Question 1

Choose the correct statement.

Accepted Answer

A) The competitive market pushes the quantity produced to its efficient level. 
B) When the efficient quantity is produced in a competitive market, consumer surplus is maximized. 
C) Competitive equilibrium occurs when demand equals supply. 
D) When the efficient quantity is produced in a competitive market, producer surplus is maximized. 
E) When the efficient quantity is produced in a competitive market, producer surplus is minimized. 
A) The competitive market pushes the quantity produced to its efficient level. 
B) When the efficient quantity is produced in a competitive market, consumer surplus is maximized. 
C) Competitive equilibrium occurs when demand equals supply. 
D) When the efficient quantity is produced in a competitive market, producer surplus is maximized. 
E) When the efficient quantity is produced in a competitive market, producer surplus is minimized. A

Question 2

Use the figure below to answer the following questions.
   
Figure 5.3.2
-Refer to Figure 5.3.2.If the level of output is 150 units, the producer surplus is area

Accepted Answer

A) BCF. 
B) ACG. 
C) DCE. 
D) ACH. 
E) HCG. 
A) BCF. 
B) ACG. 
C) DCE. 
D) ACH. 
E) HCG. E

Question 3

If production is not at an efficient level, which of the following must be true?

Accepted Answer

A) Marginal social benefit exceeds marginal social cost. 
B) Marginal social cost exceeds marginal social benefit. 
C) Production will increase. 
D) Production will decrease. 
E) none of the above 
A) Marginal social benefit exceeds marginal social cost. 
B) Marginal social cost exceeds marginal social benefit. 
C) Production will increase. 
D) Production will decrease. 
E) none of the above E

Question 4

Use the figure below to answer the following questions.
   
Figure 5.3.1
-Refer to Figure 5.3.1.If the quantity produced is 200,

Accepted Answer

A) a deadweight loss exists. 
B) the sum of consumer surplus and producer surplus is maximized. 
C) production is efficient. 
D) the sum of consumer surplus and producer surplus is zero. 
E) deadweight loss is minimized. 
A) a deadweight loss exists. 
B) the sum of consumer surplus and producer surplus is maximized. 
C) production is efficient. 
D) the sum of consumer surplus and producer surplus is zero. 
E) deadweight loss is minimized.

Question 5

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 6

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 7

Charlene is willing to pay $5.00 for a sandwich.If the price of a sandwich is ________, Charlene ________.

Accepted Answer

A) $4.00; does not receive any consumer surplus 
B) $4.00; receives a consumer surplus 
C) $6.00; receives a consumer surplus 
D) $6.00; receives a marginal cost 
E) $4.00; receives a producer surplus 
A) $4.00; does not receive any consumer surplus 
B) $4.00; receives a consumer surplus 
C) $6.00; receives a consumer surplus 
D) $6.00; receives a marginal cost 
E) $4.00; receives a producer surplus

Question 8

Sunscreen factories are required to limit production to 100 bottles a day, which is less than the efficient quantity.The 100 bottles could be allocated to beachgoers by ________, which is ________ by the fair rules idea of fairness and ________ by the fair results idea of fairness.

Accepted Answer

A) first-come first-served; fair; unfair 
B) personal characteristics; fair; fair 
C) force; unfair; fair 
D) majority rule; fair; fair 
E) first-come first-served; fair; fair 
A) first-come first-served; fair; unfair 
B) personal characteristics; fair; fair 
C) force; unfair; fair 
D) majority rule; fair; fair 
E) first-come first-served; fair; fair

Question 9

Choose the correct statement.

Accepted Answer

A) Producer surplus is an external cost. 
B) Consumer surplus is an external benefit. 
C) A government subsidy paid to a producer is an external benefit. 
D) Consumer surplus is an external cost. 
E) Subsidies lead to overproduction. 
A) Producer surplus is an external cost. 
B) Consumer surplus is an external benefit. 
C) A government subsidy paid to a producer is an external benefit. 
D) Consumer surplus is an external cost. 
E) Subsidies lead to overproduction.

Question 10

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

Accepted Answer

A) $0 
B) $1 
C) $2 
D) $3 
E) $4 
A) $0 
B) $1 
C) $2 
D) $3 
E) $4

Question 11

Sally and Eric are the only people in an economy.Sally buys 3 bottles of water when the price is $2 a bottle and 4 bottles of water when the price is $1 a bottle.Eric buys 10 bottles of water when the price is $0.50 a bottle and 5 bottles of water when the price is $1 a bottle.In the market for water, the quantity demanded

Accepted Answer

A) increases as the price rises. 
B) is 4 bottles at a price of $1 a bottle. 
C) increases as the price falls. 
D) is 8 bottles at a price of $2 a bottle. 
E) is 15 bottles at a price of $0.50 a bottle. 
A) increases as the price rises. 
B) is 4 bottles at a price of $1 a bottle. 
C) increases as the price falls. 
D) is 8 bottles at a price of $2 a bottle. 
E) is 15 bottles at a price of $0.50 a bottle.

Question 12

When the efficient quantity is produced

Accepted Answer

A) marginal social benefit equals marginal social cost. 
B) the quantity demanded equals the quantity supplied. 
C) resources are used in the activities in which they are most highly valued. 
D) the sum of consumer surplus and producer surplus is maximized. 
E) all of the above. 
A) marginal social benefit equals marginal social cost. 
B) the quantity demanded equals the quantity supplied. 
C) resources are used in the activities in which they are most highly valued. 
D) the sum of consumer surplus and producer surplus is maximized. 
E) all of the above.

Question 13

Use the figure below to answer the following questions.
   
Figure 5.2.1
-Consider the demand curve in Figure 5.2.1.If the price of the good is $4, what is the consumer surplus?

Accepted Answer

A) $32.50 
B) $25.00 
C) $20.00 
D) $12.50 
E) none of the above 
A) $32.50 
B) $25.00 
C) $20.00 
D) $12.50 
E) none of the above

Question 14

Alvin Roth of Harvard University designed a system that matches donated kidneys to recipients waiting for such donations.This system takes into account the needs of each perspective recipient, their blood type, and the urgency of their case.Based on this information, this allocation method for kidneys is

Accepted Answer

A) first-come, first-served. 
B) force. 
C) personal characteristics. 
D) a contest. 
E) a lottery. 
A) first-come, first-served. 
B) force. 
C) personal characteristics. 
D) a contest. 
E) a lottery.

Question 15

Which of the following lead to an inefficient outcome? I. Decreasing marginal social benefit
II. Taxes
III. High transactions cost

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 16

If resources are allocated efficiently,

Accepted Answer

A) consumer surplus exceeds producer surplus. 
B) producer surplus exceeds consumer surplus. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) marginal social benefit is maximized. 
E) marginal social cost is minimized. 
A) consumer surplus exceeds producer surplus. 
B) producer surplus exceeds consumer surplus. 
C) the sum of consumer surplus and producer surplus is maximized. 
D) marginal social benefit is maximized. 
E) marginal social cost is minimized.

Question 17

Lotteries work best

Accepted Answer

A) under any circumstances. 
B) under the first-come, first served allocation method. 
C) when there is no effective way to distinguish among potential users of a scarce resource. 
D) when potential users of scarce resources are unknown. 
E) under a command system. 
A) under any circumstances. 
B) under the first-come, first served allocation method. 
C) when there is no effective way to distinguish among potential users of a scarce resource. 
D) when potential users of scarce resources are unknown. 
E) under a command system.

Question 18

The price of pizza increases.Everything else remaining the same, the consumer surplus from pizza

Accepted Answer

A) increases. 
B) is greater than the producer surplus from pizza. 
C) is less than the producer surplus from pizza. 
D) does not change. 
E) decreases. 
A) increases. 
B) is greater than the producer surplus from pizza. 
C) is less than the producer surplus from pizza. 
D) does not change. 
E) decreases.

Question 19

Consumer surplus is

Accepted Answer

A) the difference between the maximum price consumers are willing to pay and the minimum price producers are willing to accept. 
B) the excess of the benefit received from a good over the amount paid for it. 
C) the total value to consumers of a good. 
D) equal to the area under the demand curve. 
E) the total amount paid for a good. 
A) the difference between the maximum price consumers are willing to pay and the minimum price producers are willing to accept. 
B) the excess of the benefit received from a good over the amount paid for it. 
C) the total value to consumers of a good. 
D) equal to the area under the demand curve. 
E) the total amount paid for a good.

