Question 1

-In the figure above, the equilibrium market price is $20.Area A is the

Accepted Answer

A)  marginal cost of 150th unit.
B)  willingness to pay for the 150th unit.
C)  producer surplus.
D)  consumer surplus.
E)  marginal benefit of 150th unit.F) A) and E)
G) C) and E)

Question 2

When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is

Accepted Answer

A)  minimized.
B)  maximized.
C)  equal to the deadweight loss.
D)  undefined.
E)  equal to zero.F) A) and E)
G) A) and B)

Question 3

Producer surplus is the ________ summed over the quantity produced.

Accepted Answer

A)  price of the good minus the marginal cost of producing it
B)  marginal benefit of the good minus its marginal cost
C)  marginal benefit of the good minus its price
D)  marginal cost of the good minus the opportunity cost of producing it
E)  None of the above answers is correct.F) A) and D)
G) B) and E)

Question 4

-In the figure above, if pizza production increases to 15,000 pizzas a day, the deadweight loss is

Accepted Answer

A)  $45,000 per day.
B)  $12,500 per day.
C)  $22,500 per day.
D)  $90,000 per day.
E)  zero.F) None of the above
G) B) and E)

Question 5

-The figure above shows the market for brooms.Which of the following could lead to the production of fewer than 600 brooms?

Accepted Answer

A)  a monopoly
B)  a deadweight loss
C)  subsidies
D)  an external cost
E)  a big tradeoffF) All of the above
G) A) and D)

Question 6

If the price is greater than the marginal cost of producing a good, the seller has

Accepted Answer

A)  no benefit from the sale.
B)  a loss.
C)  some producer surplus from the sale.
D)  some negative consumer surplus from the sale.
E)  None of the above answers is correct.F) D) and E)
G) B) and D)

Question 7

Suppose the nation is producing at a point on its PPF.If the marginal cost of producing one more computer is greater than the marginal benefit, the nation is producing

Accepted Answer

A)  too few computers to be allocatively efficient.
B)  too many computers to be allocatively efficient.
C)  the correct number of computers to be allocatively efficient.
D)  at the point of allocative efficiency.
E)  More information is needed to determine if the nation is or is not producing at the allocatively efficient point.F) None of the above
G) C) and E)

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.F) A) and B)
G) B) and C)

Question 9

Jason wants to hire Maria to tutor him in economics.Jason is willing to pay $30 for the first hour of tutoring, $25 for the second, $20 for the third, $15 for the fourth, and $10 for the fifth.Maria has an opportunity cost per hour of $6 for the first, $9 for the second, $12 for the third, $15 for the fourth, and $18 for the fifth.The initial equilibrium price for tutoring is $15 an hour and hence Maria tutors Jason for 4 hours.Now, Maria realizes that she is the only economics tutor because all the other tutors have graduated.Because she is the only tutor, she has a monopoly and, as a monopolist, Maria decides to charge a price of $25 instead of $15 an hour.
a∙At the price of $25 an hour, how many hours will Maria tutor Jason?
b∙At the initial equilibrium price of $15 an hour, what was Jason's total consumer surplus and Maria's total producer surplus?
c∙At the price of $25 an hour, how many hours will Jason hire Maria to tutor him? What is Jason's total consumer surplus and Maria's total producer surplus?
d∙How does the sum of Jason's consumer surplus plus Maria's producer surplus compare at the initial equilibrium price of $15 an hour (part b)and at the new price of $25 an hour (part c)? Comment on any difference.

Accepted Answer

a∙Maria will tutor Jason for 2 hours.
b∙...

Question 10

-The figure above shows the market for pants.If the government subsidizes the production of pants so that production expands from 6 million pairs to 7 million pairs,

Accepted Answer

A)  there would be no deadweight loss.
B)  the government's policy would have no effect on the sum of consumer surplus and producer surplus.
C)  a deadweight loss would result.
D)  the government's policy would increase the sum of consumer surplus and producer surplus.
E)  production would be even more efficient than if 6 million pairs of pants are produced because more is always better than less.F) All of the above
G) B) and C)

Question 11

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 changeF) B) and D)
G) A) and D)

Question 12

If one producer has control over an entire market and underproduces, the producer will

Accepted Answer

A)  increase producer surplus by lowering pollution costs.
B)  increase consumer surplus by lowering producer surplus.
C)  increase both consumer and producer surplus.
D)  create a deadweight loss.
E)  decrease the deadweight loss that would exist if the market were efficient.F) B) and D)
G) A) and E)

Question 13

-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 its marginal cost; too little
B)  exceeds its marginal cost; too much
C)  is below its marginal cost; too much
D)  is below its marginal cost; too little
E)  equals its marginal cost; the efficient quantity ofF) A) and E)
G) B) and E)

Question 14

Why is the demand curve the same as the marginal benefit curve?

Accepted Answer

The demand curve for a good tells us for...

Question 15

Resource use is allocative efficient

Accepted Answer

A)  when it is not possible to produce more of one good.
B)  when we produce goods and services that we value most highly.
C)  when most resources are fully employed.
D)  at any point on the PPF.
E)  at all points either on or within the PPF because all these production points are attainable.F) C) and D)
G) B) and D)

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.F) A) and E)
G) All of the above

Question 17

Consumers' total benefit from consuming a good is equal to the

Accepted Answer

A)  total amount spent on the good.
B)  consumer surplus on the quantity purchased.
C)  consumer surplus plus the total amount spent on the good.
D)  consumer surplus minus the total amount spent on the good.
E)  total amount spent on the good divided by the number of units purchased.F) A) and C)
G) B) and D)

Question 18

Lattes at Starbucks are allocated to individuals in society through what type of method?

Accepted Answer

A)  lottery
B)  contest
C)  sharing equally
D)  market price
E)  personal characteristicsF) A) and C)
G) A) and D)

Question 19

-In the figure above, the equilibrium market price is $20.The producer surplus is shown by the area

Accepted Answer

A)  A.
B)  B.
C)  A + B.
D)  A ÷ B.
E)  A - B.F) C) and E)
G) All of the above

Question 20

A cost not borne by the producer but borne by other people is known as ________ cost.

Accepted Answer

A)  a marginal
B)  an internal
C)  an external
D)  a nonessential
E)  a subsidizedF) B) and C)
G) A) and B)

Exam 6: Efficiency and Fairness of Markets

Efficiency occurs in a market when

Correct Answer
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Consumers' total benefit from consuming a good is equal to the

Correct Answer
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-In the figure above, if pizza production increases to 15,000 pizzas a day, the deadweight loss is

Correct Answer
verified

-The figure above shows the market for brooms.Which of the following could lead to the production of fewer than 600 brooms?

Correct Answer
verified

Lattes at Starbucks are allocated to individuals in society through what type of method?

Correct Answer
verified

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

Correct Answer
verified

-In the figure above, the equilibrium market price is $20.The producer surplus is shown by the area

Correct Answer
verified

A cost not borne by the producer but borne by other people is known as ________ cost.

Correct Answer
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Moving along the marginal cost curve, the .

Correct Answer
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-In the figure above, the equilibrium market price is $20.Area A is the

Correct Answer
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Suppose the nation is producing at a point on its PPF.If the marginal cost of producing one more computer is greater than the marginal benefit, the nation is producing

Correct Answer
verified

If the price is greater than the marginal cost of producing a good, the seller has

Correct Answer
verified

-The figure above shows the market for pants.If the government subsidizes the production of pants so that production expands from 6 million pairs to 7 million pairs,

Correct Answer
verified

Resource use is allocative efficient

Correct Answer
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Correct Answer
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a∙Maria will tutor Jason for 2 hours.
b∙...
View Answer

If one producer has control over an entire market and underproduces, the producer will

Correct Answer
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Why is the demand curve the same as the marginal benefit curve?

Correct Answer
verified
The demand curve for a good tells us for...
View Answer

-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.

Correct Answer
verified

When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is

Correct Answer
verified

Producer surplus is the ________ summed over the quantity produced.

Correct Answer
verified

Exam 6: Efficiency and Fairness of Markets

Efficiency occurs in a market when

Correct AnswerverifiedShow Answer

Consumers' total benefit from consuming a good is equal to the

Correct AnswerverifiedShow Answer

-In the figure above, if pizza production increases to 15,000 pizzas a day, the deadweight loss is

Correct AnswerverifiedShow Answer

-The figure above shows the market for brooms.Which of the following could lead to the production of fewer than 600 brooms?

Correct AnswerverifiedShow Answer

Lattes at Starbucks are allocated to individuals in society through what type of method?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

-In the figure above, the equilibrium market price is $20.The producer surplus is shown by the area

Correct AnswerverifiedShow Answer

A cost not borne by the producer but borne by other people is known as ________ cost.

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Moving ________ along the marginal cost curve, the ________.

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-In the figure above, the equilibrium market price is $20.Area A is the

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Suppose the nation is producing at a point on its PPF.If the marginal cost of producing one more computer is greater than the marginal benefit, the nation is producing

Correct AnswerverifiedShow Answer

If the price is greater than the marginal cost of producing a good, the seller has

Correct AnswerverifiedShow Answer

-The figure above shows the market for pants.If the government subsidizes the production of pants so that production expands from 6 million pairs to 7 million pairs,

Correct AnswerverifiedShow Answer

Resource use is allocative efficient

Correct AnswerverifiedShow Answer

Correct Answerverifieda∙Maria will tutor Jason for 2 hours.b∙...View AnswerShow Answer

If one producer has control over an entire market and underproduces, the producer will

Correct AnswerverifiedShow Answer

Why is the demand curve the same as the marginal benefit curve?

Correct AnswerverifiedThe demand curve for a good tells us for...View AnswerShow Answer

-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.

Correct AnswerverifiedShow Answer

When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is

Correct AnswerverifiedShow Answer

Producer surplus is the ________ summed over the quantity produced.

Correct AnswerverifiedShow Answer

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Moving along the marginal cost curve, the .

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a∙Maria will tutor Jason for 2 hours.
b∙...
View Answer

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The demand curve for a good tells us for...
View Answer

-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.

Correct Answer
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