Question 1

A consumer will buy a good when

Accepted Answer

A) consumer surplus is greater than or equal to the price. 
B) marginal benefit is positive. 
C) marginal benefit is greater than or equal to the price. 
D) consumer surplus is positive. 
E) consumer surplus is greater than producer surplus. 
A) consumer surplus is greater than or equal to the price. 
B) marginal benefit is positive. 
C) marginal benefit is greater than or equal to the price. 
D) consumer surplus is positive. 
E) consumer surplus is greater than producer surplus.

Question 2

An external cost

Accepted Answer

A) is a marginal benefit. 
B) results in underproduction. 
C) is a payment from the government to a producer. 
D) is a cost that affects someone other than the seller. 
E) is a payment from a producer to the government. 
A) is a marginal benefit. 
B) results in underproduction. 
C) is a payment from the government to a producer. 
D) is a cost that affects someone other than the seller. 
E) is a payment from a producer to the government.

Question 3

According to John Rawls' modified utilitarianism, income should be redistributed until

Accepted Answer

A) incomes are equal. 
B) opportunities are equal. 
C) the poorest person is as well off as possible. 
D) the poorest person is as well off as possible, after incorporating the costs of income transfers. 
E) the big tradeoff is eliminated. 
A) incomes are equal. 
B) opportunities are equal. 
C) the poorest person is as well off as possible. 
D) the poorest person is as well off as possible, after incorporating the costs of income transfers. 
E) the big tradeoff is eliminated.

Question 4

If we produce one more bottle of water,

Accepted Answer

A) we cannot be acting efficiently. 
B) we incur a marginal cost. 
C) we must move away from market equilibrium. 
D) the price of a bottle of water must rise. 
E) the marginal social benefit from bottled water increases. 
A) we cannot be acting efficiently. 
B) we incur a marginal cost. 
C) we must move away from market equilibrium. 
D) the price of a bottle of water must rise. 
E) the marginal social benefit from bottled water increases.

Question 5

Which of the following ideas describes the concept of "utilitarianism"?
I. Utilitarianism was introduced in the 1930s.
II. Utilitarians believed that a society should strive to make as many people as happy as possible.
III. Utilitarians claimed that taking money from rich people and giving it to poorer people would not make an economy better off.

Accepted Answer

A) I only 
B) II only 
C) I and III 
D) II and III 
E) I, II, and III 
A) I only 
B) II only 
C) I and III 
D) II and III 
E) I, II, and III

Question 6

According to the "big tradeoff,"

Accepted Answer

A) income transfers reduce efficiency. 
B) efficiency requires income transfers. 
C) a more equally shared pie results in a larger pie. 
D) property rights and voluntary exchange insure equality of opportunity. 
E) income transfers should make the poorest person as well off as possible. 
A) income transfers reduce efficiency. 
B) efficiency requires income transfers. 
C) a more equally shared pie results in a larger pie. 
D) property rights and voluntary exchange insure equality of opportunity. 
E) income transfers should make the poorest person as well off as possible.

Question 7

As a method of resource allocation, force

Accepted Answer

A) plays a crucial negative role but not a positive role. 
B) plays a crucial positive role but not a negative role. 
C) plays a crucial role for both good and ill. 
D) is always better than majority rule. 
E) is always better than first-come, first-served. 
A) plays a crucial negative role but not a positive role. 
B) plays a crucial positive role but not a negative role. 
C) plays a crucial role for both good and ill. 
D) is always better than majority rule. 
E) is always better than first-come, first-served.

Question 8

Use the figure below to answer the following questions.
   
Figure 5.2.1
-Consider the demand curve in Figure 5.2.1. What is the value of the first unit of the good?

Accepted Answer

A) $10 
B) $9 
C) $8 
D) $5 
E) $4 
A) $10 
B) $9 
C) $8 
D) $5 
E) $4

Question 9

The symmetry principle is based on

Accepted Answer

A) the idea that income should be redistributed from the rich to the poor. 
B) the idea that people in similar situations should be treated similarly. 
C) the fact that taxes create a deadweight loss. 
D) the idea that markets operate fairly. 
E) the idea that there is symmetry between buyers and sellers in a market. 
A) the idea that income should be redistributed from the rich to the poor. 
B) the idea that people in similar situations should be treated similarly. 
C) the fact that taxes create a deadweight loss. 
D) the idea that markets operate fairly. 
E) the idea that there is symmetry between buyers and sellers in a market.

Question 10

A supply curve is

Accepted Answer

A) the same as a production possibilities frontier. 
B) a marginal social benefit curve. 
C) a marginal benefit curve. 
D) a marginal cost curve. 
E) a downward-sloping curve. 
A) the same as a production possibilities frontier. 
B) a marginal social benefit curve. 
C) a marginal benefit curve. 
D) a marginal cost curve. 
E) a downward-sloping curve.

Question 11

Table 5.2.3
  
-Consider the demand and supply curves in Figure 5.2.3. If the market is at the competitive equilibrium, which area in the diagram indicates the cost of producing the quantity sold?

Accepted Answer

A) ABC 
B) AEC 
C) EBC 
D) 0BCD 
E) 0ECD 
A) ABC 
B) AEC 
C) EBC 
D) 0BCD 
E) 0ECD

Question 12

Which of the following is true?

Accepted Answer

A) When resources are allocated on the basis of personal characteristics, all people who are willing and able to pay the price get the resource. 
B) When the range of activities to be monitored is large and complex, a command system allocates resources better than a market price. 
C) When a market price allocates resources, some people who are willing and able to pay that price don't get the resource. 
D) Force provides the state with an effective method of transferring wealth from the rich to the poor. 
E) When resources are allocated by force, people with the "right" characteristics get the resources. 
A) When resources are allocated on the basis of personal characteristics, all people who are willing and able to pay the price get the resource. 
B) When the range of activities to be monitored is large and complex, a command system allocates resources better than a market price. 
C) When a market price allocates resources, some people who are willing and able to pay that price don't get the resource. 
D) Force provides the state with an effective method of transferring wealth from the rich to the poor. 
E) When resources are allocated by force, people with the "right" characteristics get the resources.

Question 13

An idea of fairness that emphasizes equality of opportunity is

Accepted Answer

A) fair results. 
B) fair rules. 
C) fair incomes. 
D) utilitarianism. 
E) modified utilitarianism. 
A) fair results. 
B) fair rules. 
C) fair incomes. 
D) utilitarianism. 
E) modified utilitarianism.

Question 14

Use the figure below to answer the following questions.
   
Figure 5.2.2
-Refer to Figure 5.2.2 If the price is P₁, consumer surplus is

Accepted Answer

A) A. 
B) B plus C. 
C) D plus E. 
D) A plus B plus C. 
E) A plus B plus C plus D plus E. 
A) A. 
B) B plus C. 
C) D plus E. 
D) A plus B plus C. 
E) A plus B plus C plus D plus E.

Question 15

Use the figure below to answer the following questions.
   
Figure 5.3.1
-Refer to Figure 5.3.1. If the quantity produced is 100,

Accepted Answer

A) marginal social benefit exceeds marginal social cost. 
B) marginal social cost exceeds marginal social benefit. 
C) production is efficient. 
D) marginal social benefit is minimized. 
E) deadweight loss is zero. 
A) marginal social benefit exceeds marginal social cost. 
B) marginal social cost exceeds marginal social benefit. 
C) production is efficient. 
D) marginal social benefit is minimized. 
E) deadweight loss is zero.

Question 16

When a market price allocates a scarce resource,

Accepted Answer

A) everyone in the economy can use the resource. 
B) only those who show interest can use the resource. 
C) willingness-to-pay is not an issue. 
D) ability to pay for the resource is less important than willingness-to-pay. 
E) only those who are willing and able to pay get the resource. 
A) everyone in the economy can use the resource. 
B) only those who show interest can use the resource. 
C) willingness-to-pay is not an issue. 
D) ability to pay for the resource is less important than willingness-to-pay. 
E) only those who are willing and able to pay get the resource.

Question 17

Use the figure below to answer the following questions.
   
Figure 5.2.1
-Consider Figure 5.2.1. When the price is $4, what is the consumer surplus from the second unit of the good?

Accepted Answer

A) $7 
B) $3 
C) $4 
D) $1 
E) $10 
A) $7 
B) $3 
C) $4 
D) $1 
E) $10

Question 18

The marginal cost of producing one more hot dog is $1.00. The price of a hot dog is $1.50. The producer surplus from selling one more hotdog is

Accepted Answer

A) $1.00. 
B) $1.50. 
C) $0.50. 
D) zero. 
E) $2.50. 
A) $1.00. 
B) $1.50. 
C) $0.50. 
D) zero. 
E) $2.50.

Question 19

Bill and Ted each consume 15 chocolate bars at the current price. If Bill's demand for chocolate bars is more elastic than Ted's demand, then

Accepted Answer

A) Bill's willingness to pay for the last chocolate bar is greater than Ted's. 
B) Ted's willingness to pay for the last chocolate bar is greater than Bill's. 
C) Bill's consumer surplus is greater than Ted's. 
D) Ted's consumer surplus is greater than Bill's. 
E) Bill's consumer surplus equals Ted's. 
A) Bill's willingness to pay for the last chocolate bar is greater than Ted's. 
B) Ted's willingness to pay for the last chocolate bar is greater than Bill's. 
C) Bill's consumer surplus is greater than Ted's. 
D) Ted's consumer surplus is greater than Bill's. 
E) Bill's consumer surplus equals Ted's.

Question 20

The first-come, first-served method of resource allocation allocates resources to

Accepted Answer

A) the wealthiest. 
B) people who are willing to take risks. 
C) people who are not willing to take risks. 
D) the first in line. 
E) honest, hard-working people. 
A) the wealthiest. 
B) people who are willing to take risks. 
C) people who are not willing to take risks. 
D) the first in line. 
E) honest, hard-working people.

Exam 5: Efficiency and Equity

A consumer will buy a good when

An external cost

According to John Rawls' modified utilitarianism, income should be redistributed until

If we produce one more bottle of water,

According to the "big tradeoff,"

As a method of resource allocation, force

Use the figure below to answer the following questions. Figure 5.2.1 -Consider the demand curve in Figure 5.2.1. What is the value of the first unit of the good?

The symmetry principle is based on

A supply curve is

Table 5.2.3 -Consider the demand and supply curves in Figure 5.2.3. If the market is at the competitive equilibrium, which area in the diagram indicates the cost of producing the quantity sold?

Which of the following is true?

An idea of fairness that emphasizes equality of opportunity is

Use the figure below to answer the following questions. Figure 5.2.2 -Refer to Figure 5.2.2 If the price is P₁, consumer surplus is

Use the figure below to answer the following questions. Figure 5.3.1 -Refer to Figure 5.3.1. If the quantity produced is 100,

When a market price allocates a scarce resource,

Use the figure below to answer the following questions. Figure 5.2.1 -Consider Figure 5.2.1. When the price is $4, what is the consumer surplus from the second unit of the good?

The marginal cost of producing one more hot dog is $1.00. The price of a hot dog is $1.50. The producer surplus from selling one more hotdog is

Bill and Ted each consume 15 chocolate bars at the current price. If Bill's demand for chocolate bars is more elastic than Ted's demand, then

The first-come, first-served method of resource allocation allocates resources to

What Is Economics

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Governments Actions in Markets

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Possibilities, Preferences, and Choices

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Monopolistic Competition

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Economic Inequality

Measuring Gdp and Economic Growth

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Money, the Price Level, and Inflation

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