Econ 201- Chapter 4

Points on the __________ curve represent marginal cost.

supply

Chad sells oranges, and his minimum acceptable price for a bag of oranges is $8. If the actual price is $8, what is the value of his producer surplus? Multiple choice question. $16 $0 $8

$0

How are producer surplus (PS) and price related? Multiple choice question. Inversely Directly Unrelated

directly

Economic ______________ is achieved at the equilibrium quantity. (Enter one word in the blank.)

efficiency

The seller's minimum acceptable price at each unit of the product forms a point on the _____________ curve, also known as the marginal cost curve. (Remember to type only one word in the blank.)

supply

Which of the following are signs of a market failure? Multiple select question. High demand for goods Underallocation of resources Overallocation of resources Falling prices

Underallocation of resources Overallocation of resources

An ice cream shop sells single-scoop cones for $5, but its minimum acceptable price is $3. What is the ice cream shop's producer surplus? Multiple choice question. $2 $8 $3 $5

$2

If Bob is willing to pay $13 for a bag of oranges and the actual price is $8, what is the amount of his consumer surplus? Multiple choice question. $21 $13 $5

$5

A pair of sneakers priced at $100 yields a consumer surplus of $25. What would happen to the consumer surplus if the price increased to $110? Multiple choice question. It would decrease. It would increase. It would stay the same. It would disappear.

It would decrease.

A pair of sneakers priced at $100 yields a consumer surplus of $25. What would happen to the consumer surplus if the price increased to $110? Multiple choice question. It would decrease. It would stay the same. It would disappear. It would increase.

It would decrease.

At an equilibrium price of $15 for a dozen roses, Terry's Flowers earns a producer surplus of $5. If the equilibrium price were to increase to $20, what would happen to Terry's Flowers' producer surplus? Multiple choice question. It would disappear. It would grow. It would stay the same. It would shrink.

It would grow

What do points on the demand curve represent? Multiple choice question. Efficiency in production Marginal benefit Marginal cost Marginal revenue

Marginal benefit

What do points on the demand curve represent? Multiple choice question. Marginal revenue Efficiency in production Marginal benefit Marginal cost

Marginal benefit

Which of the following conditions are necessary for a competitive market to produce efficient outcomes? Multiple select question. A level of resource allocation in which marginal costs exceed marginal benefits Market demand curves that reflect the full willingness to pay of every person benefiting from a product Equilibrium prices that are proportional to the median income of consumers in the target market Market supply curves that reflect the full cost of production

Market demand curves that reflect the full willingness to pay of every person benefiting from a product Market supply curves that reflect the full cost of production

Which term describes the inability of a market to bring about the allocation of resources that best satisfies the wants of society? Multiple choice question. Economic recession Consumer deficit Market failure Imperfect competition

Market failure

What is the difference between the actual price a seller receives and the minimum acceptable price? Multiple choice question. Producer surplus Consumer surplus Producer profit Extra surplus

Producer Surplus

Total surplus, or social surplus, is shared between which groups? Multiple choice question. Suppliers and producers Managers and workers Consumers and the government Producers and consumers

Producers and consumers

What is achieved when competition forces producers to minimize the per-unit cost of the output they produce? Multiple choice question. Preservative efficiency Consumptive efficiency Productive efficiency Allocative efficiency

Productive efficiency

What is achieved when competition forces producers to minimize the per-unit cost of the output they produce? Multiple choice question. Productive efficiency Consumptive efficiency Preservative efficiency Allocative efficiency

Productive efficiency

Which of the following are achieved at the equilibrium quantity of a good or service? Multiple select question. Productive efficiency A shortage of the good or service Allocative efficiency A surplus of the good or service

Productive efficiency Allocative efficiency

What conditions must exist for allocative efficiency to occur? Multiple select question. The maximum willingness to pay must equal the minimum acceptable price. Combined consumer and producer surplus must be at a minimum. Marginal benefit must equal marginal cost. Price must be equal to the lowest average total cost of production.

The maximum willingness to pay must equal the minimum acceptable price. Marginal benefit must equal marginal cost.

Why does allocative efficiency occur at the equilibrium quantity, where maximum willingness to pay is exactly equal to the minimum acceptable price? Multiple choice question. The quantity produced minimizes the sum of consumer and producer surplus. The costs of units produced at this quantity far exceed the benefits. The benefits of units produced at this quantity far exceed the costs. The quantity produced maximizes the sum of consumer and producer surplus.

The quantity produced maximizes the sum of consumer and producer surplus.

In competitive markets where demand curves reflect buyers' full willingness to pay and supply curves reflect all the costs facing sellers, what is maximized when output equals the equilibrium quantity? Multiple choice question. The incentive for new businesses to enter the market The difference between benefits to society and the costs incurred The actual price of the good sold The sum of consumer and producer surplus

The sum of consumer and producer surplus

For a given supply curve, how do higher prices affect producer surplus? Multiple choice question. They increase it. It stays the same. They decrease it.

They increase it.

Which term refers to the net benefits to society from the conversion of scarce resource inputs into various forms of output? Multiple choice question. Total surplus Efficiency losses Adverse selection Positive externalities

Total surplus

True or false: Markets that have downward-sloping demand curves and upward-sloping supply curves yield consumer and producer surplus. True false question. True False

True

A form of economic efficiency called _________ _________ is achieved when resources are directed toward their highest-valued use. (Enter one word in each blank.)

allocative efficiency

A deadweight loss is also known as ______. Multiple choice question. economic surplus a consumer surplus a producer surplus an efficiency loss

an efficiency loss

Consumer surplus can be illustrated as the area _____ the demand curve and ______ the market price. Multiple choice question. above; above above; below below; below below; above

below; above

The area depicted below the demand curve and above the market price is known as ______. Multiple choice question. economic surplus consumer surplus producer surplus a shortage

consumer surplus

Equilibrium quantity is efficient because the maximum willingness to pay is ______ the minimum acceptable price. Multiple choice question. equal to greater than less than

equal to

True or false: Competitive markets produce equilibrium prices and quantities that minimize the sum of consumer and producer surplus. True false question. True False

false

Consumer surplus and price are ____________ related because, with a given demand curve, higher prices reduce consumer surplus. (Enter one word in the blank)

inversely

Which of the following reduces producer surplus? Multiple choice question. Constant prices Greater economic surplus Higher prices Lower consumer surplus Lower prices

lower prices

The intersection of the demand and supply curves at the equilibrium output indicates that ______. Multiple choice question. marginal benefit exceeds marginal cost the efficient level of output has not been reached marginal benefit equals marginal cost marginal costs exceed marginal benefits

marginal benefit equals marginal cost

Allocative efficiency occurs at quantity levels where the combined consumer and producer surplus is ______. Multiple choice question. at the area of deadweight loss reduced by the area of deadweight loss minimized maximized

maximized

Consumer surplus is the difference between the ___ price a consumer is willing to pay for a product and the price paid. Multiple choice question. actual equilibrium minimum maximum

maximum

Productive efficiency is achieved when production costs are _____. Multiple choice question. equalized maximized minimized equal to allocative efficiency

minimized

__________ __________ is the difference between the actual price a seller receives and the minimum acceptable price. (Enter one word in each blank.)

producer surplus

Which term refers to the net benefits to society from the conversion of scarce resource inputs into various forms of output? Multiple choice question. Total surplus Adverse selection Efficiency losses Positive externalities

total surplus

True or false: Efficiency losses are reductions of combined consumer surplus and producer surplus associated with either underproduction or overproduction of a product. True false question. True False

true

Shawn is buying a new spring jacket, and he is willing to pay as much as he paid for the last jacket he bought, which was $38. He finds one that he likes on sale and buys it for $29. In this case, Shawn receives a consumer surplus of $______________.

