Question 1

-The figure shows the demand curve for hotel rooms at a local resort.
a.If the hotel charges $120 per night,how many rooms will they rent?
b.If there are only 40 rooms available,how much are customers willing to pay for a room?
c.If 60 rooms are available,how much are customers willing to pay?
d.What do the dollars in your answer to part (c)represent?

Accepted Answer

a.At $120 a night,the hotel will rent 20...

Question 2

Production efficiency requires that

Accepted Answer

A)  the economy be producing on the PPF but the marginal cost of a good does not need to equal its marginal benefit.
B)  the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit.
C)  the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF.
D)  the society be producing at the point of allocative efficiency.
E)  opportunity costs be minimized.F) B) and D)
G) C) and D)

Question 3

What must be true for a producer to obtain a producer surplus from the sale of a unit of a good?

Accepted Answer

The price must be gr...

Question 4

-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 quantit...

Question 5

Producer surplus

Accepted Answer

A)  increases if market price rises and the supply curve does not shift.
B)  decreases if market price rises and the supply curve does not shift.
C)  is equal to the maximum price consumers are willing to pay.
D)  is the same as the marginal cost.
E)  always must equal consumer surplus.F) B) and C)
G) A) and E)

Question 6

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 7

An unequal distribution of income is considered fair according to Robert Nozick if

Accepted Answer

A)  marginal cost equals marginal benefit.
B)  the cost of administering a welfare system is minimized.
C)  property rights are enforced and voluntary exchange occurs.
D)  the economy is producing its maximum total output.
E)  resources are allocated using the command method.F) A) and E)
G) A) and D)

Question 8

To determine how much of a good to produce to achieve allocative efficiency,we

Accepted Answer

A)  construct a production possibilities frontier and choose the midpoint.
B)  construct a production possibilities frontier and choose any point on it.
C)  must produce on the PPF and at the point where the marginal benefit and marginal cost of the good are equal.
D)  must produce on the PPF and at the point where the marginal benefit exceeds by any amount the marginal cost of the good.
E)  must produce on the PPF and at the point where the marginal benefit exceeds by as much as possible the marginal cost of the good.F) A) and C)
G) B) and D)

Question 9

When the cost of producing a product is paid,at least in part,by someone other than the producer,the cost is referred to as

Accepted Answer

A)  an external cost.
B)  an external profit.
C)  an external benefit.
D)  an external/internal cost.
E)  a public cost.F) A) and B)
G) All of the above

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) All of the above
G) B) and E)

Question 11

Allocative efficiency refers to

Accepted Answer

A)  producing the goods and services most highly valued.
B)  using the least amount of labor to produce output.
C)  producing the maximum possible amount of output.
D)  obtaining the least output with the most inputs.
E)  producing at any point on the PPF.F) C) and D)
G) C) and E)

Question 12

-The figure above shows the market for brooms.If 800 brooms are produced,

Accepted Answer

A)  consumer surplus is maximized.
B)  producer surplus is maximized.
C)  market failure and a deadweight loss occur.
D)  marginal cost is less than marginal benefit.
E)  there is no deadweight loss.F) C) and D)
G) B) and C)

Question 13

A cost not borne by the producer but borne by other people is known as ________ cost.

Accepted Answer

A)  a marginal
B)  an internal
C)  an external
D)  a nonessential
E)  a subsidizedF) A) and B)
G) A) and C)

Question 14

When society must decrease the production of something in order to produce more of another good or service,society has necessarily achieved

Accepted Answer

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

Question 15

Why is a competitive market efficient?

Accepted Answer

Efficiency is attained when production i...

Question 16

Which of the following is a correct description of the supply curve?
I.The supply curve is also the marginal cost curve.
Ii.The supply curve shows the dollars' worth of other goods that we must sacrifice to produce another unit of a good.
Iii.The supply curve shows the additional cost of producing another unit of a good.

Accepted Answer

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

Question 17

-In the above figure,if the quantity is equal to 2,500,000 units,the deadweight loss is equal to

Accepted Answer

A)  area B + area F.
B)  area D + area I.
C)  area C.
D)  area G + area H.
E)  None of the above answers is correct because the deadweight loss is equal to zero.F) A) and B)
G) C) and D)

Question 18

Which of the following is true?
I.Production efficiency occurs only when resources are used to produce the combination of goods that has the greatest value.
Ii.Allocative efficiency occurs when marginal benefit equals marginal cost.
Iii.A demand curve is a marginal cost curve.

