MIcroEcon test 2

If the demand curve facing a monopolist shifts, then the monopolist's: A. marginal revenue curve and profit-maximizing level of output will change. B. marginal revenue curve will not change, but its profit-maximizing level of output will. C. total cost curve will change, but its variable cost curve will not. D. marginal revenue curve will change, but its profit-maximizing level of output will not.

A. marginal revenue curve and profit-maximizing level of output will change

If the market supply curve does not capture all of the costs to society of producing an additional unit of good, then: A. the market equilibrium will be socially optimal. B. the market equilibrium will not be efficient. C. the allocation of resources will be efficient. D. the market will not be in equilibrium.

B. the market equilibrium will not be efficient

A market equilibrium is only efficient if: A. the consumer surplus and the producer surplus associated with a given transaction are equal. B. consumer surplus and producer surplus are both zero. C. all relevant costs and benefits are reflected in the market supply and demand curves. D. output is distributed equitably among consumers.

C. all relevant costs and benefits are reflected in the market supply and demand curves.

Economic rent is: A. the amount people pay for an apartment in a perfectly competitive market. B. the payment made to the owner of a factor of production, which is usually equal to the owner's reservation price. C. the difference between the payment made to the owner of a factor of production and the owner's reservation price. D. sometimes higher and sometimes lower than the owner's reservation price.

C. the difference between the payment made to the owner of a factor of production and the owner's reservation price.

Efficiency is an important goal because when markets are efficient: A. there is less income inequality. B. the poor benefit more than the wealthy. C. there are more resources available to achieve other goals. D. there is no need for government intervention in the economy.

C. there are more resources available to achieve other goals.

The reason economists consider monopoly to be socially undesirable is that monopolists: A. earn too much economic profit. B. can charge any price they want. C. exploit the inelastic nature of demand. D. produce less than the socially optimal level of output.

D. produce less than the socially optimal level of output