Learning curve chp 7

When graphed, the deadweight loss seems to point to the efficient quantity.

Which of these is TRUE of both deadweight loss resulting from overproduction and deadweight loss resulting from underproduction?

No collusion is required.

What kind of collusion is required in competitive markets for there to be efficient allocation?

No cooperation is required.

What kind of cooperation is required in competitive markets for there to be an efficient quantity?

No cooperation is required.

What kind of cooperation is required in competitive markets for there to be efficient production?

fewer; deadweight loss

When buyers are worried that sellers know more about a product than they do, buyers tend to make _____ purchases, which in turn creates _____.

right triangle.

When the supply curve is a straight line, the total producer surplus in an efficient market is a:

normative analysis.

Whenever you opine about what should happen, it is known as:

can make them at the lowest marginal cost.

Which best explains how markets determine who should make products? Products should be made by the producers who:

Efficient production

Which concept is most relevant to the question, "Which businesses should produce a lot, and which should produce only a little?"

Consumer surplus = Marginal benefit − Price

Which equation correctly relates consumer surplus to marginal benefit and price?

They have the potential to make everyone better off, but usually don't.

Which of these best describes efficient outcomes?

They can assist or impede market forces.

Which of these best describes the effect of government regulations on market forces?

Market forces result in efficient outcomes without any cooperation between buyers and sellers.

Which of these best explains why economist Adam Smith said it seemed like all economic activity was guided by an "invisible hand"?

The United States

Which of these countries has the LEAST centrally planned economy?

Equity

Which of these is NOT ensured by well-functioning markets?

Too much competition

Which of these is NOT one of the sources of market failure?

Quantity, not price, is important in measuring deadweight loss.

Which of these statements regarding price, quantity, and deadweight loss is true?

deadweight loss

Calculating _____ requires you to measure economic surplus at two points, the efficient quantity and the actual quantity.

Deadweight loss = Economic surplus at efficient quantity − Actual economic surplus

Which of these equations regarding deadweight loss is accurate?

market failure.

Deadweight loss measures economic surplus lost due to:

gains from trade.

Economic surplus is also known as:

each good goes to the person who gets the highest marginal benefit from it.

Efficient allocation requires that:

a given level of output is produced at the lowest possible cost.

Efficient production occurs when:

production is distributed so that each good is produced at the lowest marginal cost.

Efficient production requires that:

government policies lead to worse outcomes.

Government failure occurs when:

is lower than; increase

If sellers produce more than the equilibrium quantity, the marginal benefit to buyers _____ the marginal cost to sellers, so when producers decrease their production, they _____ the economic surplus.

Are economic benefits distributed fairly?

Which of these is NOT one of the three central questions that markets answer? Who makes what? How much gets bought and sold? Are economic benefits distributed fairly? Who gets what?

below marginal benefit and above price

On a graph of marginal benefit and price, the area _____ represents consumer surplus.

below price and above marginal cost

On a graph of marginal cost and price, the area _____ represents producer surplus.

the economic surplus you get from selling something.

Producer surplus is:

interacting; perfect

Real-world markets do not always yield efficient outcomes, since real markets do not always involve well-informed buyers and sellers _____ in a well-functioning market with _____ competition.

higher; smaller

Sellers exploit limited competition by charging _____ prices, which causes consumers to buy a _____ quantity.

to increase economic surplus, more of a good should be produced if its marginal benefit is greater than or equal to its marginal cost.

The Rational Rule for Markets says that:

equals; last; previous

The Rational Rule for Sellers tells you to keep selling until price _____ marginal cost. This means that you earn no producer surplus on the _____ item(s) you sell, but you will earn producer surplus from all _____ item(s) you sell.

efficient outcomes

The central argument to the question, "Why should markets play such a central role in our lives?" is that markets yield more _____ than centrally planned economies.

normative analysis.

The question "Which is the better outcome, and what policy should the government adopt?" reflects:

costs; production

The supply decisions of producers should be based on marginal _____, but if suppliers behave irrationally, then efficient _____ is unlikely.

seller's marginal cost

Total producer surplus is above the supply curve because each point on the supply curve represents an individual:

The first firm should produce less, but the second firm should produce more.

Two manufacturers of t-shirts are selling shirts for $10 each. The marginal cost for the first firm is $11, and the marginal cost for the second firm is $9. What should the companies do to increase economic surplus?

the largest possible economic surplus.

Well-functioning markets produce:

Economic surplus

Which of these measures the gains generated whenever a good or service is bought or sold? Identify foundational economic concepts and how they are used to interpret events and make decisions. Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices

Both the buyer and seller have to be better off if the transaction occurs.

Which of these must be TRUE for a voluntary exchange to occur?

Buyers and sellers being well-informed

Which of these would NOT be a source of market failure?

irrationality

The problem of _____ arises because sometimes people don't make decisions that are in their best interests.

Consumer surplus

_____ is the economic surplus you get from buying something.

who will get the highest marginal benefit from it.

In competitive markets, supply and demand cause consumers to divide up products in a way that ensures that each product goes to the person:

it occurs at the lowest possible cost.

In competitive markets, supply and demand cause suppliers to divide up total production in such a way as to ensure that:

market power

The problem of _____ arises when markets don't meet the perfectly competitive ideal of many buyers and sellers selling identical products.

private information

The problem of _____ arises when you're worried that the people you're doing business with know something you don't.

$40

You buy a pair of sunglasses from a manufacturer for $55. You would have been willing to pay $65 for them. It cost the manufacturer $15 to make them. What is the manufacturer's producer surplus?

consumer surplus

You gain _____ when you buy something for a cheaper price than the marginal benefit you get from it.

producer surplus

You gain _____ when you sell something at a higher price than the marginal costs you incur.

$9

You make a pizza for $5 and sell it to a customer for $12. The customer would have been willing to pay $14 for the pizza. What is the total economic surplus?

$5

You make a pizza for $6 and sell it to a customer for $10. The customer would have been willing to pay $15 dollars for the pizza. What is customer's consumer surplus?

deadweight loss

_____ could be described as a way to measure the costs of market failures by calculating how much those costs reduce economic surplus.

Deadweight loss

_____ is how far economic surplus falls below the efficient outcome.

Competitive markets

_____ lead(s) to efficient production in which each item is produced at the lowest possible cost.

Economic surplus

_____ measures the benefits that follow from a decision, less the costs you incur.

Efficient production

_____ occurs when we produce a given level of output at the lowest possible cost.