Exam 6: Efficiency and Fairness of Markets

A) if you buy it, you would be cheated because you would realize no total benefit from the purchase.
B) you buy it but you get no marginal benefit from the purchase.
C) you will not buy it.
D) you buy it but you get no consumer surplus from the purchase.
E) you might buy it depending on how the slice's marginal benefit compares to its price.

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A) Value is exchange worth minus marginal benefit and price is the dollars that must be paid.
B) Value is the marginal benefit obtained and price is the dollars that must be paid.
C) Value refers to the gain the producer gets from the good or service and price refers to the gain the consumer gets from the good or service.
D) Value refers to the dollars that must be paid and price refers to the cost of producing the good.
E) They are the same and both mean the dollars that must be paid.

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A) minimum price that people are willing to pay for another unit of a good.
B) dollars' worth of other goods that people must sacrifice to consume another unit of the good.
C) maximum price that people are willing to pay for another unit of a good.
D) consumer surplus a person gains from consuming a unit of a good.
E) marginal benefit minus the consumer surplus from consuming another unit of a good.

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The invisible hand concepts claims that ...

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A) $45,000 per day.
B) $12,500 per day.
C) $22,500 per day.
D) $90,000 per day.
E) zero.

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A) more than $100.
B) between $100 and $80.
C) between $79 and $51.
D) less than $51.
E) some amount that cannot be calculated without additional information.

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

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

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A) they are the same thing.
B) value is always greater than price.
C) value is what we must pay while price is what we are willing to pay.
D) price is what we must pay and value is what we are willing to pay.
E) value is what the seller receives when we buy a good and price is what we must pay when we buy a good.

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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.

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A) only production efficiency.
B) only allocative efficiency.
C) both production efficiency and allocative efficiency.
D) a free lunch.
E) the maximum opportunity cost..

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A) 0 dolls.
B) 1 doll.
C) 3 dolls.
D) 5 dolls.
E) 4 dolls.

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A) a quantity regulation limiting the amount that can be produced.
B) a monopoly.
C) a subsidy.
D) an external benefit.
E) producing a public good.

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A) a good or service until the person has grown tired of it.
B) only goods and services that are free.
C) one more unit of a good or service.
D) all of the possible units of a good or service that can be consumed.
E) one more unit of a good and is equal to the cost of producing the unit of the good.

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A) All people are earning equal incomes.
B) There are no public goods, monopolies, high transactions costs, or external costs and benefits.
C) The costs of administering redistribution equals the benefits the poor receive.
D) The government must redistribute income in a fashion that minimizes the "big tradeoff."
E) The government must allocate resources using a command mechanism.

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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.

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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.

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A) first-come, first-served
B) market price
C) contest
D) majority rule
E) command

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