Macroeconomics 4.2 Studyguide
14) ________ is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which the sum of consumer surplus and producer surplus is at a maximum. A) Economic efficiency B) Consumer efficiency C) Producer efficiency D) Deadweight efficiency
A
16) In a competitive market the ________ curve shows the marginal benefit received by consumers and the ________ curve shows the marginal cost to producers. A) .demand; supply B) supply; demand C) demand; market demand D) supply; market supply
A
35) What is meant by the termȱȈeconomic efficiencyȈ?
Answer: Economic efficiency refers to a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum.
12) The sum of consumer surplus and producer surplus is equal to A) the deadweight loss. B) the economic surplus. C) zero. D) total profit.
B
33) Equilibrium in a competitive market results in the greatest amount of economic surplus from the production of a good or service.
FALSE
2) When the marginal benefit equals the marginal cost of the last unit sold in a competitive market A) the net benefit of consumers is equal to the net benefit of producers. B) an economically efficient level of output is produced. C) producer surplus is equal to consumer surplus. D) total benefit is equal to total cost.
B
27) Economic efficiency is achieved when there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and A) economic surplus plus consumer surplus equals producer surplus. B) consumer surplus plus producer surplus is maximized. C) economic surplus is minimized. D) the difference between consumer surplus and producer surplus is maximized.
B
13) Economic surplus is maximized in a competitive market when A) demand is equal to supply. B) the deadweight loss equals the sum of consumer surplus and producer surplus. C) marginal benefit equals marginal cost. D) producers sell the quantity that consumers are willing to buy.
C
1) In a competitive market equilibrium the ________ equals the ________ of the last unit sold. A) total profit; marginal benefit B) total cost; marginal cost C) profit; selling price D) marginal benefit; marginal cost
D
11) Deadweight loss refers to A) the opportunity cost to firms from producing the equilibrium quantity in a competitive market. B) the sum of consumer and producer surplus. C) the loss of economic surplus when the marginal benefit equals the marginal cost of the last unit produced. D) the reduction in economic surplus resulting from not being in competitive equilibrium.
D
15) If, in a competitive market, marginal benefit is greater than marginal cost A) the net benefit to consumers from participating in the market is greater than the net benefit to producers. B) the government must force producers to lower price in order to achieve economic efficiency. C) the quantity sold is greater than the equilibrium quantity. D) the quantity sold is less than the equilibrium quantity
D
26) In a competitive market when there is no deadweight loss, A) consumer surplus is minimized. B) producer surplus is minimized. C) consumer surplus plus producer surplus is minimized. D) consumer surplus plus producer surplus is maximized.
D
30) The difference between consumer surplus and producer surplus in a market is equal to the deadweight loss.
FALSE
32) Deadweight loss refers to a loss in revenue resulting from producers having to reduce their selling price to remain competitive.
FALSE
28) There will be no deadweight loss if the marginal benefit to consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.
TRUE
29) If marginal benefit is less than marginal cost, output is inefficiently high.
TRUE
31) If the market price is at equilibrium, the deadweight loss is zero.
TRUE
