Question 1

The concept of "the invisible hand" suggests that to attain efficiency,the government should

Accepted Answer

A)   guide economic activity.
B)   set prices.
C)   leave prices and output decisions to the competitive market.
D)   regulate all production decisions, but not price decisions.
E)   make sure that a command system is used to allocate resources.

Question 2

-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.

Question 3

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 4

The supply curve is upward sloping because of

Accepted Answer

A)   increasing marginal cost.
B)   decreasing marginal benefit.
C)   decreasing marginal cost.
D)   increasing marginal benefit.
E)   increasing total cost.

Question 5

If a firm is willing to supply the 1,000th unit of a good at a price of $23 or more,we know that $23 is the

Accepted Answer

A)   highest price the seller hopes to realize for this output.
B)   minimum price the seller must receive to produce this unit.
C)   average price of all the prices the seller could charge.
D)   price that sets the marginal benefit equal to the price.
E)   only price for which the seller is willing to sell this unit of the good.

Question 6

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. D

Question 7

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.

Question 8

In the figure above,production efficiency occurs at ________,and allocative efficiency occurs at ________.

Accepted Answer

A)   all points on the PPF; only one point on the PPF
B)   only one point on the PPF; all points on the PPF
C)   only one point on the PPF; only one point on the PPF
D)   all points on the PPF; all points on the PPF
E)   all points on the PPF; all points above the PPF

Question 9

When output is less than the efficient level,

Accepted Answer

A)   consumers are willing to pay more for another unit than it costs to produce the unit.
B)   the amount consumers are willing to pay equals the cost of production.
C)   the cost of production is greater than the price consumers are willing to pay.
D)   the production costs can't be measured.
E)   the marginal cost of producing the good must be greater than the marginal benefit from the good. A

Question 10

To achieve ________,marginal cost ________ marginal benefit.

Accepted Answer

A)   production efficiency; must equal
B)   production efficiency; must be greater than
C)   allocative efficiency; must be greater than
D)   allocation efficiency; must be less than
E)   allocative efficiency; must equal

Question 11

When efficiency is attained,the consumer surplus

Accepted Answer

A)   must be larger than the producer surplus.
B)   must be smaller than the producer surplus.
C)   must equal the producer surplus.
D)   can be either smaller than or larger than but cannot equal the producer surplus.
E)   can be smaller than, equal to, or larger than the producer surplus.

Question 12

The figure above shows the demand curve for pizza and the market price of pizza.
-In the figure above,the total benefit from pizza is ________ per day.

Accepted Answer

A)   $100,000
B)   $50,000
C)   $125,000
D)   $150,000
E)   None of the above answers is correct.

Question 13

The principle of decreasing marginal benefit explains why the marginal benefit curve

Accepted Answer

A)   is upward sloping.
B)   has an infinite slope.
C)   is vertical.
D)   is downward sloping.
E)   is horizontal.

Question 14

All points on the production possibilities frontier

Accepted Answer

A)   are production inefficient.
B)   achieve allocative efficiency.
C)   are production efficient but only one point achieves allocative efficiency.
D)   are allocatively efficient but only one point achieves production efficiency.
E)   are allocatively inefficient.

Question 15

-The figure above shows the demand curve for pizza.
a.What is the marginal benefit of the 20th pizza?
b.What is the maximum price the consumer is willing to pay for the 20th pizza?
c.If the price of a pizza is $6,what is the consumer surplus of the 20th pizza?
d. If the price of a pizza is $10,what is the consumer surplus on all the pizzas consumed?
e.If the price of a pizza is $6,what is the consumer surplus on all the pizzas consumed?

Accepted Answer

a.The marginal benefit of the 20th pizza...

Question 16

-The figure above shows the market for pants.If the production of the pants results in an external cost from pollution that is the result of the dye used,then

Accepted Answer

A)   6 million pairs is the efficient quantity.
B)   fewer than 6 million pairs is the efficient quantity.
C)   more than 6 million pairs is the efficient quantity.
D)   None of the above answers is necessarily correct because more information is needed about the size of the external cost.
E)   None of the above answers is correct because it is impossible to tell whether the external cost results in underproduction or overproduction. B

Question 17

Overproduction results in

Accepted Answer

A)   external costs.
B)   external benefits.
C)   deadweight loss.
D)   super-efficiency.
E)   the marginal benefit of the last unit produced being larger than the marginal cost.

Question 18

-The figure above shows the supply and demand for pizza.
a.What is the efficient level of output?
b.If 70,000 pizzas are produced,what area represents the deadweight loss?
c.Why does the deadweight loss in part (b)occur?
d.If 20,000 pizzas are produced,what area represents the deadweight loss?
e.Why does the deadweight loss in part (d)occur?

