Question 1

As a method of resource allocation,force

Accepted Answer

A)  plays a crucial negative role but not a positive role.
B)  plays a crucial positive role but not a negative role.
C)  plays a crucial role for both good and ill.
D)  is always better than majority rule.
E)  is always better than first-come,first-served.F) A) and D)
G) A) and E)

Question 2

Restaurants don't use market price to allocate their tables because

Accepted Answer

A)  they would have to watch the price of a table at other restaurants to keep competitive.
B)  restaurants would have to advertise the price.
C)  the price of a table would fluctuate hourly,customer uncertainty would deter patrons,and lower demand would bring lower profit.
D)  they would have to continually change the supply of tables to keep the price constant.
E)  the price of a table would eventually fall to zero and restaurants would incur a loss.F) B) and C)
G) A) and B)

Question 3

Use the table below to answer the following question.
Table 5.2.4
 
-Table 5.2.4 shows the demand schedules for pizza for Abby and Barry who are the only buyers in the market.What is the marginal social benefit from the 45th slice of pizza?

Accepted Answer

A)  $3.50
B)  $4.00
C)  $2.50
D)  $5.00
E)  $4.50F) A) and E)
G) None of the above

Question 4

Choose the correct statement.

Accepted Answer

A)  Producer surplus is an external cost.
B)  Consumer surplus is an external benefit.
C)  A government subsidy paid to a producer is an external benefit.
D)  Consumer surplus is an external cost.
E)  Subsidies lead to overproduction.F) A) and B)
G) A) and C)

Question 5

Use the figure below to answer the following questions.  Figure 5.2.1
-Consider Figure 5.2.1.If the price is $4,what is the consumer surplus from the third unit of the good?

Accepted Answer

A)  $0
B)  $1
C)  $2
D)  $3
E)  $4F) A) and B)
G) A) and C)

Question 6

All of the following statements are true except:

Accepted Answer

A)  An externality is a cost or a benefit that affects someone other than the seller or the buyer of a good.
B)  When an electric utility does not consider the cost of pollution when it decides how much power to produce,the result is overproduction.
C)  An electric utility creates an external cost by burning coal.
D)  All externalities create overproduction.
E)  An external cost creates overproduction.F) C) and E)
G) B) and C) D

Question 7

The marginal cost of producing one more hot dog is $1.00.The price of a hot dog is $1.50.The producer surplus from selling one more hotdog is

Accepted Answer

A)  $1.00.
B)  $1.50.
C)  $0.50.
D)  zero.
E)  $2.50.F) All of the above
G) A) and C)

Question 8

Producer surplus is

Accepted Answer

A)  the value producers place on a good minus the price of the good.
B)  the price of the good minus the value producers place on it.
C)  zero if price equals marginal cost.
D)  equal to marginal benefit minus marginal cost.
E)  equal to consumer surplus.F) B) and D)
G) A) and E)

Question 9

If production is not at an efficient level,which of the following must be true?

Accepted Answer

A)  Marginal social benefit exceeds marginal social cost.
B)  Marginal social cost exceeds marginal social benefit.
C)  Production will increase.
D)  Production will decrease.
E)  Total surplus is not maximized.F) A) and E)
G) B) and E) E

Question 10

Sally and Eric are the only people in an economy.Sally buys 3 bottles of water when the price is $2 a bottle and 4 bottles of water when the price is $1 a bottle.Eric buys 10 bottles of water when the price is $0.50 a bottle and 5 bottles of water when the price is $1 a bottle.In the market for water,the quantity demanded

Accepted Answer

A)  increases as the price rises.
B)  is 4 bottles at a price of $1 a bottle.
C)  increases as the price falls.
D)  is 8 bottles at a price of $2 a bottle.
E)  is 15 bottles at a price of $0.50 a bottle.F) A) and E)
G) A) and D)

Question 11

A modified version of utilitarianism proposed by John Rawls could be summarized as

Accepted Answer

A)  transfer everything to the poor.
B)  transfer everything to the rich.
C)  expand the size of government.
D)  minimize the size of government.
E)  make the poorest as well off as possible.F) B) and C)
G) A) and E)

Question 12

What is the producer surplus for the market from the production of the 100th unit of a good?

Accepted Answer

A)  the marginal cost of producing the 100th unit
B)  the marginal benefit from the 100th unit
C)  the opportunity cost of producing the 100th unit
D)  the marginal social benefit from the 100th unit minus the marginal cost of producing the 100th unit
E)  the price paid for the 100th unit minus the marginal social cost of producing the 100th unitF) B) and C)
G) C) and D)

Question 13

Use the figure below to answer the following questions.  Figure 5.2.1
-Consider Figure 5.2.1.When the price is $4 a unit,what is the consumer surplus from the second unit of the good?

Accepted Answer

A)  $7
B)  $3
C)  $4
D)  $1
E)  $10F) A) and D)
G) B) and D)

Question 14

A supply curve is

Accepted Answer

A)  the same as a production possibilities frontier.
B)  a marginal social benefit curve.
C)  a marginal benefit curve.
D)  a marginal cost curve.
E)  a downward-sloping curve.F) A) and B)
G) A) and E)

Question 15

According to the "big tradeoff,"

Accepted Answer

A)  income transfers reduce efficiency.
B)  efficiency requires income transfers.
C)  a more equally shared pie results in a larger pie.
D)  property rights and voluntary exchange insure equality of opportunity.
E)  income transfers should make the poorest person as well off as possible.F) C) and E)
G) All of the above

Question 16

The market for strawberries is perfectly competitive.Joe and Haley each purchase 3 boxes of strawberries.Joe's demand is much more elastic than Haley's.Which statement is true?

