WorksheetsMicroeconomics Quiz Chapter 5
Total questions: 49
Worksheet time: 25mins
When market prices are used to allocate resources, only the people who are able and willing to pay get the resources.
True
False
A boss telling a worker what to do is an example of a command system of allocating resources.
True
False
In the U.S. economy, resources are never allocated according to random chance.
True
False
In the U.S. economy, force is used as an allocation method force only for illegal activities such as theft.
True
False
Allocative efficiency occurs when it is not possible to produce more of one good without giving up the production of something else that is more highly valued.
True
False
The price of a product always equals its value.
True
False
The demand curve for tacos shows the maximum someone is willing to pay for the ten millionth taco.
True
False
As more of a product is consumed, its marginal benefit decreases.
True
False
Consumer surplus equals the area above the demand curve and below the market price.
True
False
Cost and price are the same thing.
True
False
The marginal cost of the one millionth pizza is the total cost of producing all million pizzas.
True
False
The supply curve and the marginal benefit curve are the same.
True
False
Producer surplus equals the price of the good minus the opportunity cost of producing the unit.
True
False
If the marginal benefit from a good exceeds its marginal cost, resources are used more efficiently if less of the good is produced.
True
False
Allocative efficiency requires that the marginal social benefit of a good equal its marginal social cost.
True
False
A competitive market is always efficient.
True
False
When producing the efficient quantity of a good, the sum of consumer surplus plus producer surplus is as large as possible.
True
False
Deadweight loss is comprised of a loss of consumer surplus and/or producer surplus.
True
False
Utilitarianism says that a competitive market producing the efficient quantity is always fair.
True
False
The idea of making the poorest as well off as possible uses the “results” to judge fairness.
True
False
The symmetry principle states that people should have identical, this is, “symmetric” incomes.
True
False
Allocating resources by the order of someone in authority is a ____ allocation method.
first-come, first-served
market price
majority rule
command
Often people trying to withdraw money from their bank must wait in line, which reflects a ____ allocation method.
first-come, first-served
market price
contest
command
If a person will rent an apartment only to married couples over 30 years old, that person is allocating resources using a ____ allocation method.
first-come, first-served
market price
personal characteristics
command
Allocative efficiency occurs when
the marginal benefit of the good is zero.
the marginal benefit from a good exceeds its marginal cost by as much as possible.
it is not possible to produce more of one good without giving up the production of another good or service that is more highly valued.
the marginal cost of a good is set equal to zero.
Which of the following statements is FALSE?
The value of one more unit of a good is the good’s marginal benefit.
A good’s marginal benefit is the maximum price someone is willing to pay for another unit.
The maximum price someone is willing to pay for one more unit of a good is its value.
None of the above because all the statements are true.
The marginal benefit curve for a product is the same as the good’s
marginal cost curve.
supply curve.
demand curve.
consumer surplus curve.
Susan is willing to pay $4.00 for the second slice of pizza she eats. The price she actually pays is $3.00. Susan’s consumer surplus for this slice of pizza is
$4.00.
$3.00.
$2.00.
$1.00.
Because of decreasing marginal benefit, the consumer surplus from the first unit of a good is ____ the consumer surplus from the second unit.
greater than
equal to
less than
not comparable to
The cost of producing one more unit of a good is the good’s
price.
marginal benefit.
marginal cost.
producer surplus.
The supply curve shows the
minimum price suppliers must receive in order to produce another unit of the good.
maximum price suppliers must receive in order to produce another unit of the good.
amount of producer surplus suppliers receive.
profit that suppliers receive from producing another unit of the good.
The producer surplus from a good is equal to the
maximum amount a consumer is willing to pay for the good minus the price that actually must be paid.
actual price of the good minus the maximum amount a consumer is willing to pay for the good.
opportunity cost of producing the good minus its price.
price of the good minus its opportunity cost of production.
The equilibrium quantity produced equals
0 units.
3 units.
6 units.
None of the above.
The efficient quantity equals
0 units.
3 units.
6 units.
None of the above.
Which of the following is NOT a potential source of inefficiency?
External costs
Decreasing marginal benefit
Monopoly
A tax
When production is 3 units with a price of $3, consumer surplus in the market illustrated in Figure 5.7 equals a. area a. b. area b. c. area a + b. d. area a + d.
area a.
area b.
area a + b.
area a + d.
When production is 3 units with a price of $3, producer surplus in this market equals
area a + b.
area c.
area c + d.
area a + c.
If the quantity is restricted to 2, then the deadweight loss equals
area c.
area c +d.
area a +b.
area b + c.
A deadweight loss
is possible only if the good is underproduced but is not possible if the good is overproduced.
subtracts only from producer surplus.
is a loss to consumers and a gain to producers.
is a loss inflicted on the entire society.
If a person will rent an apartment only to married couples over 30 years old, that person is allocating resources using a ____ allocation method.
first-come, first-served
market price
personal characteristics
command
Allocating resources by the order of someone in authority is a ____ allocation method.
first-come, first-served
market price
majority rule
command
If the quantity is restricted to 2, then the deadweight loss equals
area c.
area c +d.
area a +b.
area b + c.
The assertion that if resources are allocated efficiently, they also are allocated fairly is made by
all utilitarians.
John Rawls, who proposed making the poorest as well off as possible.
Robert Nozick, who believes that equality of opportunity is fair.
all economists who understand the big tradeoff.
Suppose consumers decide they value a product more highly than before. Then the efficient quantity to produce of that product ____.
increases.
does not change.
decreases.
perhaps changes, but without more information the direction of the change cannot be told.
How does the sum of the consumer surplus and producer surplus when 3 units are produced compare to the sum when 2 units are produced?
The sum is larger when 3 units are produced.
The sum is the same.
The sum is larger when 2 units are produced.
The sum cannot be compared between these two situations.
Susan thinks the only fair outcome is one in which she has three slices of pizza a week. Susan is using a ____ concept of fairness.
“it’s not fair if the result isn’t fair”
“it’s not fair if the rules aren’t fair”
“big tradeoff”
“symmetry principle”
Often people trying to withdraw money from their bank must wait in line, which reflects a ____ allocation method.
first-come, first-served
market price
contest
command
In Figure 5.8, when 2 units are produced, what is the dollar value of the deadweight loss?
$0
$2
$3
$8
The marginal cost of producing a purse rises. Then, the efficient quantity of purses to produce ____.
increases.
does not change.
decreases.
perhaps changes, but without more information the direction of the change cannot be told.
