Question 1

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. What is the marginal social cost of producing the 200th dozen doughnuts each day?

Accepted Answer

A)   $10.00 per dozen
B)   $8.00 per dozen
C)   $6.00 per dozen
D)   $4.00 per dozenE) A) and B)
F) A) and C)

Question 2

-In the above table, when 200 brownies are produced

Accepted Answer

A)   marginal social benefit is greater than marginal social cost, and resource use is efficient.
B)   marginal social benefit is greater than marginal social cost, and there is a deadweight loss.
C)   marginal social benefit equals marginal social cost, and resource use is efficient.
D)   marginal social benefit is less than marginal social cost, and there is a deadweight loss.E) A) and B)
F) B) and C)

Question 3

-In the table above, if there are 80 umbrellas produced, the deadweight loss from the 80th umbrella is

Accepted Answer

A)   $10.
B)   $20.
C)   $30.
D)   $40.E) B) and C)
F) A) and D)

Question 4

-In the above figure, what is the marginal social benefit of the four-hundredth pretzel?

Accepted Answer

A)   $0
B)   $2.00
C)   $3.00
D)   $4.00E) C) and D)
F) B) and C)

Question 5

-The figure above shows the market for coffee. If the government pays the coffee producers a subsidy and production increases to 30 million pounds per day, the market is

Accepted Answer

A)   efficient because the marginal social benefit from the last pound of coffee exceeds its marginal social cost.
B)   efficient because the total social benefit from coffee exceed the total social cost.
C)   inefficient because the marginal social benefit from the last pound of coffee exceeds its marginal social cost.
D)   inefficient because the marginal social cost of the last pound of coffee exceeds its marginal social benefit.E) B) and D)
F) A) and B)

Question 6

Consider the market for hot dogs. As long as the marginal benefit of consuming hot dogs is greater than the price of hot dogs

Accepted Answer

A)   people receive consumer surplus from eating hot dogs.
B)   the price of hot dogs will rise.
C)   the value of hot dogs will rise.
D)   there is no decreasing marginal benefit of eating hot dogs.E) None of the above
F) A) and B)

Question 7

When allocating resources using market price

Accepted Answer

A)   everyone who is willing and able to pay for a good gets one.
B)   everyone who wants a good gets one.
C)   everyone who is willing to pay for a good gets one.
D)   everyone who is able to pay for a good gets one.E) B) and D)
F) A) and D)

Question 8

Currently kidneys are allocated based on the needs of each perspective recipient, their blood type, and the urgency of their case. An alternative way to allocate kidneys is to go by the order in which patients were placed on the waiting list. In that case, the allocation of resources is made using

Accepted Answer

A)   market price.
B)   auction.
C)   first-come, first-served.
D)   personal characteristics.E) None of the above
F) A) and B)

Question 9

-In the figure above, if the quantity is restricted to 2, then the deadweight loss in this market equals

Accepted Answer

A)   b + g.
B)   c + d.
C)   e + k.
D)   h + i.E) None of the above
F) B) and C)

Question 10

Jane is willing to pay $4 for the first cup of coffee a day, $2.50 for the second cup, and $1 for the third cup, after which she won't buy any coffee. The price of a cup of coffee is $2.40. Jane's consumer surplus from the coffee she buys is ________ per day.

Accepted Answer

A)   $1.60
B)   $1.70
C)   $4.80
D)   $6.50E) A) and C)
F) None of the above

Question 11

When there are external costs of production, such as when electric utilities burn coal, a competitive market will produce an inefficient level of output.

Accepted Answer

A) True 
 B)False

Question 12

When a deadweight loss occurs in a market, we can be certain that

Accepted Answer

A)   taxes have been imposed in a market.
B)   the market is a monopoly.
C)   there underproduction in the market.
D)   the entire society experiences a loss.E) A) and C)
F) A) and D)

Question 13

Consumer surplus is the value of a good minus the cost of producing it, summed over the quantity bought.

Accepted Answer

A) True 
 B)False

Question 14

-In the above figure, if five million CDs per month are produced and consumed, that is

Accepted Answer

A)   better than producing and consuming four million CDs because more is always better than less.
B)   more than the efficient quantity because the marginal social benefit exceeds the marginal social cost.
C)   more than the efficient quantity because the marginal social cost exceeds the marginal social benefit.
D)   less than the efficient quantity because the opportunity cost exceeds the marginal social benefit.E) C) and D)
F) None of the above

Question 15

Allocative efficiency occurs when

Accepted Answer

A)   marginal social cost exceeds marginal social benefit.
B)   marginal social benefit exceeds marginal social cost.
C)   marginal social benefit equals marginal social cost.
D)   total social benefit exceeds total social cost.E) B) and C)
F) None of the above

Question 16

Explain how the invisible hand delivers an efficient market outcome.