Accepted Answer

a.40,000 pizzas is the efficient quantit...

Question 19

Hester owns an ice cream shop.It costs her $2 per cone to make 10 ice cream cones.If she sells 10 cones for $4 each,her producer surplus on the 10 cones is equal to

Accepted Answer

A)   $2.
B)   $20.
C)   $10.
D)   $40.
E)   $4.

Question 20

"If there is an inefficient level of nursing care in South America,a deadweight loss exists." Is this statement true or false?

Accepted Answer

The statement is tru...

Exam 6: Efficiency and Fairness of Markets

The concept of "the invisible hand" suggests that to attain efficiency,the government should

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

The fair results approach to fairness

Correct Answer
verified

The supply curve is upward sloping because of

Correct Answer
verified

If a firm is willing to supply the 1,000th unit of a good at a price of $23 or more,we know that $23 is the

Correct Answer
verified

A point on the demand curve shows the

Correct Answer
verified
D

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

Correct Answer
verified

In the figure above,production efficiency occurs at ,and allocative efficiency occurs at .

Correct Answer
verified

When output is less than the efficient level,

Correct Answer
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A

To achieve ,marginal cost marginal benefit.

Correct Answer
verified

When efficiency is attained,the consumer surplus

Correct Answer
verified

The figure above shows the demand curve for pizza and the market price of pizza. -In the figure above,the total benefit from pizza is ________ per day.

Correct Answer
verified

The principle of decreasing marginal benefit explains why the marginal benefit curve

Correct Answer
verified

All points on the production possibilities frontier

Correct Answer
verified

Correct Answer
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a.The marginal benefit of the 20th pizza...
View Answer

-The figure above shows the market for pants.If the production of the pants results in an external cost from pollution that is the result of the dye used,then

Correct Answer
verified
B

Overproduction results in

Correct Answer
verified

Correct Answer
verified
a.40,000 pizzas is the efficient quantit...
View Answer

Hester owns an ice cream shop.It costs her $2 per cone to make 10 ice cream cones.If she sells 10 cones for $4 each,her producer surplus on the 10 cones is equal to

Correct Answer
verified

"If there is an inefficient level of nursing care in South America,a deadweight loss exists." Is this statement true or false?

Correct Answer
verified
The statement is tru...
View Answer

Exam 6: Efficiency and Fairness of Markets

The concept of "the invisible hand" suggests that to attain efficiency,the government should

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

The fair results approach to fairness

Correct AnswerverifiedShow Answer

The supply curve is upward sloping because of

Correct AnswerverifiedShow Answer

If a firm is willing to supply the 1,000th unit of a good at a price of $23 or more,we know that $23 is the

Correct AnswerverifiedShow Answer

A point on the demand curve shows the

Correct AnswerverifiedD

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

Correct AnswerverifiedShow Answer

In the figure above,production efficiency occurs at ________,and allocative efficiency occurs at ________.

Correct AnswerverifiedShow Answer

When output is less than the efficient level,

Correct AnswerverifiedA

To achieve ________,marginal cost ________ marginal benefit.

Correct AnswerverifiedShow Answer

When efficiency is attained,the consumer surplus

Correct AnswerverifiedShow Answer

The figure above shows the demand curve for pizza and the market price of pizza. -In the figure above,the total benefit from pizza is ________ per day.

Correct AnswerverifiedShow Answer

The principle of decreasing marginal benefit explains why the marginal benefit curve

Correct AnswerverifiedShow Answer

All points on the production possibilities frontier

Correct AnswerverifiedShow Answer

Correct Answerverifieda.The marginal benefit of the 20th pizza...View AnswerShow Answer

-The figure above shows the market for pants.If the production of the pants results in an external cost from pollution that is the result of the dye used,then

Correct AnswerverifiedB

Overproduction results in

Correct AnswerverifiedShow Answer

Correct Answerverifieda.40,000 pizzas is the efficient quantit...View AnswerShow Answer

Hester owns an ice cream shop.It costs her $2 per cone to make 10 ice cream cones.If she sells 10 cones for $4 each,her producer surplus on the 10 cones is equal to

Correct AnswerverifiedShow Answer

"If there is an inefficient level of nursing care in South America,a deadweight loss exists." Is this statement true or false?

Correct AnswerverifiedThe statement is tru...View AnswerShow Answer

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D

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In the figure above,production efficiency occurs at ,and allocative efficiency occurs at .

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A

To achieve ,marginal cost marginal benefit.

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a.The marginal benefit of the 20th pizza...
View Answer

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B

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a.40,000 pizzas is the efficient quantit...
View Answer

Correct Answer
verified

Correct Answer
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The statement is tru...
View Answer