Econ Chapter 4 Quiz

equals the marginal cost of producing that particular unit

A producer's minimum acceptable price for a particular unit of a good: -is the same for all units of the good -will, for most units produced, equal the maximum that consumers are willing to pay for the good -equals the marginal cost of producing that particular unit -must cover the wages, rent, and interest payments necessary to produce the good but need not include profit

there is inadequate information about sellers and their products

Buyers will opt out of markets in which: -there are significant negative externalities -standardized products are being produced -there is inadequate information about sellers and their products -there are only foreign sellers

a consumer surplus of $9 and Nathan experiences a producer surplus of $3

Jennifer buys a piece of costume jewelry for $33 for which she was willing to pay $42. The minimum acceptable price to the seller, Nathan, was $30. Jennifer experiences: -a consumer surplus of $12 and Nathan experiences a producer surplus of $3 -a producer surplus of $9 and Nathan experiences a consumer surplus of $3. -a consumer surplus of $9 and Nathan experiences a producer surplus of $3 -a producer surplus of $9 and Nathan experiences a producer surplus of $12

nonrival in consumption

If one person's consumption of a good does not preclude another's consumption, the good is said to be: -nonrival in consumption -rival in consumption -nonexcludable -excludable

the benefit surpluses shared between consumers and producers will be maximized

If the demand curve reflects consumers' full willingness to pay, and the supply curve reflects all costs of production, then which of the following is true? -the benefit surpluses shared between consumers and producers will be maximized -the benefit surpluses received by consumers and producers will be equal -there will be no consumer or producer surplus -consumer surplus will be maximized, and producer surplus will be minimized

the moral hazard problem

In response to the financial crisis that began in 2007, the government began to bail out banks deemed "too big to fail." Critics of this action argued that this would create the prospect of future bailouts and encourage banks to be fiscally irresponsible in the future. This illustrates: -the adverse selection problem -the moral hazard problem -the principal-agent problem -logrolling

adverse selection problem

Suppose a firm offers its workers a cafeteria plan in which it allows workers to allocate a set amount of fringe benefit money toward specific insurance. Mary, who has five kids needing braces, selects the family dental coverage. This is an example of the: -free-rider problem -principal-agent problem -adverse selection problem -moral hazard problem

asymmetric information

professional buyers of antiques often have more information about the value of antique objects that do the sellers. This illustrates: -the principal-agent problem -the moral hazard problem -the free-rider problem -asymmetric information