Accepted Answer

The invisible hand concepts claims that ...

Question 17

The symmetry principle is the requirement that

Accepted Answer

A)   people in similar situations be treated similarly.
B)   Society's income be distributed symmetrically among its members.
C)   the poorest 20 percent of households should receive the same total income as the richest 10 percent of households.
D)   the average person be made as well off as possible.E) A) and D)
F) All of the above

Question 18

-In the above figure, a price of $1.25 and a quantity of 5 million gallons of milk per day maximizes the

Accepted Answer

A)   amount of consumer surplus.
B)   amount of producer surplus.
C)   sum of consumer surplus and producer surplus.
D)   All of the above answers are correct.E) C) and D)
F) B) and C)

Question 19

At the current level of output, the marginal social cost of tennis balls is greater than the marginal social benefit. Then

Accepted Answer

A)   more than the efficient quantity of tennis balls is being produced.
B)   there is excess demand for tennis balls.
C)   firms producing tennis balls must be earning negative profit.
D)   too few tennis balls are being produced.E) A) and B)
F) A) and C)

Question 20

Bill Gates is the world's second richest person whose net worth is estimated at $54 billion. The idea that Bill Gates marginal utility for his 54 billionth dollar is less than someone else's 1000th dollar is the

Accepted Answer

A)   "Utilitarian" principle.
B)   "Big Tradeoff" principle.
C)   "Make the Poorest as Well Off as Possible" principle.
D)   "Equity" principle.E) C) and D)
F) A) and B)

Exam 5: Efficiency and Equity

The symmetry principle is the requirement that

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-In the figure above, if the quantity is restricted to 2, then the deadweight loss in this market equals

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-In the above figure, a price of $1.25 and a quantity of 5 million gallons of milk per day maximizes the

Correct AnswerverifiedShow Answer

Consider the market for hot dogs. As long as the marginal benefit of consuming hot dogs is greater than the price of hot dogs

Correct AnswerverifiedShow Answer

Consumer surplus is the value of a good minus the cost of producing it, summed over the quantity bought.

Correct AnswerverifiedShow Answer

Jane is willing to pay $4 for the first cup of coffee a day, $2.50 for the second cup, and $1 for the third cup, after which she won't buy any coffee. The price of a cup of coffee is $2.40. Jane's consumer surplus from the coffee she buys is ________ per day.

Correct AnswerverifiedShow Answer

When a deadweight loss occurs in a market, we can be certain that

Correct AnswerverifiedShow Answer

-In the above table, when 200 brownies are produced

Correct AnswerverifiedShow Answer

Allocative efficiency occurs when

Correct AnswerverifiedShow Answer

Bill Gates is the world's second richest person whose net worth is estimated at $54 billion. The idea that Bill Gates marginal utility for his 54 billionth dollar is less than someone else's 1000th dollar is the

Correct AnswerverifiedShow Answer

Explain how the invisible hand delivers an efficient market outcome.

Correct AnswerverifiedThe invisible hand concepts claims that ...View AnswerShow Answer

-The above figure shows the marginal social benefit and marginal social cost curves of doughnuts in the nation of Kaffenia. What is the marginal social cost of producing the 200th dozen doughnuts each day?

Correct AnswerverifiedShow Answer

When allocating resources using market price

Correct AnswerverifiedShow Answer

-In the above figure, what is the marginal social benefit of the four-hundredth pretzel?

Correct AnswerverifiedShow Answer

-The figure above shows the market for coffee. If the government pays the coffee producers a subsidy and production increases to 30 million pounds per day, the market is

Correct AnswerverifiedShow Answer

-In the table above, if there are 80 umbrellas produced, the deadweight loss from the 80th umbrella is

Correct AnswerverifiedShow Answer

Currently kidneys are allocated based on the needs of each perspective recipient, their blood type, and the urgency of their case. An alternative way to allocate kidneys is to go by the order in which patients were placed on the waiting list. In that case, the allocation of resources is made using

Correct AnswerverifiedShow Answer

At the current level of output, the marginal social cost of tennis balls is greater than the marginal social benefit. Then

Correct AnswerverifiedShow Answer

-In the above figure, if five million CDs per month are produced and consumed, that is

Correct AnswerverifiedShow Answer

When there are external costs of production, such as when electric utilities burn coal, a competitive market will produce an inefficient level of output.

Correct AnswerverifiedShow Answer

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Bill Gates is the world's second richest person whose net worth is estimated at $54 billion. The idea that Bill Gates marginal utility for his 54 billionth dollar is less than someone else's 1000^th dollar is the

Correct Answer
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Correct Answer
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The invisible hand concepts claims that ...
View Answer

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