Exam 4: Efficiency in Resource Allocation: How Much Do We Have How Much Do We Want

Use the following diagram to answer the following questions. -Refer to Diagram 4-3. In the above diagram the efficient level of output is:

Use the following diagram to answer the following questions. -Refer to Diagram 4-3. In the above diagram, if the external costs are internalized (accounted for), the efficient price and quantity will be

No external benefits are provided by the public goods.

Use the following diagram to answer the following questions. -Refer to Diagram 4-1. If production of compact discs is currently represented by quantity Q₂. The total cost of this production is given by area:

Use the following diagram to answer the following questions. -Refer to Diagram 4-1. Total net benefits at the efficient level of production is given by area:

Use the following diagram to answer the following questions. -Refer to Diagram 4-1. If individuals are currently consuming Q₂ units of compact discs. The total benefit of this consumption is given by area:

Which of the following is an example of government failure?

Use the following diagram to answer the following questions. -Refer to Wages. The total net efficiency loss from government imposing a minimum wage is given by area:

To determine the efficient amount of a good or service.

Output is being produced efficiently if marginal social benefit is equal to marginal social cost.

A monopoly is a market in which only one seller exists.

Use the following information to answer the following questions. -Refer to Bicycles. The total benefit of 3 bicycles is:

Which of the following is an example of market failure?

Minimum wage laws give rise to unemployment.

Moneymakers Incorporated currently produces 100 units of output per day. At this level of production, the marginal benefit of production is $25 while the marginal cost is $20. Moneymakers is obviously producing at the efficient level because society is getting a net benefit. Is this statement true or False? Defend your answer.

Currently 75 pairs of sandals are being exchanged in the market. The marginal social benefit of the last unit is $15 while the marginal cost of this unit is $30. We know that with regard to efficiency:

A lighthouse is an example of a public good.

Pollution is an example of external costs.

Use the following diagram to answer the following questions. -Refer to Diagram 4-1. If a monopolist produces at Q₁, the quantity and price that maximizes its profits, the loss in total net benefits can be calculated as the value of the area;

The supply curve represents the marginal cost of producing various quantities of a good or service.