Question 1

The reduction in consumer and producer surplus that results from underproduction is called

Accepted Answer

A)  an internal cost. 
B)  a deadweight loss. 
C)  a quantity loss. 
D)  None of the above answers is correct. 
A)  an internal cost. 
B)  a deadweight loss. 
C)  a quantity loss. 
D)  None of the above answers is correct.

Question 2

Among the sources of economic inefficiency are all of the following EXCEPT

Accepted Answer

A)  subsidies. 
B)  taxes. 
C)  competition. 
D)  external costs. 
A)  subsidies. 
B)  taxes. 
C)  competition. 
D)  external costs.

Question 3

If the hot dog vendors at Yankee Stadium are earning a producer surplus on each hot dog they sell, then baseball fans cannot be gaining any consumer surplus on the hot dogs they buy.

Accepted Answer

A) True 
 B)False

Question 4

Which of these is NOT a potential source of inefficiency?

Accepted Answer

A)  external benefits 
B)  increasing marginal costs 
C)  monopoly 
D)  subsidies 
A)  external benefits 
B)  increasing marginal costs 
C)  monopoly 
D)  subsidies

Question 5

-The schedules in the table give the marginal social benefit and marginal social cost of a DVD. If there are no external benefits or external costs, the efficient number of DVDs to produce is ________ a week.

Accepted Answer

A)  1 
B)  3 
C)  5 
D)  any number less than 3 
A)  1 
B)  3 
C)  5 
D)  any number less than 3

Question 6

According to Utilitarian principles first discussed in the nineteenth century, fairness implies

Accepted Answer

A)  equality of income. 
B)  equality of opportunity. 
C)  winner takes all. 
D)  maximizing consumption. 
A)  equality of income. 
B)  equality of opportunity. 
C)  winner takes all. 
D)  maximizing consumption.

Question 7

Why do societies face a tradeoff between the size of the economic pie and the degree of equality with which it is shared?

Accepted Answer

A person's share of the economic pie is

Question 8

If the marginal social benefit of pizza exceeds the marginal social cost of pizza, the economy is producing the efficient quantity of pizza.

Accepted Answer

A) True 
 B)False

Question 9

At the efficient level of production, ________.

Accepted Answer

A)  producer surplus must be greater than consumer surplus 
B)  consumer surplus must be greater than producer surplus 
C)  there is no deadweight loss 
D)  the market price is greater than the monopoly price 
A)  producer surplus must be greater than consumer surplus 
B)  consumer surplus must be greater than producer surplus 
C)  there is no deadweight loss 
D)  the market price is greater than the monopoly price

Question 10

A modified version of utilitarianism proposed by John Rawls states that

Accepted Answer

A)  the distribution of the economic pie is fair if the rules are fair. 
B)  the distribution of the economic pie is fair if it achieves the greatest happiness for the greatest number of people. 
C)  the fair distribution of the economic pie is the one that makes the poorest person as well off as possible. 
D)  goods may be transferred from one person to another only by voluntary exchange. 
A)  the distribution of the economic pie is fair if the rules are fair. 
B)  the distribution of the economic pie is fair if it achieves the greatest happiness for the greatest number of people. 
C)  the fair distribution of the economic pie is the one that makes the poorest person as well off as possible. 
D)  goods may be transferred from one person to another only by voluntary exchange.

Question 11

Which of the following arguments support the proposition that society should accept at least some income inequality?

Accepted Answer

A)  Income redistribution will require taxation, causing inefficiently low levels of labor supply and saving, thus decreasing the size of the economic pie. 
B)  Administrative costs associated with income redistribution imply that low-income people receive less than $1 for each dollar taken from high-income people. 
C)  Income redistribution programs divert skilled labor and capital to tax compliance activities and away from production of goods and services that people value. 
D)  All of the above answers are correct because all support the proposition that society should accept some income inequality. 
A)  Income redistribution will require taxation, causing inefficiently low levels of labor supply and saving, thus decreasing the size of the economic pie. 
B)  Administrative costs associated with income redistribution imply that low-income people receive less than $1 for each dollar taken from high-income people. 
C)  Income redistribution programs divert skilled labor and capital to tax compliance activities and away from production of goods and services that people value. 
D)  All of the above answers are correct because all support the proposition that society should accept some income inequality.

Question 12

When economists refer to "the invisible hand," what do they mean?

Accepted Answer

In his book, Wealth of Nations, Adam Smi

Question 13

-In the above figure, what is the amount of producer surplus at the efficient quantity?

Accepted Answer

A)  $0 
B)  $1,000 
C)  $2,000 
D)  $4,000 
A)  $0 
B)  $1,000 
C)  $2,000 
D)  $4,000

Question 14

Which of the following statements is TRUE?

Accepted Answer

A)  At the efficient quantity, marginal social benefit equals marginal social cost. 
B)  Marginal social cost increases as the quantity produced decreases. 
C)  Marginal social benefit decreases as the quantity consumed decreases. 
D)  If marginal social benefit exceeds marginal social cost by as much as possible, production is efficient. 
A)  At the efficient quantity, marginal social benefit equals marginal social cost. 
B)  Marginal social cost increases as the quantity produced decreases. 
C)  Marginal social benefit decreases as the quantity consumed decreases. 
D)  If marginal social benefit exceeds marginal social cost by as much as possible, production is efficient.

Question 15

Deadweight loss is the decrease in ________ from producing an inefficient amount of a product.

Accepted Answer

A)  only consumer surplus 
B)  only producer surplus 
C)  consumer surplus and producer surplus 
D)  profit 
A)  only consumer surplus 
B)  only producer surplus 
C)  consumer surplus and producer surplus 
D)  profit

Question 16

-In the above figure, when the quantity equals 400 pretzels

Accepted Answer

A)  consumers are willing to pay $2 for the 400th pretzel. 
B)  producers are willing to supply 400 pretzels for $3. 
C)  producers are willing to supply 400 pretzels for $2. 
D)  the marginal benefit is greater than the marginal cost. 
A)  consumers are willing to pay $2 for the 400th pretzel. 
B)  producers are willing to supply 400 pretzels for $3. 
C)  producers are willing to supply 400 pretzels for $2. 
D)  the marginal benefit is greater than the marginal cost.

Question 17

If the market for roller blades is at a competitive equilibrium, and there are no external costs or benefits, then

Accepted Answer

A)  marginal social benefit is equal to marginal social cost. 
B)  the sum of consumer surplus and producer surplus is maximized. 
C)  resources are being used efficiently. 
D)  All of the above answers are correct. 
A)  marginal social benefit is equal to marginal social cost. 
B)  the sum of consumer surplus and producer surplus is maximized. 
C)  resources are being used efficiently. 
D)  All of the above answers are correct.

Question 18

If the government subsidizes the production of a good

Accepted Answer

A)  an efficient outcome for producers occurs. 
B)  overproduction relative to the efficient quantity occurs. 
C)  a deadweight loss is created. 
D)  Both answers B and C are correct. 
A)  an efficient outcome for producers occurs. 
B)  overproduction relative to the efficient quantity occurs. 
C)  a deadweight loss is created. 
D)  Both answers B and C are correct.

Question 19

If the demand for a good does not change, how will an increase in the price of that good affect the consumer surplus from it?

Accepted Answer

The consumer surplus equals the differen

Question 20

The annual Great Sofa Round-up is a collaborative event between Colorado State University and the City of Fort Collins aims to help students and neighbors get rid of unwanted furniture, while giving people in need access to inexpensive sofas. Suppose on the day of the Round-up, your friends take their couches to the main parking lot on campus where the Round-up is held. Raj will not sell his couch for less than $30, Emily will not sell her couch for less than $50, Nara will not sell her couch for less than $20, Sergio just wants to get rid of his couch and he is willing to give it away for free. At the Round-up, potential buyers think that all the couches available are basically the same and they are willing to buy a couch for $50. What is the value of Nara's producer surplus?

Accepted Answer

A)  $30 
B)  $50 
C)  $20 
D)  $10 
A)  $30 
B)  $50 
C)  $20 
D)  $10

The reduction in consumer and producer surplus that results from underproduction is called

Among the sources of economic inefficiency are all of the following EXCEPT

If the hot dog vendors at Yankee Stadium are earning a producer surplus on each hot dog they sell, then baseball fans cannot be gaining any consumer surplus on the hot dogs they buy.

Which of these is NOT a potential source of inefficiency?

-The schedules in the table give the marginal social benefit and marginal social cost of a DVD. If there are no external benefits or external costs, the efficient number of DVDs to produce is ________ a week.

According to Utilitarian principles first discussed in the nineteenth century, fairness implies

Why do societies face a tradeoff between the size of the economic pie and the degree of equality with which it is shared?

If the marginal social benefit of pizza exceeds the marginal social cost of pizza, the economy is producing the efficient quantity of pizza.

At the efficient level of production, ________.

A modified version of utilitarianism proposed by John Rawls states that

Which of the following arguments support the proposition that society should accept at least some income inequality?

When economists refer to "the invisible hand," what do they mean?

-In the above figure, what is the amount of producer surplus at the efficient quantity?

Which of the following statements is TRUE?

Deadweight loss is the decrease in ________ from producing an inefficient amount of a product.

-In the above figure, when the quantity equals 400 pretzels

If the market for roller blades is at a competitive equilibrium, and there are no external costs or benefits, then

If the government subsidizes the production of a good

If the demand for a good does not change, how will an increase in the price of that good affect the consumer surplus from it?

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

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 5: Efficiency and Equity

The reduction in consumer and producer surplus that results from underproduction is called

Among the sources of economic inefficiency are all of the following EXCEPT

If the hot dog vendors at Yankee Stadium are earning a producer surplus on each hot dog they sell, then baseball fans cannot be gaining any consumer surplus on the hot dogs they buy.

Which of these is NOT a potential source of inefficiency?

-The schedules in the table give the marginal social benefit and marginal social cost of a DVD. If there are no external benefits or external costs, the efficient number of DVDs to produce is ________ a week.

According to Utilitarian principles first discussed in the nineteenth century, fairness implies

Why do societies face a tradeoff between the size of the economic pie and the degree of equality with which it is shared?

If the marginal social benefit of pizza exceeds the marginal social cost of pizza, the economy is producing the efficient quantity of pizza.

At the efficient level of production, ________.

A modified version of utilitarianism proposed by John Rawls states that

Which of the following arguments support the proposition that society should accept at least some income inequality?

When economists refer to "the invisible hand," what do they mean?

-In the above figure, what is the amount of producer surplus at the efficient quantity?

Which of the following statements is TRUE?

Deadweight loss is the decrease in ________ from producing an inefficient amount of a product.

-In the above figure, when the quantity equals 400 pretzels

If the market for roller blades is at a competitive equilibrium, and there are no external costs or benefits, then

If the government subsidizes the production of a good

If the demand for a good does not change, how will an increase in the price of that good affect the consumer surplus from it?

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

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters