Question 1

-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.

Question 2

-In the above figure,the market is at its equilibrium.Area A + area B is equal to

Accepted Answer

A)  consumer surplus.
B)  total revenue.
C)  total surplus.
D)  marginal benefit.
E)  producer surplus.

Question 3

When there is market failure so that a market produces less than the efficient amount,

Accepted Answer

A)  consumer surplus definitely is larger than when the efficient quantity is produced.
B)  the sum of producer surplus and consumer surplus is larger than when the efficient quantity is produced.
C)  there is a deadweight loss.
D)  consumers definitely lose and producers definitely gain.
E)  consumers definitely gain and producers definitely lose.

Question 4

Why does the problem of the big tradeoff arise when the government engages in the process of redistributing income using taxes and transfers?

Accepted Answer

There are two reasons why the big tradeo...

Question 5

The marginal benefit from buying a particular unit of a good

Accepted Answer

A)  is the amount paid for the unit plus the consumer surplus of the unit.
B)  increases as market price increases.
C)  is the difference between the amount paid for the unit and the market price of the unit.
D)  is the difference between the total benefit of the unit and the marginal cost of producing that unit.
E)  None of the above answers is correct.

Question 6

In a competitive market with no externalities,

Accepted Answer

A)  the consumer surplus is equal to zero because of competition.
B)  buyers cannot control the price,so the consumer surplus is zero.
C)  at the equilibrium price,marginal benefit exceeds marginal cost.
D)  at the equilibrium price,marginal benefit equals marginal cost.
E)  at the equilibrium price,the total amount of consumer surplus equals the total amount of producer surplus.

Question 7

-In the figure above,if the market price is $12,then the total consumer surplus is

Accepted Answer

A)  $12.
B)  $10.
C)  minimized.
D)  $240.
E)  $480.

Question 8

Redistributing income from the rich to the poor creates inefficiency because

Accepted Answer

A)  of wasteful expenditures by people receiving welfare grants.
B)  of the administrative costs to operate the government redistribution agencies.
C)  the redistribution creates an incentive to produce less output.
D)  Both answers B and C are correct.
E)  Both answers A and C are correct.

Question 9

If the price of a pizza is $10 per pizza,the consumer surplus from the first pizza consumed ________ the consumer surplus from the second pizza consumed.

Accepted Answer

A)  is greater than
B)  equals
C)  is less than
D)  cannot be compared to
E)  None of the above answers is correct because more information is needed about the marginal cost of producing the pizzas to answer the question.

Question 10

Allocative efficiency is achieved when the production is such that

Accepted Answer

A)  the marginal benefit exceeds the marginal cost by as much as possible.
B)  marginal cost equals zero.
C)  marginal benefit is equal to marginal cost.
D)  the production point is on the PPF.
E)  None of the above is true.

Question 11

The fair results approach to fairness

Accepted Answer

A)  requires property rights and voluntary exchange.
B)  supports transferring income from the rich and giving it to the poor.
C)  requires efficient market outcomes.
D)  ensures that marginal cost equals marginal benefit.
E)  never creates a big tradeoff.

Question 12

The marginal cost curve is

Accepted Answer

A)  downward sloping to reflect the bowed out PPF.
B)  downward sloping as marginal benefits increase.
C)  upward sloping because marginal cost falls as more of a good or service is produced.
D)  upward sloping to reflect the increasing opportunity cost of producing one more unit.
E)  U-shaped to reflect the bowed out PPF.

Question 13

A point on the demand curve shows the

Accepted Answer

A)  price and the corresponding quantity demanded.
B)  marginal benefit from that unit.
C)  marginal cost to the seller of producing the unit.
D)  Both answers A and B are correct.
E)  Both answers A and C are correct.

Question 14

A benefit that accrues to people other than the buyer of a good is known as ________ benefit.

Accepted Answer

A)  an internal
B)  an external
C)  a marginal
D)  a total
E)  a subsidized

Question 15

If a landlord will rent an apartment only to married couples over 30 years old,the landlord is allocating resources using a ________ allocation method.

Accepted Answer

A)  majority rule
B)  market price
C)  contest
D)  personal characteristics
E)  command

Question 16

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

Accepted Answer

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

Question 17

Shelby said to her friend,"I just bought a new pair of climbing shoes and I love them so much that I totally would have paid more for them." Shelby was describing the concept of

Accepted Answer

A)  consumer surplus.
B)  producer surplus.
C)  equilibrium.
D)  marginal cost.
E)  total surplus.

Question 18

According to the "fair rules" view of fairness,are taxes fair? Explain.

Accepted Answer

Taxes are unfair according to the fair r...

Question 19

When a society achieves production efficiency,it is

Accepted Answer

A)  definitely producing at a point on its PPF.
B)  perhaps producing at a point on its PPF and perhaps producing at a point inside its PPF.
C)  definitely producing that combination of goods and services that society values most highly.
D)  not fully employing all of its available resources to produce goods and services.
E)  enjoying a free lunch.

Question 20

At the current production point on a nation's production possibilities frontier,the marginal benefit of a slice of pizza is 500 tacos while the marginal cost of producing a slice of pizza is 750 tacos.For the nation to produce at the point of allocative efficiency,what should be done?

Accepted Answer

The marginal benefit of a slic...

Exam 6: Efficiency and Fairness of Markets

Allocative efficiency is achieved when the production is such that

Correct AnswerverifiedShow Answer

When there is market failure so that a market produces less than the efficient amount,

Correct AnswerverifiedShow Answer

When a society achieves production efficiency,it is

Correct AnswerverifiedShow Answer

Shelby said to her friend,"I just bought a new pair of climbing shoes and I love them so much that I totally would have paid more for them." Shelby was describing the concept of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a competitive market with no externalities,

Correct AnswerverifiedShow Answer

-In the figure above,if the market price is $12,then the total consumer surplus is

Correct AnswerverifiedShow Answer

The marginal benefit from buying a particular unit of a good

Correct AnswerverifiedShow Answer

The fair results approach to fairness

Correct AnswerverifiedShow Answer

-In the above figure,the market is at its equilibrium.Area A + area B is equal to

Correct AnswerverifiedShow Answer

If a landlord will rent an apartment only to married couples over 30 years old,the landlord is allocating resources using a ________ allocation method.

Correct AnswerverifiedShow Answer

Redistributing income from the rich to the poor creates inefficiency because

Correct AnswerverifiedShow Answer

According to the "fair rules" view of fairness,are taxes fair? Explain.

Correct AnswerverifiedTaxes are unfair according to the fair r...View AnswerShow Answer

If the price of a pizza is $10 per pizza,the consumer surplus from the first pizza consumed ________ the consumer surplus from the second pizza consumed.

Correct AnswerverifiedShow Answer

At the current production point on a nation's production possibilities frontier,the marginal benefit of a slice of pizza is 500 tacos while the marginal cost of producing a slice of pizza is 750 tacos.For the nation to produce at the point of allocative efficiency,what should be done?

Correct AnswerverifiedThe marginal benefit of a slic...View AnswerShow Answer

A benefit that accrues to people other than the buyer of a good is known as ________ benefit.

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

Why does the problem of the big tradeoff arise when the government engages in the process of redistributing income using taxes and transfers?

Correct AnswerverifiedThere are two reasons why the big tradeo...View AnswerShow Answer

The marginal cost curve is

Correct AnswerverifiedShow Answer

A point on the demand curve shows the

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Taxes are unfair according to the fair r...
View Answer

Correct Answer
verified

Correct Answer
verified
The marginal benefit of a slic...
View Answer

Correct Answer
verified

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

Correct Answer
verified
There are two reasons why the big tradeo...
View Answer

Correct Answer
verified

Correct Answer
verified