Question 1

-In the figure above, the equilibrium market price is $20.The producer surplus equals

Accepted Answer

A)  $20.
B)  $1,500.
C)  $3,000.
D)  150.
E)  $4,500.

Question 2

-In the above figure, if the market quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied, then the producer surplus is equal to

Accepted Answer

A)  area D + area F.
B)  area C + area E.
C)  area A + area B + area C.
D)  area A + area B.
E)  area B + area D + area F.

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

We allocate resources efficiently when

Accepted Answer

A)  marginal benefit is equal to marginal cost.
B)  marginal benefit is greater than marginal cost by any amount.
C)  marginal cost is greater than marginal benefit.
D)  total benefit is greater than total cost.
E)  marginal benefit is greater than marginal cost by as much as possible.

Question 5

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 6

Why does the problem of the big tradeoff arise when the government engages in the process of redistributing income using taxes and transfers?

Accepted Answer

There are two reasons why the big tradeo...

Question 7

-In the figure above, when 4,000 pizzas are produced, the marginal benefit of a pizza ________ its marginal cost, which means ________ pizza is being produced.

Accepted Answer

A)  exceeds its marginal cost; too little
B)  exceeds its marginal cost; too much
C)  is below its marginal cost; too much
D)  is below its marginal cost; too little
E)  equals its marginal cost; the efficient quantity of

Question 8

Why do societies face a tradeoff between the size of the economic pie and the degree of equality with which it is shared?

Accepted Answer

A person's share of the economic pie is ...

Question 9

If an economy is allocatively efficient, it must be producing

Accepted Answer

A)  beyond its production possibilities frontier.
B)  inside its production possibilities frontier.
C)  on its production possibilities frontier.
D)  the goods and services that are the most expensive.
E)  the goods and services that are the least expensive to produce.

Question 10

Is the marginal benefit someone enjoys from a good or service the same as the price he or she pays? Explain your answer.

Accepted Answer

Generally the marginal benefit of a good...

Question 11

When economists use the term "big tradeoff" when discussing efficiency they are referring to the tradeoff between

Accepted Answer

A)  external costs and external benefits.
B)  marginal cost and marginal benefits.
C)  producer surplus and consumer surplus.
D)  efficiency and fairness.
E)  deadweight loss and producer/consumer surplus.

Question 12

When marginal benefit exceeds marginal cost in a market,

Accepted Answer

A)  only consumer surplus is reduced.
B)  only producer surplus is reduced.
C)  consumer surplus and producer surplus are not affected compared to when production is such that marginal cost equals marginal benefit.
D)  the deadweight loss is negative.
E)  None of the above answers is correct.

Question 13

-The table above shows the production possibilities frontier for the nation of Isolanda.
a.Find the marginal cost of a pound of fish using the above PPF.
b.How does the marginal cost of a pound of fish change as more fish are caught?

Accepted Answer

a∙The table above shows the marginal c...

Question 14

-In the figure above, how much do the consumers pay in total for the quantity of pizza they buy per day?

Accepted Answer

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

Question 15

-In the figure above, the total revenue from pizza per day is

Accepted Answer

A)  $60,000.
B)  $100,000.
C)  $40,000.
D)  $80,000.
E)  $50,000.

Question 16

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The ________ price that must be offered so that the 10,000th soda is produced is ________.

Accepted Answer

A)  minimum; $0.50
B)  minimum; $1.00
C)  maximum; $0.50
D)  maximum; $1.00
E)  minimum; more than $0.50 but less than $1.00

Question 17

The concept of "the invisible hand" suggests that markets

Accepted Answer

A)  do not produce the efficient quantity.
B)  are always fair.
C)  produce the efficient quantity.
D)  are unfair.
E)  allocate resources unfairly and inefficiently.

Question 18

-In the above figure, if the market is in equilibrium, area A + area B + area C equals

Accepted Answer

A)  total surplus.
B)  consumer surplus.
C)  deadweight loss.
D)  producer surplus.
E)  total revenue.

Question 19

To achieve allocative efficiency, one must compare the

Accepted Answer

A)  marginal cost of a good to its opportunity cost.
B)  opportunity cost to the attainable point on the production possibilities frontier.
C)  marginal benefit of a good to its marginal cost.
D)  marginal cost to the production efficiency cost.
E)  point of production efficiency to the point of allocative efficiency.

Question 20

-In the figure above, when 2,000 pizzas are produced, the marginal benefit of a pizza ________ its marginal cost, which means ________ pizza is being produced.

Accepted Answer

A)  exceeds its marginal cost; too little
B)  exceeds its marginal cost; too much
C)  is below its marginal cost; too much
D)  is below its marginal cost; too little
E)  equals its marginal cost; the efficient quantity of

Exam 6: Efficiency and Fairness of Markets

-The table above shows the production possibilities frontier for the nation of Isolanda. a.Find the marginal cost of a pound of fish using the above PPF. b.How does the marginal cost of a pound of fish change as more fish are caught?

Correct Answerverified a∙The table above shows the marginal c...View AnswerShow Answer

-In the above figure, if the market is in equilibrium, area A + area B + area C equals

Correct AnswerverifiedShow Answer

The fair results approach to fairness

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Why does the problem of the big tradeoff arise when the government engages in the process of redistributing income using taxes and transfers?

Correct AnswerverifiedThere are two reasons why the big tradeo...View AnswerShow Answer

-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The ________ price that must be offered so that the 10,000th soda is produced is ________.

Correct AnswerverifiedShow Answer

-In the figure above, how much do the consumers pay in total for the quantity of pizza they buy per day?

Correct AnswerverifiedShow Answer

Is the marginal benefit someone enjoys from a good or service the same as the price he or she pays? Explain your answer.

Correct AnswerverifiedGenerally the marginal benefit of a good...View AnswerShow Answer

If an economy is allocatively efficient, it must be producing

Correct AnswerverifiedShow Answer

-In the figure above, the total revenue from pizza per day is

Correct AnswerverifiedShow Answer

-In the figure above, when 2,000 pizzas are produced, the marginal benefit of a pizza ________ its marginal cost, which means ________ pizza is being produced.

Correct AnswerverifiedShow Answer

We allocate resources efficiently when

Correct AnswerverifiedShow Answer

-In the figure above, the equilibrium market price is $20.The producer surplus equals

Correct AnswerverifiedShow Answer

The concept of "the invisible hand" suggests that markets

Correct AnswerverifiedShow Answer

-In the above figure, if the market quantity is restricted to 500,000 and the price is allowed to rise to set the quantity demanded equal to the quantity supplied, then the producer surplus is equal to

Correct AnswerverifiedShow Answer

When marginal benefit exceeds marginal cost in a market,

Correct AnswerverifiedShow Answer

To achieve allocative efficiency, one must compare the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Why do societies face a tradeoff between the size of the economic pie and the degree of equality with which it is shared?

Correct AnswerverifiedA person's share of the economic pie is ...View AnswerShow Answer

-In the figure above, when 4,000 pizzas are produced, the marginal benefit of a pizza ________ its marginal cost, which means ________ pizza is being produced.

Correct AnswerverifiedShow Answer

When economists use the term "big tradeoff" when discussing efficiency they are referring to the tradeoff between

Correct AnswerverifiedShow Answer

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a∙The table above shows the marginal c...
View Answer

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There are two reasons why the big tradeo...
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-The figure above shows the supply curve for soda.The market price is $1.00 per soda.The price that must be offered so that the 10,000th soda is produced is .

Correct Answer
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Correct Answer
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Correct Answer
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Generally the marginal benefit of a good...
View Answer

Correct Answer
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Correct Answer
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-In the figure above, when 2,000 pizzas are produced, the marginal benefit of a pizza its marginal cost, which means pizza is being produced.

Correct Answer
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A person's share of the economic pie is ...
View Answer

-In the figure above, when 4,000 pizzas are produced, the marginal benefit of a pizza its marginal cost, which means pizza is being produced.

Correct Answer
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Correct Answer
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