Question 20

The market for strawberries is perfectly competitive.Joe and Haley are consuming the same amount of strawberries, but Joe's demand is much more elastic than Haley's.Which statement is true?

Accepted Answer

A) Joe's consumer surplus exceeds Haley's. 
B) Haley's consumer surplus equals Joe's. 
C) Haley's consumer surplus exceeds Joe's. 
D) In comparing consumer surpluses, no statement can be made. 
E) Any comparison of consumer surplus depends on the price of strawberries. 
A) Joe's consumer surplus exceeds Haley's. 
B) Haley's consumer surplus equals Joe's. 
C) Haley's consumer surplus exceeds Joe's. 
D) In comparing consumer surpluses, no statement can be made. 
E) Any comparison of consumer surplus depends on the price of strawberries.

Choose the correct statement.

Use the figure below to answer the following questions. Figure 5.3.2 -Refer to Figure 5.3.2.If the level of output is 150 units, the producer surplus is area

If production is not at an efficient level, which of the following must be true?

Use the figure below to answer the following questions. Figure 5.3.1 -Refer to Figure 5.3.1.If the quantity produced is 200,

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

The symmetry principle is based on

Charlene is willing to pay $5.00 for a sandwich.If the price of a sandwich is , Charlene .

Sunscreen factories are required to limit production to 100 bottles a day, which is less than the efficient quantity.The 100 bottles could be allocated to beachgoers by , which is by the fair rules idea of fairness and by the fair results idea of fairness.

Choose the correct statement.

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

When the efficient quantity is produced

Use the figure below to answer the following questions. Figure 5.2.1 -Consider the demand curve in Figure 5.2.1.If the price of the good is $4, what is the consumer surplus?

Which of the following lead to an inefficient outcome? I. Decreasing marginal social benefit II. Taxes III. High transactions cost

If resources are allocated efficiently,

Lotteries work best

The price of pizza increases.Everything else remaining the same, the consumer surplus from pizza

Consumer surplus is

The market for strawberries is perfectly competitive.Joe and Haley are consuming the same amount of strawberries, but Joe's demand is much more elastic than Haley's.Which statement is true?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

Exam 5: Efficiency and Equity

Choose the correct statement.

Use the figure below to answer the following questions. Figure 5.3.2 -Refer to Figure 5.3.2.If the level of output is 150 units, the producer surplus is area

If production is not at an efficient level, which of the following must be true?

Use the figure below to answer the following questions. Figure 5.3.1 -Refer to Figure 5.3.1.If the quantity produced is 200,

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

The symmetry principle is based on

Charlene is willing to pay $5.00 for a sandwich.If the price of a sandwich is ________, Charlene ________.

Sunscreen factories are required to limit production to 100 bottles a day, which is less than the efficient quantity.The 100 bottles could be allocated to beachgoers by ________, which is ________ by the fair rules idea of fairness and ________ by the fair results idea of fairness.

Choose the correct statement.

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

When the efficient quantity is produced

Use the figure below to answer the following questions. Figure 5.2.1 -Consider the demand curve in Figure 5.2.1.If the price of the good is $4, what is the consumer surplus?

Which of the following lead to an inefficient outcome? I. Decreasing marginal social benefit II. Taxes III. High transactions cost

If resources are allocated efficiently,

Lotteries work best

The price of pizza increases.Everything else remaining the same, the consumer surplus from pizza

Consumer surplus is

The market for strawberries is perfectly competitive.Joe and Haley are consuming the same amount of strawberries, but Joe's demand is much more elastic than Haley's.Which statement is true?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

Charlene is willing to pay $5.00 for a sandwich.If the price of a sandwich is , Charlene .

Sunscreen factories are required to limit production to 100 bottles a day, which is less than the efficient quantity.The 100 bottles could be allocated to beachgoers by , which is by the fair rules idea of fairness and by the fair results idea of fairness.