Question 1

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 2

The "invisible hand" refers to the notion that

Accepted Answer

A)   competitive markets send resources to their highest valued uses.
B)   government intervention is necessary to ensure efficiency.
C)   marginal benefit decreases as more is consumed.
D)   marginal cost increases as more is produced.
E)   no matter what allocation method is used, the resulting production is efficient.

Question 3

-The table above shows the production possibilities for an economy.When the economy produces a combination of 900 books and 50 loaves of bread,

Accepted Answer

A)   production efficiency occurs because resources are not overused.
B)   allocative efficiency is achieved because both goods are produced.
C)   production efficiency is not achieved.
D)   allocative and production efficiency are both achieved.
E)   production efficiency is not achieved but allocative efficiency might be achieved.

Question 4

-Bill and Krista sell potted plants from a roadside stand.The figure above shows Bill and Krista's marginal cost curve and the market price.If Bill and Krista sell 60 plants per week,their producer surplus from the 60th plant will equal

Accepted Answer

A)   $8.
B)   $480.
C)   $0.
D)   $20.
E)   More information is needed to answer the question.

Question 5

-The figure above represents the competitive market for slices of key lime pie.When the price equals $3

Accepted Answer

A)   there is a shortage of slices of pie.
B)   there is a surplus of slices of pie.
C)   the efficient quantity of slices is being produced.
D)   the quantity produced is inefficient.
E)   the deadweight loss is maximized.

Question 6

Producer surplus

Accepted Answer

A)   increases if market price rises and the supply curve does not shift.
B)   decreases if market price rises and the supply curve does not shift.
C)   is equal to the maximum price consumers are willing to pay.
D)   is the same as the marginal cost.
E)   always must equal consumer surplus.

Question 7

The marginal cost of a good or service

Accepted Answer

A)   can be calculated from the marginal benefit of that good or service.
B)   decreases as more of the good or service is produced.
C)   can be derived from the production possibilities frontier.
D)   graphs as a positively sloped curve, so it cannot be derived from the production possibilities frontier, which is downward sloping.
E)   None of the above answers are correct.

Question 8

What did Adam Smith identify as the source of the invisible hand in 1776?

Accepted Answer

A)   a benevolent central government that decided was best for everyone
B)   an individual's concern for fellow humans
C)   an individual's own self-interest
D)   the stock market
E)   buyers' and suppliers' concerns to obtain and retain good reputations

Question 9

The cost of producing one more unit of a good or service is equal to its

Accepted Answer

A)   marginal benefit.
B)   producer surplus.
C)   marginal expenditure.
D)   consumer surplus.
E)   marginal cost.

Question 10

For resource use to be allocatively efficient,when the marginal benefit of a slice of pizza exceeds the marginal cost ________.

Accepted Answer

A)   more slices of pizza should be produced
B)   fewer slices of pizza should be produced
C)   no more slices of pizza should be produced
D)   allocative efficiency is reached only if the marginal benefit exceeds the marginal cost by as much as possible
E)   None of the above answers is correct.

Question 11

-In the figure above,what is the consumer surplus per day?

Accepted Answer

A)   $100,000
B)   $50,000
C)   $125,000
D)   $150,000
E)   zero

Question 12

When the market price rises,the consumers' consumer surplus ________.When the market price falls,the consumers' consumer surplus ________.

Accepted Answer

A)   decreases; increases
B)   decreases; decreases
C)   increases; increases
D)   increases; decreases
E)   does not change; increases

Question 13

The price of a cowboy hat is $100.Willie is willing to pay $130,Waylon is willing to pay $100,and Merle is willing to pay $85.All of the following statements are true EXCEPT:

Accepted Answer

A)   Merle's consumer surplus is $15.
B)   The sum of consumer surplus will be $30.
C)   Waylon's consumer surplus is $0.
D)   Only Willie and Waylon will purchase the cowboy hat.
E)   Willie's consumer surplus is $30.

Question 14

As more of a good is consumed,the marginal benefit of the good

Accepted Answer

A)   increases.
B)   decreases.
C)   remains constant.
D)   is unpredictable.
E)   first decreases and then increases.

Question 15

-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 16

Jason hires 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.What will be the equilibrium quantity of hours tutored and the equilibrium price? Explain why this quantity and price is the equilibrium.What is Jason's consumer surplus and what is Maria's producer surplus?

Accepted Answer

The equilibrium quantity will be 4 hours...

Question 17

Consumer surplus exists when

Accepted Answer

A)   it costs less to produce goods than buyers must pay for them.
B)   consumers value the good more highly than what they must pay to buy it.
C)   taxes on goods are less than the appropriate amount.
D)   the marginal benefit of the good is always equal to or less than the price of the good.
E)   the price of the good is greater than the marginal cost of producing a unit of the good.

Question 18

Outcomes are fair according to the

Accepted Answer

A)   rules view if private property rights are established and trade is voluntary.
B)   results view if private property rights are established and trade is voluntary.
C)   rules view if there is not too much inequality.
D)   results view if there is not a big tradeoff.
E)   results view if there is equality of opportunity.

Question 19

-The figure above shows Diane's demand curve for soda.The price of a soda is $1.00.Diane's total benefit from consuming 15 sodas is

Accepted Answer

A)   $15.00.
B)   $26.25.
C)   $11.25.
D)   $0.
E)   None of the above answers is correct.

Question 20

-The figure above shows a nation's production possibilities frontier.If the marginal cost equals the marginal benefit at point A when 4 million pizzas are produced,

Accepted Answer

A)   allocative efficiency is achieved but production efficiency is not achieved because there are no tacos being produced.
B)   both allocative and production efficiency are achieved.
C)   production efficiency is achieved but allocative efficiency is not achieved because there are no tacos being produced.
D)   production efficiency is achieved but allocative efficiency is not achieved because the number of tacos produced is at its absolute maximum.
E)   neither allocative nor production efficiency has been achieved.

Exam 6: Efficiency and Fairness of Markets

Producer surplus

Correct Answer
verified

-The figure above represents the competitive market for slices of key lime pie.When the price equals $3

Correct Answer
verified

-In the figure above,what is the consumer surplus per day?

Correct Answer
verified

Correct Answer
verified
The equilibrium quantity will be 4 hours...
View Answer

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

Correct Answer
verified

As more of a good is consumed,the marginal benefit of the good

Correct Answer
verified

Consumer surplus exists when

Correct Answer
verified

When the market price rises,the consumers' consumer surplus .When the market price falls,the consumers' consumer surplus .

Correct Answer
verified

The cost of producing one more unit of a good or service is equal to its

Correct Answer
verified

-Bill and Krista sell potted plants from a roadside stand.The figure above shows Bill and Krista's marginal cost curve and the market price.If Bill and Krista sell 60 plants per week,their producer surplus from the 60th plant will equal

Correct Answer
verified

What did Adam Smith identify as the source of the invisible hand in 1776?

Correct Answer
verified

For resource use to be allocatively efficient,when the marginal benefit of a slice of pizza exceeds the marginal cost ________.

Correct Answer
verified

-The table above shows the production possibilities for an economy.When the economy produces a combination of 900 books and 50 loaves of bread,

Correct Answer
verified

-The figure above shows Diane's demand curve for soda.The price of a soda is $1.00.Diane's total benefit from consuming 15 sodas is

Correct Answer
verified

-The figure above shows a nation's production possibilities frontier.If the marginal cost equals the marginal benefit at point A when 4 million pizzas are produced,

Correct Answer
verified

The supply curve is upward sloping because of

Correct Answer
verified

Outcomes are fair according to the

Correct Answer
verified

The "invisible hand" refers to the notion that

Correct Answer
verified

The marginal cost of a good or service

Correct Answer
verified

The price of a cowboy hat is $100.Willie is willing to pay $130,Waylon is willing to pay $100,and Merle is willing to pay $85.All of the following statements are true EXCEPT:

Correct Answer
verified

Exam 6: Efficiency and Fairness of Markets

Producer surplus

Correct AnswerverifiedShow Answer

-The figure above represents the competitive market for slices of key lime pie.When the price equals $3

Correct AnswerverifiedShow Answer

-In the figure above,what is the consumer surplus per day?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe equilibrium quantity will be 4 hours...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

As more of a good is consumed,the marginal benefit of the good

Correct AnswerverifiedShow Answer

Consumer surplus exists when

Correct AnswerverifiedShow Answer

When the market price rises,the consumers' consumer surplus ________.When the market price falls,the consumers' consumer surplus ________.

Correct AnswerverifiedShow Answer

The cost of producing one more unit of a good or service is equal to its

Correct AnswerverifiedShow Answer

-Bill and Krista sell potted plants from a roadside stand.The figure above shows Bill and Krista's marginal cost curve and the market price.If Bill and Krista sell 60 plants per week,their producer surplus from the 60th plant will equal

Correct AnswerverifiedShow Answer

What did Adam Smith identify as the source of the invisible hand in 1776?

Correct AnswerverifiedShow Answer

For resource use to be allocatively efficient,when the marginal benefit of a slice of pizza exceeds the marginal cost ________.

Correct AnswerverifiedShow Answer

-The table above shows the production possibilities for an economy.When the economy produces a combination of 900 books and 50 loaves of bread,

Correct AnswerverifiedShow Answer

-The figure above shows Diane's demand curve for soda.The price of a soda is $1.00.Diane's total benefit from consuming 15 sodas is

Correct AnswerverifiedShow Answer

-The figure above shows a nation's production possibilities frontier.If the marginal cost equals the marginal benefit at point A when 4 million pizzas are produced,

Correct AnswerverifiedShow Answer

The supply curve is upward sloping because of

Correct AnswerverifiedShow Answer

Outcomes are fair according to the

Correct AnswerverifiedShow Answer

The "invisible hand" refers to the notion that

Correct AnswerverifiedShow Answer

The marginal cost of a good or service

Correct AnswerverifiedShow Answer

The price of a cowboy hat is $100.Willie is willing to pay $130,Waylon is willing to pay $100,and Merle is willing to pay $85.All of the following statements are true EXCEPT:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The equilibrium quantity will be 4 hours...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

When the market price rises,the consumers' consumer surplus .When the market price falls,the consumers' consumer surplus .

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