Question 1

The price of a cowboy hat is $100. Willie can produce a hat at a marginal cost of $130, Waylon can produce at a marginal cost of $100, and Merle can produce at a marginal cost of $85. Which of the following statements is correct?

Accepted Answer

A)  The sum of producer surplus is $15.
B)  All three of these sellers will gain producer surplus from selling a hat.
C)  The sum of producer surplus is $30.
D)  Willie's producer surplus is $30.
E)  The sum of producer surplus is $45.F) A) and D)
G) C) and D)

Question 2

-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 quanti...

Question 3

When a society achieves allocative efficiency, it

Accepted Answer

A)  is not achieving production efficiency.
B)  is producing that combination of goods and services that society values most highly.
C)  might or it might not be producing at a point on society's PPF.
D)  is producing a combination of goods and services whose marginal cost exceeds their marginal benefit.
E)  is producing the combination of goods and services for which marginal benefit exceeds marginal cost by as much as possible.F) D) and E)
G) C) and E)

Question 4

Marginal benefit

Accepted Answer

A)  increases as more of a good is consumed.
B)  decreases as more of a good is consumed.
C)  is the total benefit from all units consumed.
D)  is constant as more of a good is consumed.
E)  is the gain to the producer of producing and selling one more unit of a good.F) A) and E)
G) B) and D)

Question 5

Why does the marginal benefit curve have a negative slope?

Accepted Answer

Each successive increase in the consumpt...

Question 6

"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false?
 Explain your answer.

Accepted Answer

The statement is false. Allocative effic...

Question 7

The figure above shows the market for pizza.
-In the figure above, when the market is in equilibrium, marginal benefit ________ marginal cost, so the quantity of pizza produced is ________.

Accepted Answer

A)  equals; efficient
B)  exceeds; efficient
C)  is below; efficient
D)  is below; not efficient
E)  exceeds; not efficientF) C) and E)
G) A) and D)

Question 8

When underproduction occurs,

Accepted Answer

A)  producers gain more surplus at the expense of consumers.
B)  marginal cost is greater than marginal benefit.
C)  consumer surplus increases to a harmful amount.
D)  there is a deadweight loss that is borne by the entire society.
E)  the deadweight loss harms only consumers.F) None of the above
G) C) and E)

Question 9

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 10

Allocative efficiency occurs

Accepted Answer

A)  anywhere inside or on the production possibilities frontier.
B)  when the total cost of production is minimized.
C)  at all points on the production possibilities frontier.
D)  at only one point on the production possibilities frontier.
E)  at the points where the production possibilities frontier crosses the horizontal or vertical axis.F) A) and E)
G) A) and C)

Question 11

Which of the following is an example of consumer surplus?

Accepted Answer

A)  Jose buys a hamburger for $2 and tells you he would not have paid a penny more.
B)  John believes the price he paid for his computer was too high.
C)  Mary buys a paper tablet for $2 and finds the same good at another store for $1.50.
D)  Sue would have paid $15 for a new compact disc but paid only $10.
E)  Anne finds a mountain bike for which she is willing to pay a maximum of $550 and the price of the bike is $600.F) A) and B)
G) A) and C)

Question 12

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 B)
G) A) and C)

Question 13

If the government imposes a tax on a competitive market with no externalities, then i. resource use is not efficient.
Ii. there is a deadweight loss.
Iii. consumer surplus is at its maximum.

Accepted Answer

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

Question 14

The supply curve of a good or service is the same as

Accepted Answer

A)  the demand curve.
B)  the marginal benefit curve.
C)  the marginal cost curve.
D)  the total surplus curve.
E)  None of the above answers is correct.F) All of the above
G) A) and E)

Question 15

Which of the following is an example in which "the big tradeoff" can occur?

Accepted Answer

A)  The government redistributes income from the rich to the poor.
B)  Ford increases the price of a pickup truck.
C)  A basketball player signs a $5 million contract.
D)  A college lowers tuition.
E)  The price of personal computers falls year after year.F) B) and C)
G) A) and D)

Question 16

Which of the following situations describing a resource allocation method most resembles the majority rule method?

Accepted Answer

A)  Seventy percent of Austin's chess club wanted to purchase new chess sets and thirty percent did not. The club purchased the sets.
B)  Lattes are sold at Starbucks.
C)  Food from the Weld County Food Bank is distributed to families in need.
D)  Jose works at Intel. His manager tells him what work needs to be completed each month.
E)  Matt's mother had the rule that whoever cuts the cake chooses their slice last.F) A) and D)
G) None of the above

Question 17

-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.F) A) and C)
G) D) and E)

Question 18

Why is a competitive market efficient?

Accepted Answer

Efficiency is attained when production i...

Question 19

-The figure above represents the competitive market for slices of key lime pie. When 60 slices are produced, the marginal cost

Accepted Answer

A)  exceeds the marginal benefit.
B)  is less than the marginal benefit.
C)  equals the marginal benefit.
D)  is not defined.
E)  equals the deadweight loss on the 60th slice.F) B) and D)
G) A) and D)

Question 20

Which of the following statements is correct?

Accepted Answer

A)  Consumer surplus equals the price paid for a good.
B)  The consumer surplus from a good is always larger than the total benefit from the good.
C)  An increase in price decreases consumer surplus.
D)  An increase in price has no effect on consumer surplus.
E)  The consumer surplus from a good or service must always equal producer surplus.F) A) and E)
G) B) and E)

Exam 6: Efficiency and Fairness of Markets

Which of the following situations describing a resource allocation method most resembles the majority rule method?

Correct Answer
verified

Allocative efficiency occurs

Correct Answer
verified

When underproduction occurs,

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

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

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

"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false? Explain your answer.

Correct Answer
verified
The statement is false. Allocative effic...
View Answer

-The figure above represents the competitive market for slices of key lime pie. When 60 slices are produced, the marginal cost

Correct Answer
verified

Why is a competitive market efficient?

Correct Answer
verified
Efficiency is attained when production i...
View Answer

The supply curve of a good or service is the same as

Correct Answer
verified

Marginal benefit

Correct Answer
verified

If the government imposes a tax on a competitive market with no externalities, then i. resource use is not efficient. Ii. there is a deadweight loss. Iii. consumer surplus is at its maximum.

Correct Answer
verified

The price of a cowboy hat is $100. Willie can produce a hat at a marginal cost of $130, Waylon can produce at a marginal cost of $100, and Merle can produce at a marginal cost of $85. Which of the following statements is correct?

Correct Answer
verified

When a society achieves allocative efficiency, it

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

Which of the following is an example in which "the big tradeoff" can occur?

Correct Answer
verified

Which of the following is an example of consumer surplus?

Correct Answer
verified

The figure above shows the market for pizza. -In the figure above, when the market is in equilibrium, marginal benefit marginal cost, so the quantity of pizza produced is .

Correct Answer
verified

Why does the marginal benefit curve have a negative slope?

Correct Answer
verified
Each successive increase in the consumpt...
View Answer

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

Exam 6: Efficiency and Fairness of Markets

Which of the following situations describing a resource allocation method most resembles the majority rule method?

Correct AnswerverifiedShow Answer

Allocative efficiency occurs

Correct AnswerverifiedShow Answer

When underproduction occurs,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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

"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false? Explain your answer.

Correct AnswerverifiedThe statement is false. Allocative effic...View AnswerShow Answer

-The figure above represents the competitive market for slices of key lime pie. When 60 slices are produced, the marginal cost

Correct AnswerverifiedShow Answer

Why is a competitive market efficient?

Correct AnswerverifiedEfficiency is attained when production i...View AnswerShow Answer

The supply curve of a good or service is the same as

Correct AnswerverifiedShow Answer

Marginal benefit

Correct AnswerverifiedShow Answer

If the government imposes a tax on a competitive market with no externalities, then i. resource use is not efficient. Ii. there is a deadweight loss. Iii. consumer surplus is at its maximum.

Correct AnswerverifiedShow Answer

The price of a cowboy hat is $100. Willie can produce a hat at a marginal cost of $130, Waylon can produce at a marginal cost of $100, and Merle can produce at a marginal cost of $85. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

When a society achieves allocative efficiency, it

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

Which of the following is an example in which "the big tradeoff" can occur?

Correct AnswerverifiedShow Answer

Which of the following is an example of consumer surplus?

Correct AnswerverifiedShow Answer

The figure above shows the market for pizza. -In the figure above, when the market is in equilibrium, marginal benefit ________ marginal cost, so the quantity of pizza produced is ________.

Correct AnswerverifiedShow Answer

Why does the marginal benefit curve have a negative slope?

Correct AnswerverifiedEach successive increase in the consumpt...View AnswerShow Answer

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified
The statement is false. Allocative effic...
View Answer

Correct Answer
verified

Correct Answer
verified
Efficiency is attained when production i...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The figure above shows the market for pizza. -In the figure above, when the market is in equilibrium, marginal benefit marginal cost, so the quantity of pizza produced is .

Correct Answer
verified

Correct Answer
verified
Each successive increase in the consumpt...
View Answer

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