Question 1

Market demand is the

Accepted Answer

A) sum of the prices that each individual is willing to pay for each quantity demanded. 
B) sum of the quantity demanded by each individual at each price. 
C) sum of the consumer surplus of each individual. 
D) difference between the maximum amount each individual is willing to pay for a good and the market price. 
E) difference between the market price and the maximum amount each individual is willing to pay for a good. 
A) sum of the prices that each individual is willing to pay for each quantity demanded. 
B) sum of the quantity demanded by each individual at each price. 
C) sum of the consumer surplus of each individual. 
D) difference between the maximum amount each individual is willing to pay for a good and the market price. 
E) difference between the market price and the maximum amount each individual is willing to pay for a good.

Question 2

All of the following statements are true except:

Accepted Answer

A) An externality is a cost or a benefit that affects someone other than the seller or the buyer of a good. 
B) When an electric utility does not consider the cost of pollution when it decides how much power to produce, the result is overproduction. 
C) An electric utility creates an external cost by burning coal. 
D) All externalities create overproduction. 
E) An external cost creates overproduction. 
A) An externality is a cost or a benefit that affects someone other than the seller or the buyer of a good. 
B) When an electric utility does not consider the cost of pollution when it decides how much power to produce, the result is overproduction. 
C) An electric utility creates an external cost by burning coal. 
D) All externalities create overproduction. 
E) An external cost creates overproduction.

Question 3

A used truck has a sticker price of $21,000.Arthur decided that he would pay no more than $19,500 for this truck.He bought the truck for $19,250.Arthur obtained a consumer surplus of

Accepted Answer

A) $21,000. 
B) $19,500. 
C) $19,250. 
D) $1,750. 
E) $250. 
A) $21,000. 
B) $19,500. 
C) $19,250. 
D) $1,750. 
E) $250.

Question 4

Use the figure below to answer the following questions.
   
Figure 5.2.2
-Refer to Figure 5.2.2.If the price is P₀, 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 5

The essence of philosopher Robert Nozick's proposal is that

Accepted Answer

A) fairness works on the basis of fair outcomes. 
B) fairness must be based on fairness of rules. 
C) involuntary exchange is fair. 
D) all of the above 
E) none of the above 
A) fairness works on the basis of fair outcomes. 
B) fairness must be based on fairness of rules. 
C) involuntary exchange is fair. 
D) all of the above 
E) none of the above

Question 6

Use the figure below to answer the following questions.
   
Figure 5.3.1
-Refer to Figure 5.3.1.If the price is $15 a unit,

Accepted Answer

A) production is efficient. 
B) marginal social benefit equals marginal social cost. 
C) deadweight loss is zero. 
D) the sum of consumer surplus and producer surplus is maximized. 
E) all of the above 
A) production is efficient. 
B) marginal social benefit equals marginal social cost. 
C) deadweight loss is zero. 
D) the sum of consumer surplus and producer surplus is maximized. 
E) all of the above

Question 7

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 consumer 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.

Question 8

Markets may not achieve an efficient allocation of resources when there are

Accepted Answer

A) public goods. 
B) external benefits. 
C) monopolies. 
D) subsidies. 
E) all of the above 
A) public goods. 
B) external benefits. 
C) monopolies. 
D) subsidies. 
E) all of the above

Question 9

Use the figure below to answer the following question.
   
Figure 5.3.3
-Consider the demand and supply curves in Figure 5.3.3.If the market is at the competitive equilibrium, which area in the diagram indicates producer surplus?

Accepted Answer

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

Question 10

At West, a restaurant in Vancouver, reservations are essential.At Cibo, a restaurant in downtown Vancouver, reservations are recommended.At Vij's, a restaurant near the University of British Columbia, reservations are not accepted. West allocates scarce table resources by ________, Cibo allocates scarce table resources by ________, and Vij's allocates scarce table resources by ________.

Accepted Answer

A) market price; market price and force; force 
B) personal characteristics; personal characteristics and first-come, first-served; first-come, first-served 
C) a command system; a combination of a command system and first-come, first-served; first-come, first-served 
D) first-come, first-served; first-come, first-served; first-come, first-served 
E) personal characteristics; personal characteristics; first-come, first-served 
A) market price; market price and force; force 
B) personal characteristics; personal characteristics and first-come, first-served; first-come, first-served 
C) a command system; a combination of a command system and first-come, first-served; first-come, first-served 
D) first-come, first-served; first-come, first-served; first-come, first-served 
E) personal characteristics; personal characteristics; first-come, first-served

Question 11

Lotteries allocate resources to

Accepted Answer

A) those who work for the government. 
B) those who come up lucky in a gaming system. 
C) those who work for private firms. 
D) people who are employed by gaming corporations. 
E) those who are in command. 
A) those who work for the government. 
B) those who come up lucky in a gaming system. 
C) those who work for private firms. 
D) people who are employed by gaming corporations. 
E) those who are in command.

Question 12

Adam earns $25,000 a year and Bob earns $45,000 a year, and they both have the same marginal benefit curve.According to the utilitarian view, if a dollar is transferred from Bob to Adam, then

Accepted Answer

A) the change in Adam's marginal benefit plus the change in Bob's marginal benefit equals zero. 
B) Adam's marginal benefit decreases by more than bob's marginal benefit increases. 
C) Adam's marginal benefit increases by more than Bob's marginal benefit decreases. 
D) the change in Adam's marginal benefit plus the change in Bob's marginal benefit is negative. 
E) Bob's marginal benefit increases because he is being kind to Adam. 
A) the change in Adam's marginal benefit plus the change in Bob's marginal benefit equals zero. 
B) Adam's marginal benefit decreases by more than bob's marginal benefit increases. 
C) Adam's marginal benefit increases by more than Bob's marginal benefit decreases. 
D) the change in Adam's marginal benefit plus the change in Bob's marginal benefit is negative. 
E) Bob's marginal benefit increases because he is being kind to Adam.

Question 13

It is efficient to produce an additional shirt if the

Accepted Answer

A) marginal social benefit from producing the shirt exceeds zero. 
B) marginal social benefit of producing the shirt equals zero. 
C) consumer surplus from the additional shirt exceeds its producer surplus. 
D) marginal social benefit from producing the shirt is greater than the marginal social cost of producing it. 
E) producer surplus from the additional shirt exceeds its consumer surplus. 
A) marginal social benefit from producing the shirt exceeds zero. 
B) marginal social benefit of producing the shirt equals zero. 
C) consumer surplus from the additional shirt exceeds its producer surplus. 
D) marginal social benefit from producing the shirt is greater than the marginal social cost of producing it. 
E) producer surplus from the additional shirt exceeds its consumer surplus.

Question 14

Use the information below to answer the following questions.
Fact 5.3.1
Only 1 percent of the world supply of water is fit for human consumption. Some places have more water than they can use; some could use much more than they have. The 1 percent available would be sufficient if only it were in the right place.
-Refer to Fact 5.3.1.If there were a global market in water like there is in oil,

Accepted Answer

A) the supply of water would decrease. 
B) less water would be made available to countries that experience drought. 
C) supply and demand would determine the price of water and those who are willing to pay the equilibrium price would get the water. 
D) the demand for water would increase. 
E) countries with a shortage of water would pay an exorbitant price for water. 
A) the supply of water would decrease. 
B) less water would be made available to countries that experience drought. 
C) supply and demand would determine the price of water and those who are willing to pay the equilibrium price would get the water. 
D) the demand for water would increase. 
E) countries with a shortage of water would pay an exorbitant price for water.

Question 15

An oil painting has an opportunity cost of $1,000.The painting was purchased for $1,500.How much consumer surplus did the buyer obtain?

Accepted Answer

A) $1,500 
B) $1,000 
C) $500 
D) zero 
E) cannot be determined from the information given 
A) $1,500 
B) $1,000 
C) $500 
D) zero 
E) cannot be determined from the information given

Question 16

Consider a downward-sloping demand curve.Consumer surplus is

Accepted Answer

A) the difference between the market price of the good and the cost of the good. 
B) greater on the last unit sold than on the first unit sold. 
C) greater on the first unit sold than on the last unit sold. 
D) equal to price multiplied by quantity sold. 
E) equal to the area below the demand curve. 
A) the difference between the market price of the good and the cost of the good. 
B) greater on the last unit sold than on the first unit sold. 
C) greater on the first unit sold than on the last unit sold. 
D) equal to price multiplied by quantity sold. 
E) equal to the area below the demand curve.