9

What must the market supply curve reflect for a competitive market to produce efficient outcomes? Multiple choice question. Only those costs that exceed expected revenues All the costs of production, including those that fall to persons not directly involved with production Only those costs that are passed on to consumers or subsidized by the government Only those costs paid directly by the producer

All the costs of production, including those that fall to persons not directly involved with production

What is achieved when output is produced at the point at which maximum willingness to pay exactly equals the minimum acceptable price? Multiple choice question. Productive efficiency Allocative efficiency Retroactive efficiency Capital efficiency

Allocative efficiency

What occurs when marginal benefits are equal to marginal cost, maximum willingness to pay is equal to minimum acceptable price, and total surplus is at a maximum? Multiple choice question. Negative externalities Allocative efficiency Productive efficiency Deadweight losses

Allocative efficiency

___ is defined as the difference between the maximum price a consumer is willing to pay for a product and the actual price. Multiple choice question. Producer surplus Deadweight loss Consumer surplus Product surplus

Consumer surplus

Assuming demand reflects consumers' full willingness to pay and supply reflects all costs, which of the following are scenarios that would result in efficiency losses? Multiple select question. Consumers' maximum willingness to pay is less than producers' minimum acceptable price. Consumers' maximum willingness to pay is equal to producers' minimum acceptable price. Consumers' maximum willingness to pay exceeds producers' minimum acceptable price. Output is equal to the equilibrium quantity.

Consumers' maximum willingness to pay is less than producers' minimum acceptable price. Consumers' maximum willingness to pay exceeds producers' minimum acceptable price.

Which of the following refers to reductions of combined consumer and producer surplus associated with the underproduction or overproduction of a good or service? Multiple choice question. Inefficiency loss Triangle loss Surplus loss Deadweight loss

Deadweight loss

What is created when output does not meet the equilibrium quantity? Multiple choice question. Efficiency (deadweight) gains No change in efficiency Efficiency (deadweight) losses

Efficiency (deadweight) losses

What kind of relationship exists between equilibrium price and the amount of producer surplus? Multiple choice question. Negative Inverse Positive

Positive

Which curve shows the seller's minimum acceptable price for each unit of the product? Multiple choice question. Revenue curve Supply curve Demand curve

Supply curve

When is allocative efficiency of a product achieved? Multiple choice question. When the benefit of additional production is less than the opportunity cost of redirecting those resources When demand for the product peaks When the correct quantity of the product is produced relative to other goods and services When the per-unit cost of the product is minimized

When the correct quantity of the product is produced relative to other goods and services

When is allocative efficiency of a product achieved? Multiple choice question. When the benefit of additional production is less than the opportunity cost of redirecting those resources When demand for the product peaks When the per-unit cost of the product is minimized When the correct quantity of the product is produced relative to other goods and services

When the correct quantity of the product is produced relative to other goods and services

Is there a relation between consumer surplus and price? Multiple choice question. Yes, they are directly related Yes, they are inversely related No, they are unrelated

Yes, they are inversely related

A form of economic efficiency called _________ efficiency is achieved when the quantity of output at equilibrium is produced.

allocative

Consumer surplus and price are _____ related. Multiple choice question. independently inversely indirectly positively

inversely

There is a(n) __________ (positive/negative) relationship between equilibrium price and the amount of producer surplus.

positive

All markets that have downward-sloping demand curves and upward-sloping supply curves yield _________ and _________ surplus. (Remember to type only one word per blank.)

producer, consumer

The size of the deadweight loss will get smaller when output is increased and ______. Multiple choice question. marginal cost exceeds marginal benefit for the consumer the maximum willingness to pay exceeds acceptable prices the producer's surplus exceeds consumer surplus

the maximum willingness to pay exceeds acceptable prices

True or false: At the equilibrium output, where the demand and supply curves intersect, marginal benefit equals marginal cost. True false question. True False

true