays for each unit of a good 
D) how many people will purchase a good at each possible price 
E) the maximum price someone would be willing to pay for each unit of a good 
A) the minimum price someone would be willing to pay for each unit of a good 
B) the cost of producing each unit of a good 
C) the price someone pays for each unit of a good 
D) how many people will purchase a good at each possible price 
E) the maximum price someone would be willing to pay for each unit of a good

Question 13

Consider a market with a price floor.If the price floor is lowered,which of the following would happen?

Accepted Answer

A) The consumer surplus would increase,the producer surplus would decrease and the dead weight loss would decrease 
B) The consumer surplus would decrease,the producer surplus would decrease and the dead weight loss would increase 
C) The consumer surplus,the producer surplus and the dead weight loss would all decrease 
D) The consumer surplus,the producer surplus and the dead weight loss would all increase 
E) The consumer surplus would decrease,the producer surplus would increase and the dead weight loss would increase 
A) The consumer surplus would increase,the producer surplus would decrease and the dead weight loss would decrease 
B) The consumer surplus would decrease,the producer surplus would decrease and the dead weight loss would increase 
C) The consumer surplus,the producer surplus and the dead weight loss would all decrease 
D) The consumer surplus,the producer surplus and the dead weight loss would all increase 
E) The consumer surplus would decrease,the producer surplus would increase and the dead weight loss would increase

Question 14

A government program would impose a 25-cent tax on each pack of cigarettes in order to fund welfare programs.Such a policy

Accepted Answer

A) is not a Pareto improvement 
B) is an example of an economically inefficient economy 
C) would clearly not increase tax revenues 
D) is a Pareto improvement 
E) could only occur in a fair economy 
A) is not a Pareto improvement 
B) is an example of an economically inefficient economy 
C) would clearly not increase tax revenues 
D) is a Pareto improvement 
E) could only occur in a fair economy

Question 15

A welfare loss in a market

Accepted Answer

A) is the dollar difference between consumer surplus and producer surplus 
B) is measured as the area above the market price and to the left of the market quantity 
C) is the dollar value of potential benefits not achieved due to inefficiency in that market 
D) is typically due to government intervention in that market 
E) is typically minimized when a government sets a ceiling price 
A) is the dollar difference between consumer surplus and producer surplus 
B) is measured as the area above the market price and to the left of the market quantity 
C) is the dollar value of potential benefits not achieved due to inefficiency in that market 
D) is typically due to government intervention in that market 
E) is typically minimized when a government sets a ceiling price

Question 16

-In Figure 14-1,which area represents consumer surplus?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
E) E 
A) A 
B) B 
C) C 
D) D 
E) E

Question 17

Because the market demand curve slopes downward

Accepted Answer

A) each unit of a good is worth more than the market price 
B) each unit of a good is worth the market price paid for each 
C) each unit of a good is worth less than the previous units are worth 
D) diminishing marginal returns have set it 
E) the market is efficient 
A) each unit of a good is worth more than the market price 
B) each unit of a good is worth the market price paid for each 
C) each unit of a good is worth less than the previous units are worth 
D) diminishing marginal returns have set it 
E) the market is efficient

Question 18

When individuals trade in open markets,

Accepted Answer

A) Pareto improvements occur 
B) Pareto improvements cannot occur 
C) the markets are economically efficient 
D) the markets are Pareto efficient 
E) there are barriers to trade 
A) Pareto improvements occur 
B) Pareto improvements cannot occur 
C) the markets are economically efficient 
D) the markets are Pareto efficient 
E) there are barriers to trade

Question 19

If all opportunities for Pareto improvements have been exhausted,

Accepted Answer

A) economic efficiency has been achieved 
B) the allocation of goods and services is fair 
C) perfect competition has been achieved 
D) the economy is in disequilibrium 
E) economic inefficiency has been achieved 
A) economic efficiency has been achieved 
B) the allocation of goods and services is fair 
C) perfect competition has been achieved 
D) the economy is in disequilibrium 
E) economic inefficiency has been achieved

Question 20

Economic efficiency is achieved

Accepted Answer

A) when all resources are fairly allocated 
B) when an economy is producing the maximum possible amount of goods and services 
C) when production or allocation of goods cannot be rearranged to make one person better off while harming no one else. 
D) if production or allocation of goods cannot be rearranged to make at least one person better off 
E) if production or allocation of goods cannot be rearranged in a way the benefits more people than it harms 
A) when all resources are fairly allocated 
B) when an economy is producing the maximum possible amount of goods and services 
C) when production or allocation of goods cannot be rearranged to make one person better off while harming no one else. 
D) if production or allocation of goods cannot be rearranged to make at least one person better off 
E) if production or allocation of goods cannot be rearranged in a way the benefits more people than it harms

At the output level corresponding to the efficient quantity of a good,

Total net benefits gained in a market

The total producer surplus enjoyed by all sellers in a market

Economic efficiency

If a perfectly competitive market is in equilibrium and market demand decreases,which of the following would happen?

A price ceiling in a perfectly competitive market

Suppose a perfectly competitive market is in equilibrium,and then market supply increases.Which of the following would happen?

A buyer's consumer surplus on a unit of a good is its value to that buyer minus the market price.

Taking money from a wealthy individual in order to feed a destitute family would be a Pareto improvement.

In order for a Pareto improvement to occur,someone must suffer a loss so that others may benefit from the improvement.

If the price floor of a market is raised,which of the following would happen?

The market demand curve indicates

Consider a market with a price floor.If the price floor is lowered,which of the following would happen?

A government program would impose a 25-cent tax on each pack of cigarettes in order to fund welfare programs.Such a policy

A welfare loss in a market

-In Figure 14-1,which area represents consumer surplus?

Because the market demand curve slopes downward

When individuals trade in open markets,

If all opportunities for Pareto improvements have been exhausted,

Economic efficiency is achieved

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

Exam 15: Economic Efficiency and the Competitive Ideal

At the output level corresponding to the efficient quantity of a good,

Total net benefits gained in a market

The total producer surplus enjoyed by all sellers in a market

Economic efficiency

If a perfectly competitive market is in equilibrium and market demand decreases,which of the following would happen?

A price ceiling in a perfectly competitive market

Suppose a perfectly competitive market is in equilibrium,and then market supply increases.Which of the following would happen?

A buyer's consumer surplus on a unit of a good is its value to that buyer minus the market price.

Taking money from a wealthy individual in order to feed a destitute family would be a Pareto improvement.

In order for a Pareto improvement to occur,someone must suffer a loss so that others may benefit from the improvement.

If the price floor of a market is raised,which of the following would happen?

The market demand curve indicates

Consider a market with a price floor.If the price floor is lowered,which of the following would happen?

A government program would impose a 25-cent tax on each pack of cigarettes in order to fund welfare programs.Such a policy

A welfare loss in a market

-In Figure 14-1,which area represents consumer surplus?

Because the market demand curve slopes downward

When individuals trade in open markets,

If all opportunities for Pareto improvements have been exhausted,

Economic efficiency is achieved

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters