Question 1

Which of the following occurs when a market is efficient?

Accepted Answer

A)  Producers earn the highest income possible. 
B)  Production costs equal total benefit. 
C)  Consumer surplus equals producer surplus. 
D)  Scarce resources are used to produce the goods and services that people value most highly. 
E)  Every consumer has all of the good or service he or she wants. 
A)  Producers earn the highest income possible. 
B)  Production costs equal total benefit. 
C)  Consumer surplus equals producer surplus. 
D)  Scarce resources are used to produce the goods and services that people value most highly. 
E)  Every consumer has all of the good or service he or she wants.

Question 2

Why does the marginal benefit curve have a negative slope?

Accepted Answer

Each successive increase in the consumpt

Question 3

A good or service can be consumed by a person even if he or she didn't pay for it is called ________ good.

Accepted Answer

A)  a private 
B)  a public 
C)  a normal 
D)  an inferior 
E)  an external 
A)  a private 
B)  a public 
C)  a normal 
D)  an inferior 
E)  an external

Question 4

The phrase "decreasing marginal benefit" means that

Accepted Answer

A)  the more you consume of the product, the less total benefit you derive. 
B)  the marginal cost will be increasing as you consume more of a good. 
C)  each additional unit of a good you consume gives you less additional benefit than the previous unit. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  the more you consume of the product, the less total benefit you derive. 
B)  the marginal cost will be increasing as you consume more of a good. 
C)  each additional unit of a good you consume gives you less additional benefit than the previous unit. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 5

Mary is willing to pay $50 for a Christmas tree,John is willing to pay $45 and Jeff is willing to pay $40.The price of a tree is $40.The total consumer surplus for Mary,John and Jeff taken together is

Accepted Answer

A)  $15. 
B)  $135. 
C)  $40. 
D)  $95. 
E)  $120. 
A)  $15. 
B)  $135. 
C)  $40. 
D)  $95. 
E)  $120.

Question 6

The price of a shirt is $20.Charlie can produce a shirt at a marginal cost of $10,Mac can produce a shirt for $18,and Dennis can produce a shirt for $22.For a shirt,Deandra has a marginal benefit of $25,Frank has marginal benefit of $20,and Artemis has a marginal benefit of $18.Which of the following statements is correct?

Accepted Answer

A)  The sum of consumer surplus is $5 and the sum of producer surplus is $12. 
B)  The sum of consumer surplus is $12. 
C)  Only Frank and Artemis will purchase a shirt. 
D)  Only Dennis will produce a shirt. 
E)  The sum of producer surplus is $10. 
A)  The sum of consumer surplus is $5 and the sum of producer surplus is $12. 
B)  The sum of consumer surplus is $12. 
C)  Only Frank and Artemis will purchase a shirt. 
D)  Only Dennis will produce a shirt. 
E)  The sum of producer surplus is $10.

Question 7

-In the figure above,if the market is at equilibrium,the sum of the total consumer surplus and the total producer surplus is

Accepted Answer

A)  $240. 
B)  $600. 
C)  $1,000. 
D)  $0. 
E)  $60. 
A)  $240. 
B)  $600. 
C)  $1,000. 
D)  $0. 
E)  $60.

Question 8

Efficiency occurs in a market when

Accepted Answer

A)  the sum of consumer surplus and producer surplus is maximized. 
B)  consumer surplus is equal to producer surplus. 
C)  consumer surplus is less than producer surplus. 
D)  consumer surplus is greater than producer surplus. 
E)  total revenue is maximized. 
A)  the sum of consumer surplus and producer surplus is maximized. 
B)  consumer surplus is equal to producer surplus. 
C)  consumer surplus is less than producer surplus. 
D)  consumer surplus is greater than producer surplus. 
E)  total revenue is maximized.

Question 9

If you are willing to pay no more than $4 for a slice of pizza and the price of a slice of pizza is $4,then

Accepted Answer

A)  if you buy it, you would be cheated because you would realize no total benefit from the purchase. 
B)  you buy it but you get no marginal benefit from the purchase. 
C)  you will not buy it. 
D)  you buy it but you get no consumer surplus from the purchase. 
E)  you might buy it depending on how the slice's marginal benefit compares to its price. 
A)  if you buy it, you would be cheated because you would realize no total benefit from the purchase. 
B)  you buy it but you get no marginal benefit from the purchase. 
C)  you will not buy it. 
D)  you buy it but you get no consumer surplus from the purchase. 
E)  you might buy it depending on how the slice's marginal benefit compares to its price.

Question 10

In general,the marginal cost curve

Accepted Answer

A)  has a positive slope. 
B)  has a negative slope. 
C)  is horizontal. 
D)  is vertical. 
E)  is U-shaped. 
A)  has a positive slope. 
B)  has a negative slope. 
C)  is horizontal. 
D)  is vertical. 
E)  is U-shaped.

Question 11

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The marginal cost of the 10,000th soda is

Accepted Answer

A)  $0.00. 
B)  $0.50. 
C)  $1.00. 
D)  more than $0.50 and less than $1.00. 
E)  None of the above answers is correct. 
A)  $0.00. 
B)  $0.50. 
C)  $1.00. 
D)  more than $0.50 and less than $1.00. 
E)  None of the above answers is correct.

Question 12

The idea of the "big tradeoff" points out the costs of

Accepted Answer

A)  using a results approach to fairness when the rules approach is correct. 
B)  transferring income using taxes that decrease efficiency. 
C)  price hikes during natural disasters. 
D)  using a rules approach to fairness when the results approach is correct. 
E)  None of the above answers is correct. 
A)  using a results approach to fairness when the rules approach is correct. 
B)  transferring income using taxes that decrease efficiency. 
C)  price hikes during natural disasters. 
D)  using a rules approach to fairness when the results approach is correct. 
E)  None of the above answers is correct.

Question 13

A supply curve shows the ________ of producing one more unit of a good or service.

Accepted Answer

A)  producer surplus 
B)  consumer surplus 
C)  total benefit 
D)  marginal cost 
E)  marginal benefit to the producer 
A)  producer surplus 
B)  consumer surplus 
C)  total benefit 
D)  marginal cost 
E)  marginal benefit to the producer

Question 14

-Suppose a factory can be designed to produce either trucks or cars.The figure above shows the marginal cost and marginal benefit of producing trucks in terms of the forgone cars.
a.What is the marginal benefit of the 25th truck?
b.What is the marginal cost of the 25th truck?
c.Should the 25th truck be produced? Why or why not.
d.What is the marginal benefit of the 75th truck?
e.What is the marginal cost of the 75th truck?
f.Should the 75th truck be produced? Why or why not?
g.What is the allocatively efficient quantity of trucks?

Accepted Answer

a.3 cars
b.1 car
c.This truck should be

Question 15

If an economy is producing on its PPF,then it is definitely achieving

Accepted Answer

A)  both production and allocative efficiency. 
B)  only production efficiency, but it definitely is not achieving allocative efficiency. 
C)  only allocative efficiency, but it is definitely not achieving production efficiency. 
D)  neither production nor allocative efficiency. 
E)  only production efficiency. 
A)  both production and allocative efficiency. 
B)  only production efficiency, but it definitely is not achieving allocative efficiency. 
C)  only allocative efficiency, but it is definitely not achieving production efficiency. 
D)  neither production nor allocative efficiency. 
E)  only production efficiency.

Question 16

A competitive market with no externalities is efficient when it is in equilibrium because

Accepted Answer

A)  total benefit equals total cost. 
B)  marginal benefit equals marginal cost. 
C)  consumer surplus equals producer surplus. 
D)  the sum of consumer surplus plus producer surplus is minimized. 
E)  the deadweight gain equals its maximum. 
A)  total benefit equals total cost. 
B)  marginal benefit equals marginal cost. 
C)  consumer surplus equals producer surplus. 
D)  the sum of consumer surplus plus producer surplus is minimized. 
E)  the deadweight gain equals its maximum.

Question 17

The opportunity cost of producing one more unit of a good or service is the

Accepted Answer

A)  marginal cost. 
B)  marginal benefit. 
C)  efficient level of production. 
D)  market outcome. 
E)  price of the good or service. 
A)  marginal cost. 
B)  marginal benefit. 
C)  efficient level of production. 
D)  market outcome. 
E)  price of the good or service.

Question 18

In the figure above,when 6,000 pizzas are produced,the marginal benefit of a pizza ________ its marginal cost,which means ________ pizza is being produced.

Accepted Answer

A)  exceeds; too little 
B)  exceeds; too much 
C)  is below; too much 
D)  is below; too little 
E)  equals ; the efficient quantity of 
A)  exceeds; too little 
B)  exceeds; too much 
C)  is below; too much 
D)  is below; too little 
E)  equals ; the efficient quantity of

Question 19

Moving ________ along the marginal cost curve,the ________.

Accepted Answer

A)  upward; opportunity cost of one more unit increases 
B)  upward; marginal cost decreases 
C)  downward; marginal cost increases 
D)  upward; opportunity cost of one more unit does not change 
E)  downward; opportunity cost of one more unit does not change 
A)  upward; opportunity cost of one more unit increases 
B)  upward; marginal cost decreases 
C)  downward; marginal cost increases 
D)  upward; opportunity cost of one more unit does not change 
E)  downward; opportunity cost of one more unit does not change

Question 20

If the demand curve is the same as the marginal benefit curve and the supply curve is the same as the marginal cost curve,then the quantity at which they cross is
i.the equilibrium quantity.
ii.the allocatively efficient quantity.
iii.the quantity with no deadweight loss.

Accepted Answer

A)  i, ii, and iii. 
B)  only i. 
C)  only ii. 
D)  only i and ii. 
E)  only i and iii. 
A)  i, ii, and iii. 
B)  only i. 
C)  only ii. 
D)  only i and ii. 
E)  only i and iii.

Which of the following occurs when a market is efficient?

Why does the marginal benefit curve have a negative slope?

A good or service can be consumed by a person even if he or she didn't pay for it is called ________ good.

The phrase "decreasing marginal benefit" means that

Mary is willing to pay $50 for a Christmas tree,John is willing to pay $45 and Jeff is willing to pay $40.The price of a tree is $40.The total consumer surplus for Mary,John and Jeff taken together is

-In the figure above,if the market is at equilibrium,the sum of the total consumer surplus and the total producer surplus is

Efficiency occurs in a market when

If you are willing to pay no more than $4 for a slice of pizza and the price of a slice of pizza is $4,then

In general,the marginal cost curve

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The marginal cost of the 10,000th soda is

The idea of the "big tradeoff" points out the costs of

A supply curve shows the ________ of producing one more unit of a good or service.

If an economy is producing on its PPF,then it is definitely achieving

A competitive market with no externalities is efficient when it is in equilibrium because

The opportunity cost of producing one more unit of a good or service is the

In the figure above,when 6,000 pizzas are produced,the marginal benefit of a pizza its marginal cost,which means pizza is being produced.

Moving along the marginal cost curve,the .

If the demand curve is the same as the marginal benefit curve and the supply curve is the same as the marginal cost curve,then the quantity at which they cross is i.the equilibrium quantity. ii.the allocatively efficient quantity. iii.the quantity with no deadweight loss.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 6: Efficiency and Fairness of Markets

Which of the following occurs when a market is efficient?

Why does the marginal benefit curve have a negative slope?

A good or service can be consumed by a person even if he or she didn't pay for it is called ________ good.

The phrase "decreasing marginal benefit" means that

Mary is willing to pay $50 for a Christmas tree,John is willing to pay $45 and Jeff is willing to pay $40.The price of a tree is $40.The total consumer surplus for Mary,John and Jeff taken together is

-In the figure above,if the market is at equilibrium,the sum of the total consumer surplus and the total producer surplus is

Efficiency occurs in a market when

If you are willing to pay no more than $4 for a slice of pizza and the price of a slice of pizza is $4,then

In general,the marginal cost curve

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The marginal cost of the 10,000th soda is

The idea of the "big tradeoff" points out the costs of

A supply curve shows the ________ of producing one more unit of a good or service.

If an economy is producing on its PPF,then it is definitely achieving

A competitive market with no externalities is efficient when it is in equilibrium because

The opportunity cost of producing one more unit of a good or service is the

In the figure above,when 6,000 pizzas are produced,the marginal benefit of a pizza ________ its marginal cost,which means ________ pizza is being produced.

Moving ________ along the marginal cost curve,the ________.

If the demand curve is the same as the marginal benefit curve and the supply curve is the same as the marginal cost curve,then the quantity at which they cross is i.the equilibrium quantity. ii.the allocatively efficient quantity. iii.the quantity with no deadweight loss.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

In the figure above,when 6,000 pizzas are produced,the marginal benefit of a pizza its marginal cost,which means pizza is being produced.

Moving along the marginal cost curve,the .