Question 17

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 18

The main idea of fairness is based on which of the following rules? a. The state must enforce laws that establish and protect private property.
B. Goods and services that produce externalities must be owned by the state, monopolies must be eliminated, and common resources must follow the rules of the competitive market.
C. The state must enforce tax laws so that after taxes are paid and benefits are received, the gap between rich and poor is as small as possible.
D. Private property may be transferred from one person to another only by voluntary exchange.

Accepted Answer

A) Rules a and d 
B) Rules b and d 
C) Rules b and c 
D) Rules a and c 
E) The main idea of fairness is not based on any of these rules. 
A) Rules a and d 
B) Rules b and d 
C) Rules b and c 
D) Rules a and c 
E) The main idea of fairness is not based on any of these rules.

Question 19

When demand is perfectly elastic, then consumer surplus is

Accepted Answer

A) infinite. 
B) zero. 
C) 1.00. 
D) -1.00. 
E) between zero and 1.00. 
A) infinite. 
B) zero. 
C) 1.00. 
D) -1.00. 
E) between zero and 1.00.

Question 20

What method of resource allocation depends on willingness-to-pay and ability-to-pay?

Accepted Answer

A) command 
B) lottery 
C) market price 
D) first-come, first-served 
E) force 
A) command 
B) lottery 
C) market price 
D) first-come, first-served 
E) force

Market demand is the

All of the following statements are true except:

A used truck has a sticker price of $21,000.Arthur decided that he would pay no more than $19,500 for this truck.He bought the truck for $19,250.Arthur obtained a consumer surplus of

Use the figure below to answer the following questions. Figure 5.2.2 -Refer to Figure 5.2.2.If the price is P₀, consumer surplus is

The essence of philosopher Robert Nozick's proposal is that

Use the figure below to answer the following questions. Figure 5.3.1 -Refer to Figure 5.3.1.If the price is $15 a unit,

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 consumer surplus is area

Markets may not achieve an efficient allocation of resources when there are

Use the figure below to answer the following question. Figure 5.3.3 -Consider the demand and supply curves in Figure 5.3.3.If the market is at the competitive equilibrium, which area in the diagram indicates producer surplus?

Lotteries allocate resources to

Adam earns $25,000 a year and Bob earns $45,000 a year, and they both have the same marginal benefit curve.According to the utilitarian view, if a dollar is transferred from Bob to Adam, then

It is efficient to produce an additional shirt if the

An oil painting has an opportunity cost of $1,000.The painting was purchased for $1,500.How much consumer surplus did the buyer obtain?

Consider a downward-sloping demand curve.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 demand is perfectly elastic, then consumer surplus is

What method of resource allocation depends on willingness-to-pay and ability-to-pay?

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

Market demand is the

All of the following statements are true except:

A used truck has a sticker price of $21,000.Arthur decided that he would pay no more than $19,500 for this truck.He bought the truck for $19,250.Arthur obtained a consumer surplus of

Use the figure below to answer the following questions. Figure 5.2.2 -Refer to Figure 5.2.2.If the price is P₀, consumer surplus is

The essence of philosopher Robert Nozick's proposal is that

Use the figure below to answer the following questions. Figure 5.3.1 -Refer to Figure 5.3.1.If the price is $15 a unit,

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 consumer surplus is area

Markets may not achieve an efficient allocation of resources when there are

Use the figure below to answer the following question. Figure 5.3.3 -Consider the demand and supply curves in Figure 5.3.3.If the market is at the competitive equilibrium, which area in the diagram indicates producer surplus?

Lotteries allocate resources to

Adam earns $25,000 a year and Bob earns $45,000 a year, and they both have the same marginal benefit curve.According to the utilitarian view, if a dollar is transferred from Bob to Adam, then

It is efficient to produce an additional shirt if the

An oil painting has an opportunity cost of $1,000.The painting was purchased for $1,500.How much consumer surplus did the buyer obtain?

Consider a downward-sloping demand curve.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 demand is perfectly elastic, then consumer surplus is

What method of resource allocation depends on willingness-to-pay and ability-to-pay?

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