Question 1

-In the above figure, if output were restricted to 300 million pounds of turkey, then

Accepted Answer

A)  the marginal social benefit would exceed the marginal social cost on the last pound of turkey traded by $0.80. 
B)  there would be a deadweight loss of $40 million. 
C)  there would be inefficient underproduction of turkey. 
D)  All of the above answers are correct. 
A)  the marginal social benefit would exceed the marginal social cost on the last pound of turkey traded by $0.80. 
B)  there would be a deadweight loss of $40 million. 
C)  there would be inefficient underproduction of turkey. 
D)  All of the above answers are correct.

Question 2

Often politicians assert that a price, such as the price of gasoline or the rent for an apartment, is too high and that it is unfair for these prices to be so high. If these products are traded in competitive markets, what fairness rule are politicians using? Why?

Accepted Answer

The fairness rule is one of "It's not fa

Question 3

Which of the following can prevent markets from reaching efficiency? I. price regulations that cap the price that may be charged
II) increasing marginal cost
III) monopoly

Accepted Answer

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

Question 4

It is efficient to produce an additional shirt if the

Accepted Answer

A)  marginal social benefit of producing the shirt is greater than zero. 
B)  marginal social benefit of producing the shirt is zero. 
C)  marginal social benefit of producing the shirt is greater than the marginal social cost of producing it. 
D)  total social benefit from producing shirts is maximized. 
A)  marginal social benefit of producing the shirt is greater than zero. 
B)  marginal social benefit of producing the shirt is zero. 
C)  marginal social benefit of producing the shirt is greater than the marginal social cost of producing it. 
D)  total social benefit from producing shirts is maximized.

Question 5

-In the above figure suppose there is only one milk producer who chooses to restrict milk production to two million gallons per day. What is the size of the deadweight loss? (Hint: It is equal to the triangular area of consumer and producer surplus that is lost because of the reduction in output.)

Accepted Answer

A)  $12.5 million 
B)  $6.25 million 
C)  $2.25 million 
D)  none of the above 
A)  $12.5 million 
B)  $6.25 million 
C)  $2.25 million 
D)  none of the above

Question 6

If you increase your consumption of soda by one additional can a week, your marginal benefit of this last can is $1.00. The ________ of this last can of soda is $1.00.

Accepted Answer

A)  value 
B)  price 
C)  opportunity cost 
D)  marginal cost 
A)  value 
B)  price 
C)  opportunity cost 
D)  marginal cost

Question 7

-In the above table, the efficient quantity of brownies is produced when the price of a brownie is equal to

Accepted Answer

A)  0. 
B)  40¢. 
C)  60¢. 
D)  80¢. 
A)  0. 
B)  40¢. 
C)  60¢. 
D)  80¢.

Question 8

Suppose the government considers placing a tax on business profits o that businesses decrease their production and generate a deadweight loss. Revenues from the tax would be used to boost the incomes of the poor. The decision to levy the tax implies that in this case, the government

Accepted Answer

A)  values people but not business. 
B)  values efficiency more than its view of fairness. 
C)  profits from taxes. 
D)  values its view of fairness more than efficiency. 
A)  values people but not business. 
B)  values efficiency more than its view of fairness. 
C)  profits from taxes. 
D)  values its view of fairness more than efficiency.

Question 9

-The above figure shows that the maximum amount a person is willing to pay for the 400th pretzel

Accepted Answer

A)  is greater than the marginal social cost of the 400th pretzel. 
B)  is less than the marginal social benefit of the 400th pretzel. 
C)  and the marginal social benefit of the 400th pretzel are both $2. 
D)  is greater than the marginal social benefit of the 200th pretzel. 
A)  is greater than the marginal social cost of the 400th pretzel. 
B)  is less than the marginal social benefit of the 400th pretzel. 
C)  and the marginal social benefit of the 400th pretzel are both $2. 
D)  is greater than the marginal social benefit of the 200th pretzel.

Question 10

The symmetry principle states that

Accepted Answer

A)  the poorest person must be made as well off as possible. 
B)  income should be transferred from the rich to the poor up to the point of complete equality. 
C)  resources should be common property. 
D)  people in similar situations must be treated similarly. 
A)  the poorest person must be made as well off as possible. 
B)  income should be transferred from the rich to the poor up to the point of complete equality. 
C)  resources should be common property. 
D)  people in similar situations must be treated similarly.

Question 11

-The figure above shows the market for umbrellas in Sunville. Suppose the quantity of umbrellas currently traded in Sunville is 199 per day. If one more umbrella is sold, the total surplus in Sunville will

Accepted Answer

A)  decrease by $26.67. 
B)  increase by $26.67. 
C)  increase by $50.00. 
D)  not change. 
A)  decrease by $26.67. 
B)  increase by $26.67. 
C)  increase by $50.00. 
D)  not change.

Question 12

When the Smiths were shopping for their present home, the asking price from the previous owner was $250,000.00. The Smiths had decided they would pay no more than $245,000.00 for the house. After negotiations, the Smiths actually purchased the house for $239,000.00. They, therefore, enjoyed a consumer surplus of

Accepted Answer

A)  $239,000.00. 
B)  $5,000.00. 
C)  $6,000.00. 
D)  $11,000.00. 
A)  $239,000.00. 
B)  $5,000.00. 
C)  $6,000.00. 
D)  $11,000.00.

Question 13

-The figure above shows the market for coffee. The ________ price that producers must be offered to get them to produce 30 million pounds of coffee per month is ________.

Accepted Answer

A)  maximum; $2.50 
B)  minimum; $2.50 
C)  maximum; $4.00 
D)  minimum; $4.00 
A)  maximum; $2.50 
B)  minimum; $2.50 
C)  maximum; $4.00 
D)  minimum; $4.00

Question 14

-In the above figure, the deadweight loss is zero if output is

Accepted Answer

A)  0 units. 
B)  10 units. 
C)  20 units. 
D)  30 units. 
A)  0 units. 
B)  10 units. 
C)  20 units. 
D)  30 units.

Question 15

One of the obstacles to efficiency is monopoly.

Accepted Answer

A) True 
 B)False

Question 16

-The above figure illustrates the marginal social benefit and marginal social cost for chicken sandwiches. If the quantity is decreased from 6 to 3 and the price increases from $3 to $4, consumer surplus will decrease by

Accepted Answer

A)  $1.50. 
B)  $2.00. 
C)  $3.00. 
D)  $4.50. 
A)  $1.50. 
B)  $2.00. 
C)  $3.00. 
D)  $4.50.

Question 17

-The table above gives the demand and supply schedules for bottled spring water in Springsboro. Assume that the only people who benefit from spring water are the people who drink it and the only people who bear the cost of bottled spring water are the people who produce it.
a) Draw the market demand and market supply curves. What are the equilibrium price and equilibrium quantity of spring water? Is this equilibrium efficient? Explain.
b) What is the maximum price that consumers are willing to pay for the 400th bottle? What is the minimum price that producers are willing to accept for the 400th bottle? Explain.
c) Are 400 bottles a day less than or greater than the efficient quantity? Explain your answer.
d) If the market for spring water is efficient, what is the consumer surplus? Show it on your graph. What is the producer surplus? Show it on your graph.
e) If spring water bottlers produce 400 bottles a day, is there a deadweight loss? If yes, what is it? Explain your answer using your graph.

Accepted Answer

@#IMG-DLM& a) The figure above shows the supply an

Question 18

The figure shows the competitive market for milk.
-In the figure above, when the quantity of milk produced is 600 gallons per day, what is the deadweight loss?

Accepted Answer

A)  $250 
B)  $125 
C)  $500 
D)  $50 
A)  $250 
B)  $125 
C)  $500 
D)  $50

Question 19

-In the above table, what is the minimum price that producers must be offered to produce the 200th brownie?

Accepted Answer

A)  0 
B)  20¢ 
C)  60¢ 
D)  80¢ 
A)  0 
B)  20¢ 
C)  60¢ 
D)  80¢

Question 20

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the total surplus?

Accepted Answer

A)  $0 
B)  $12,000 
C)  $24,000 
D)  $16,000 
A)  $0 
B)  $12,000 
C)  $24,000 
D)  $16,000

-In the above figure, if output were restricted to 300 million pounds of turkey, then

Often politicians assert that a price, such as the price of gasoline or the rent for an apartment, is too high and that it is unfair for these prices to be so high. If these products are traded in competitive markets, what fairness rule are politicians using? Why?

Which of the following can prevent markets from reaching efficiency? I. price regulations that cap the price that may be charged II) increasing marginal cost III) monopoly

It is efficient to produce an additional shirt if the

-In the above figure suppose there is only one milk producer who chooses to restrict milk production to two million gallons per day. What is the size of the deadweight loss? (Hint: It is equal to the triangular area of consumer and producer surplus that is lost because of the reduction in output.)

If you increase your consumption of soda by one additional can a week, your marginal benefit of this last can is $1.00. The ________ of this last can of soda is $1.00.

-In the above table, the efficient quantity of brownies is produced when the price of a brownie is equal to

Suppose the government considers placing a tax on business profits o that businesses decrease their production and generate a deadweight loss. Revenues from the tax would be used to boost the incomes of the poor. The decision to levy the tax implies that in this case, the government

-The above figure shows that the maximum amount a person is willing to pay for the 400th pretzel

The symmetry principle states that

-The figure above shows the market for umbrellas in Sunville. Suppose the quantity of umbrellas currently traded in Sunville is 199 per day. If one more umbrella is sold, the total surplus in Sunville will

-The figure above shows the market for coffee. The price that producers must be offered to get them to produce 30 million pounds of coffee per month is .

-In the above figure, the deadweight loss is zero if output is

One of the obstacles to efficiency is monopoly.

-The above figure illustrates the marginal social benefit and marginal social cost for chicken sandwiches. If the quantity is decreased from 6 to 3 and the price increases from $3 to $4, consumer surplus will decrease by

The figure shows the competitive market for milk. -In the figure above, when the quantity of milk produced is 600 gallons per day, what is the deadweight loss?

-In the above table, what is the minimum price that producers must be offered to produce the 200th brownie?

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the total surplus?

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

-In the above figure, if output were restricted to 300 million pounds of turkey, then

Often politicians assert that a price, such as the price of gasoline or the rent for an apartment, is too high and that it is unfair for these prices to be so high. If these products are traded in competitive markets, what fairness rule are politicians using? Why?

Which of the following can prevent markets from reaching efficiency? I. price regulations that cap the price that may be charged II) increasing marginal cost III) monopoly

It is efficient to produce an additional shirt if the

-In the above figure suppose there is only one milk producer who chooses to restrict milk production to two million gallons per day. What is the size of the deadweight loss? (Hint: It is equal to the triangular area of consumer and producer surplus that is lost because of the reduction in output.)

If you increase your consumption of soda by one additional can a week, your marginal benefit of this last can is $1.00. The ________ of this last can of soda is $1.00.

-In the above table, the efficient quantity of brownies is produced when the price of a brownie is equal to

Suppose the government considers placing a tax on business profits o that businesses decrease their production and generate a deadweight loss. Revenues from the tax would be used to boost the incomes of the poor. The decision to levy the tax implies that in this case, the government

-The above figure shows that the maximum amount a person is willing to pay for the 400th pretzel

The symmetry principle states that

-The figure above shows the market for umbrellas in Sunville. Suppose the quantity of umbrellas currently traded in Sunville is 199 per day. If one more umbrella is sold, the total surplus in Sunville will

-The figure above shows the market for coffee. The ________ price that producers must be offered to get them to produce 30 million pounds of coffee per month is ________.

-In the above figure, the deadweight loss is zero if output is

One of the obstacles to efficiency is monopoly.

-The above figure illustrates the marginal social benefit and marginal social cost for chicken sandwiches. If the quantity is decreased from 6 to 3 and the price increases from $3 to $4, consumer surplus will decrease by

The figure shows the competitive market for milk. -In the figure above, when the quantity of milk produced is 600 gallons per day, what is the deadweight loss?

-In the above table, what is the minimum price that producers must be offered to produce the 200th brownie?

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the total surplus?

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

-The figure above shows the market for coffee. The price that producers must be offered to get them to produce 30 million pounds of coffee per month is .