Accepted Answer

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

Question 19

Marginal benefit equals the

Accepted Answer

A)  benefit that a person receives from consuming another unit of a good.
B)  additional efficiency from producing another unit of a good.
C)  increase in profit from producing another unit of a good.
D)  cost of producing another unit of a good.
E)  total benefit from consuming all the units of the good or service.F) A) and E)
G) B) and D)

Question 20

John has a marginal benefit of $7 for 1 slice of pizza,$5 for a second slice,$3 for a third slice,$1 for a fourth slice,and $0.50 for a fifth slice.The price of pizza is $1.50 per slice.Which of the following statements is correct?

Accepted Answer

A)  John will purchase 3 slices of pizza and have consumer surplus of $10.50.
B)  John will purchase 4 slices of pizza and have consumer surplus of $12.00.
C)  John will purchase 2 slices of pizza and have consumer surplus of $1.50.
D)  John will purchase 3 slices of pizza and have consumer surplus of $4.50.
E)  John will purchase 2 slices of pizza and have consumer surplus of $3.00.F) All of the above
G) A) and B)

Exam 6: Efficiency and Fairness of Markets

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

Production efficiency requires that

Correct Answer
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When the cost of producing a product is paid,at least in part,by someone other than the producer,the cost is referred to as

Correct Answer
verified

Correct Answer
verified
a.At $120 a night,the hotel will rent 20...
View Answer

Allocative efficiency occurs

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

-The figure above shows the market for brooms.If 800 brooms are produced,

Correct Answer
verified

-In the above figure,if the quantity is equal to 2,500,000 units,the deadweight loss is equal to

Correct Answer
verified

John has a marginal benefit of $7 for 1 slice of pizza,$5 for a second slice,$3 for a third slice,$1 for a fourth slice,and $0.50 for a fifth slice.The price of pizza is $1.50 per slice.Which of the following statements is correct?

Correct Answer
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Allocative efficiency refers to

Correct Answer
verified

A cost not borne by the producer but borne by other people is known as ________ cost.

Correct Answer
verified

To determine how much of a good to produce to achieve allocative efficiency,we

Correct Answer
verified

An unequal distribution of income is considered fair according to Robert Nozick if

Correct Answer
verified

Why is a competitive market efficient?

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

Which of the following is true? I.Production efficiency occurs only when resources are used to produce the combination of goods that has the greatest value. Ii.Allocative efficiency occurs when marginal benefit equals marginal cost. Iii.A demand curve is a marginal cost curve.

Correct Answer
verified

What must be true for a producer to obtain a producer surplus from the sale of a unit of a good?

Correct Answer
verified
The price must be gr...
View Answer

Producer surplus

Correct Answer
verified

Marginal benefit equals the

Correct Answer
verified

When society must decrease the production of something in order to produce more of another good or service,society has necessarily achieved

Correct Answer
verified

Exam 6: Efficiency and Fairness of Markets

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

Production efficiency requires that

Correct AnswerverifiedShow Answer

When the cost of producing a product is paid,at least in part,by someone other than the producer,the cost is referred to as

Correct AnswerverifiedShow Answer

Correct Answerverifieda.At $120 a night,the hotel will rent 20...View AnswerShow Answer

Allocative efficiency occurs

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-The figure above shows the market for brooms.If 800 brooms are produced,

Correct AnswerverifiedShow Answer

-In the above figure,if the quantity is equal to 2,500,000 units,the deadweight loss is equal to

Correct AnswerverifiedShow Answer

John has a marginal benefit of $7 for 1 slice of pizza,$5 for a second slice,$3 for a third slice,$1 for a fourth slice,and $0.50 for a fifth slice.The price of pizza is $1.50 per slice.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Allocative efficiency refers to

Correct AnswerverifiedShow Answer

A cost not borne by the producer but borne by other people is known as ________ cost.

Correct AnswerverifiedShow Answer

To determine how much of a good to produce to achieve allocative efficiency,we

Correct AnswerverifiedShow Answer

An unequal distribution of income is considered fair according to Robert Nozick if

Correct AnswerverifiedShow Answer

Why is a competitive market efficient?

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

Which of the following is true? I.Production efficiency occurs only when resources are used to produce the combination of goods that has the greatest value. Ii.Allocative efficiency occurs when marginal benefit equals marginal cost. Iii.A demand curve is a marginal cost curve.

Correct AnswerverifiedShow Answer

What must be true for a producer to obtain a producer surplus from the sale of a unit of a good?

Correct AnswerverifiedThe price must be gr...View AnswerShow Answer

Producer surplus

Correct AnswerverifiedShow Answer

Marginal benefit equals the

Correct AnswerverifiedShow Answer

When society must decrease the production of something in order to produce more of another good or service,society has necessarily achieved

Correct AnswerverifiedShow Answer

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.At $120 a night,the hotel will rent 20...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
The price must be gr...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified