Question 1

What is the producer surplus for the market from the production of the 100th unit of a good?

Accepted Answer

A) the marginal cost of producing the 100th unit 
B) the marginal benefit from the 100th unit 
C) the opportunity cost of producing the 100th unit 
D) the marginal social benefit from the 100th unit minus the marginal cost of producing the 100th unit 
E) the price paid for the 100th unit minus the marginal social cost of producing the 100th unit 
A) the marginal cost of producing the 100th unit 
B) the marginal benefit from the 100th unit 
C) the opportunity cost of producing the 100th unit 
D) the marginal social benefit from the 100th unit minus the marginal cost of producing the 100th unit 
E) the price paid for the 100th unit minus the marginal social cost of producing the 100th unit

Question 2

Contests do a good job in resource allocation

Accepted Answer

A) under any circumstances. 
B) when the efforts of the players are easy to monitor and reward directly. 
C) when the efforts of the players are hard to monitor and reward directly. 
D) when the first-come, first-served allocation method has failed. 
E) only under a command system. 
A) under any circumstances. 
B) when the efforts of the players are easy to monitor and reward directly. 
C) when the efforts of the players are hard to monitor and reward directly. 
D) when the first-come, first-served allocation method has failed. 
E) only under a command system.

Question 3

The maximum price a consumer is willing to pay for a good is the

Accepted Answer

A) consumer surplus. 
B) value of the good. 
C) opportunity cost of producing the good. 
D) minimum supply-price. 
E) marginal cost of the good. 
A) consumer surplus. 
B) value of the good. 
C) opportunity cost of producing the good. 
D) minimum supply-price. 
E) marginal cost of the good.

Question 4

When the efficient quantity is produced

Accepted Answer

A) total consumer surplus is zero. 
B) total producer surplus is zero. 
C) consumer surplus exceeds producer surplus by the greatest possible amount. 
D) producer surplus exceeds consumer surplus by the greatest possible amount. 
E) the sum of consumer surplus and producer surplus is maximized. 
A) total consumer surplus is zero. 
B) total producer surplus is zero. 
C) consumer surplus exceeds producer surplus by the greatest possible amount. 
D) producer surplus exceeds consumer surplus by the greatest possible amount. 
E) the sum of consumer surplus and producer surplus is maximized.

Question 5

Consider the market for hot dogs.If this market becomes a monopoly, then there will be

Accepted Answer

A) underproduction of hot dogs. 
B) overproduction of hot dogs. 
C) a deadweight loss in the market for hot dogs. 
D) an efficient quantity of hot dogs. 
E) both A and C are correct. 
A) underproduction of hot dogs. 
B) overproduction of hot dogs. 
C) a deadweight loss in the market for hot dogs. 
D) an efficient quantity of hot dogs. 
E) both A and C are correct.

Question 6

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 7

Marginal cost

Accepted Answer

A) is always less than price. 
B) can be negative. 
C) is the minimum price a producer must receive to induce him to offer one more unit of a good or service for sale. 
D) is greater than price. 
E) decreases as more of a good or service is produced. 
A) is always less than price. 
B) can be negative. 
C) is the minimum price a producer must receive to induce him to offer one more unit of a good or service for sale. 
D) is greater than price. 
E) decreases as more of a good or service is produced.

Question 8

Figure 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 9

Which of the following can lead to an inefficient outcome? I. Price regulations
II. Increasing marginal cost
III. Monopoly

Accepted Answer

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

Question 10

A market demand curve is constructed by

Accepted Answer

A) adding the prices all consumers are willing to pay for any given quantity. 
B) determining the quantity supplied by all producers at all possible prices. 
C) subtracting the quantity supplied by all producers from the quantity demanded by all individuals at each price. 
D) adding the quantities demanded by all individuals at each price. 
E) subtracting the quantity demanded by all individuals from the quantity supplied by all producers at each price. 
A) adding the prices all consumers are willing to pay for any given quantity. 
B) determining the quantity supplied by all producers at all possible prices. 
C) subtracting the quantity supplied by all producers from the quantity demanded by all individuals at each price. 
D) adding the quantities demanded by all individuals at each price. 
E) subtracting the quantity demanded by all individuals from the quantity supplied by all producers at each price.

Question 11

If the owner of an apartment building rents only to married couples over the age of 30, the method of resource allocation is

Accepted Answer

A) majority rule. 
B) contest. 
C) personal characteristics. 
D) market price. 
E) force. 
A) majority rule. 
B) contest. 
C) personal characteristics. 
D) market price. 
E) force.

Question 12

One big problem with the utilitarian ideal is that it

Accepted Answer

A) ignores fairness. 
B) ignores equality. 
C) ignores the costs of making income transfers. 
D) all of the above 
E) none of the above 
A) ignores fairness. 
B) ignores equality. 
C) ignores the costs of making income transfers. 
D) all of the above 
E) none of the above

Question 13

Use the figure below to answer the following questions.
   
Figure 5.2.2
-Refer to Figure 5.2.2 If the price falls from P₁ to P₀, then the change in consumer surplus is

Accepted Answer

A) A. 
B) A + B. 
C) A + B + C. 
D) B + C. 
E) A + B + D. 
A) A. 
B) A + B. 
C) A + B + C. 
D) B + C. 
E) A + B + D.

Question 14

When a deadweight loss occurs in a market, we can be certain that

Accepted Answer

A) taxes have been imposed in the market. 
B) the market is a monopoly. 
C) there is underproduction in the market. 
D) the entire economy experiences a loss. 
E) both A and C. 
A) taxes have been imposed in the market. 
B) the market is a monopoly. 
C) there is underproduction in the market. 
D) the entire economy experiences a loss. 
E) both A and C.

Question 15

Use the figure below to answer the following questions.
   
Figure 5.2.2
-Refer to Figure 5.2.2.If the price is P₀, then the value of the last unit consumed is

Accepted Answer

A) P₀. 
B) P₁. 
C) equal to area A + B + C. 
D) 0. 
E) P₁- P₀. 
A) P₀. 
B) P₁. 
C) equal to area A + B + C. 
D) 0. 
E) P₁- P₀.

Question 16

Majority rule allocates resources in the way that

Accepted Answer

A) politicians choose. 
B) a majority of voters choose. 
C) democracies choose. 
D) all voters choose. 
E) the military chooses. 
A) politicians choose. 
B) a majority of voters choose. 
C) democracies choose. 
D) all voters choose. 
E) the military chooses.

Question 17

A modified version of utilitarianism proposed by John Rawls could be summarized as

Accepted Answer

A) transfer everything to the poor. 
B) transfer everything to the rich. 
C) expand the size of government. 
D) minimize the size of government. 
E) make the poorest as well off as possible. 
A) transfer everything to the poor. 
B) transfer everything to the rich. 
C) expand the size of government. 
D) minimize the size of government. 
E) make the poorest as well off as possible.

Question 18

Overproduction of a good means that

Accepted Answer

A) deadweight loss has been eliminated. 
B) the sum of consumer surplus and producer surplus is greater than the sum for an efficient allocation. 
C) marginal social cost exceeds marginal social benefit. 
D) marginal social benefit exceeds marginal social cost. 
E) this is a public good. 
A) deadweight loss has been eliminated. 
B) the sum of consumer surplus and producer surplus is greater than the sum for an efficient allocation. 
C) marginal social cost exceeds marginal social benefit. 
D) marginal social benefit exceeds marginal social cost. 
E) this is a public good.

Question 19

Restaurants don't use market price to allocate their tables because

Accepted Answer

A) they would have to watch the price of a table at other restaurants to keep competitive. 
B) restaurants would have to advertise the price. 
C) the price of a table would fluctuate hourly, customer uncertainty would deter patrons, and lower demand would bring lower profit. 
D) they would have to continually change the supply of tables to keep the price constant. 
E) the price of a table would eventually fall to zero and restaurants would incur a loss. 
A) they would have to watch the price of a table at other restaurants to keep competitive. 
B) restaurants would have to advertise the price. 
C) the price of a table would fluctuate hourly, customer uncertainty would deter patrons, and lower demand would bring lower profit. 
D) they would have to continually change the supply of tables to keep the price constant. 
E) the price of a table would eventually fall to zero and restaurants would incur a loss.

Question 20

A negative externality results in

Accepted Answer

A) underproduction. 
B) zero production. 
C) overproduction. 
D) efficient production. 
E) zero deadweight loss. 
A) underproduction. 
B) zero production. 
C) overproduction. 
D) efficient production. 
E) zero deadweight loss.

What is the producer surplus for the market from the production of the 100th unit of a good?

Contests do a good job in resource allocation

The maximum price a consumer is willing to pay for a good is the

When the efficient quantity is produced

Consider the market for hot dogs.If this market becomes a monopoly, then there will be

When a market price allocates a scarce resource,

Marginal cost

Figure 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 can lead to an inefficient outcome? I. Price regulations II. Increasing marginal cost III. Monopoly

A market demand curve is constructed by

If the owner of an apartment building rents only to married couples over the age of 30, the method of resource allocation is

One big problem with the utilitarian ideal is that it

Use the figure below to answer the following questions. Figure 5.2.2 -Refer to Figure 5.2.2 If the price falls from P₁ to P₀, then the change in consumer surplus is

When a deadweight loss occurs in a market, we can be certain that

Use the figure below to answer the following questions. Figure 5.2.2 -Refer to Figure 5.2.2.If the price is P₀, then the value of the last unit consumed is

Majority rule allocates resources in the way that

A modified version of utilitarianism proposed by John Rawls could be summarized as

Overproduction of a good means that

Restaurants don't use market price to allocate their tables because

A negative externality results in

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

What is the producer surplus for the market from the production of the 100th unit of a good?

Contests do a good job in resource allocation

The maximum price a consumer is willing to pay for a good is the

When the efficient quantity is produced

Consider the market for hot dogs.If this market becomes a monopoly, then there will be

When a market price allocates a scarce resource,

Marginal cost

Figure 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 can lead to an inefficient outcome? I. Price regulations II. Increasing marginal cost III. Monopoly

A market demand curve is constructed by

If the owner of an apartment building rents only to married couples over the age of 30, the method of resource allocation is

One big problem with the utilitarian ideal is that it

Use the figure below to answer the following questions. Figure 5.2.2 -Refer to Figure 5.2.2 If the price falls from P₁ to P₀, then the change in consumer surplus is

When a deadweight loss occurs in a market, we can be certain that

Use the figure below to answer the following questions. Figure 5.2.2 -Refer to Figure 5.2.2.If the price is P₀, then the value of the last unit consumed is

Majority rule allocates resources in the way that

A modified version of utilitarianism proposed by John Rawls could be summarized as

Overproduction of a good means that

Restaurants don't use market price to allocate their tables because

A negative externality results in

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