MACRO: Week Six: Chapter 7
Which of the following is correct? A. Efficiency deals with the size of the economic pie, and equality deals with how fairly the pie is sliced. B. Equality can be judged on positive grounds whereas efficiency requires normative judgments. C. Efficiency is more difficult to evaluate than equality. D. Equality and efficiency are both maximized in a society when total surplus is maximized.
A. Efficiency deals with the size of the economic pie, and equality deals with how fairly the pie is sliced.
The "invisible hand" refers to, A. The marketplace guiding the self-interests of market participants into promoting general economic well-being. B. The fact that social planners sometimes have to intervene, even in perfectly competitive markets, to make those markets more efficient. C. The equality that results from market forces allocating the goods produced in the market. D. The automatic maximization of consumer surplus in free markets.
A. The marketplace guiding the self-interests of market participants into promoting general economic well-being.
Consumer surplus A. Is the amount of a good that a consumer can buy at a price below equilibrium price. B. Is the amount a consumer is willing to pay minus the amount the consumer actually pays. C. Is the number of consumers who are excluded from a market because of scarcity. D. Measures how much a seller values a good.
B. Is the amount a consumer is willing to pay minus the amount the consumer actually pays.
A seller is willing to sell a product only if the seller receives a price that is at least as great as the, A. Seller's producer surplus. B. Seller's cost of production. C. Seller's profit. D. Average willingness to pay of buyers of the product.
B. Seller's cost of production.
The maximum price that a buyer will pay for a good is called, A. Consumer surplus. B. Willingness to pay. C. Equilibrium. D. Efficiency.
B. Willingness to pay.
The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of, A. Market equilibrium. B. Market power. C. Externalities. D. Laissez-faire.
C. Externalities.
A seller's willingness to sell is, A. Measured by the seller's cost of production. B. Related to her supply curve, just as a buyer's willingness to buy is related to his demand curve. C. Less than the price received if producer surplus is a positive number. D. All of the above are correct.
D. All of the above are correct.
Total surplus, A. Can be used to measure a market's efficiency. B. Is the sum of consumer and producer surplus. C. Is the value to buyers minus the cost to sellers. D. All of the above are correct.
D. All of the above are correct.