Accepted Answer

A)  Joe's consumer surplus exceeds Haley's.
B)  Haley's consumer surplus equals Joe's.
C)  Haley's consumer surplus exceeds Joe's.
D)  Joe receives no consumer surplus.
E)  Neither Joe nor Haley receive any consumer surplus.F) C) and D)
G) None of the above C

Question 17

The price of pizza increases.Everything else remaining the same,the consumer surplus from pizza

Accepted Answer

A)  increases.
B)  is greater than the producer surplus from pizza.
C)  is less than the producer surplus from pizza.
D)  does not change.
E)  decreases.F) B) and C)
G) A) and D)

Question 18

In competitive equilibrium,which of the following statements is false?

Accepted Answer

A)  Marginal social benefit equals marginal social cost.
B)  Willingness to pay equals marginal cost of production.
C)  The sum of consumer surplus and producer surplus is maximized.
D)  Deadweight loss is maximized.
E)  Resources are used efficiently to produce goods and services that people value most highly.F) B) and D)
G) C) and D)

Question 19

Markets achieve an efficient allocation of resources when

Accepted Answer

A)  public goods are produced.
B)  external benefits are present.
C)  the market is a monopoly.
D)  subsidies are paid to producers.
E)  marginal social benefit equals marginal social cost.F) B) and D)
G) A) and B)

Question 20

Which of the following lead to an inefficient outcome? I.Decreasing marginal social benefit
II.Taxes
III.High transactions cost

Accepted Answer

A)  I only
B)  II only
C)  I and III
D)  II and III
E)  I,II and IIIF) A) and B)
G) C) and D)

Exam 5: Efficiency and Equity

As a method of resource allocation,force

Correct Answer
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Restaurants don't use market price to allocate their tables because

Correct Answer
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Use the table below to answer the following question. Table 5.2.4 -Table 5.2.4 shows the demand schedules for pizza for Abby and Barry who are the only buyers in the market.What is the marginal social benefit from the 45th slice of pizza?

Correct Answer
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Choose the correct statement.

Correct Answer
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Use the figure below to answer the following questions. Figure 5.2.1 -Consider Figure 5.2.1.If the price is $4,what is the consumer surplus from the third unit of the good?

Correct Answer
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All of the following statements are true except:

Correct Answer
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D

The marginal cost of producing one more hot dog is $1.00.The price of a hot dog is $1.50.The producer surplus from selling one more hotdog is

Correct Answer
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Producer surplus is

Correct Answer
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If production is not at an efficient level,which of the following must be true?

Correct Answer
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E

Correct Answer
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A modified version of utilitarianism proposed by John Rawls could be summarized as

Correct Answer
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What is the producer surplus for the market from the production of the 100th unit of a good?

Correct Answer
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Use the figure below to answer the following questions. Figure 5.2.1 -Consider Figure 5.2.1.When the price is $4 a unit,what is the consumer surplus from the second unit of the good?

Correct Answer
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A supply curve is

Correct Answer
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According to the "big tradeoff,"

Correct Answer
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The market for strawberries is perfectly competitive.Joe and Haley each purchase 3 boxes of strawberries.Joe's demand is much more elastic than Haley's.Which statement is true?

Correct Answer
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C

The price of pizza increases.Everything else remaining the same,the consumer surplus from pizza

Correct Answer
verified

In competitive equilibrium,which of the following statements is false?

Correct Answer
verified

Markets achieve an efficient allocation of resources when

Correct Answer
verified

Which of the following lead to an inefficient outcome? I.Decreasing marginal social benefit II.Taxes III.High transactions cost

Correct Answer
verified

Exam 5: Efficiency and Equity

As a method of resource allocation,force

Correct AnswerverifiedShow Answer

Restaurants don't use market price to allocate their tables because

Correct AnswerverifiedShow Answer

Use the table below to answer the following question. Table 5.2.4 -Table 5.2.4 shows the demand schedules for pizza for Abby and Barry who are the only buyers in the market.What is the marginal social benefit from the 45th slice of pizza?

Correct AnswerverifiedShow Answer

Choose the correct statement.

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 5.2.1 -Consider Figure 5.2.1.If the price is $4,what is the consumer surplus from the third unit of the good?

Correct AnswerverifiedShow Answer

All of the following statements are true except:

Correct AnswerverifiedD

The marginal cost of producing one more hot dog is $1.00.The price of a hot dog is $1.50.The producer surplus from selling one more hotdog is

Correct AnswerverifiedShow Answer

Producer surplus is

Correct AnswerverifiedShow Answer

If production is not at an efficient level,which of the following must be true?

Correct AnswerverifiedE

Correct AnswerverifiedShow Answer

A modified version of utilitarianism proposed by John Rawls could be summarized as

Correct AnswerverifiedShow Answer

What is the producer surplus for the market from the production of the 100th unit of a good?

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Figure 5.2.1 -Consider Figure 5.2.1.When the price is $4 a unit,what is the consumer surplus from the second unit of the good?

Correct AnswerverifiedShow Answer

A supply curve is

Correct AnswerverifiedShow Answer

According to the "big tradeoff,"

Correct AnswerverifiedShow Answer

The market for strawberries is perfectly competitive.Joe and Haley each purchase 3 boxes of strawberries.Joe's demand is much more elastic than Haley's.Which statement is true?

Correct AnswerverifiedC

The price of pizza increases.Everything else remaining the same,the consumer surplus from pizza

Correct AnswerverifiedShow Answer

In competitive equilibrium,which of the following statements is false?

Correct AnswerverifiedShow Answer

Markets achieve an efficient allocation of resources when

Correct AnswerverifiedShow Answer

Which of the following lead to an inefficient outcome? I.Decreasing marginal social benefit II.Taxes III.High transactions cost

Correct AnswerverifiedShow Answer

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D

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E

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C

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