ECO2023 Chapter 7 Pretest

Alex is willing to pay $10, and Bella is willing to pay $8, for 1 pound of ribeye steak. When the price of ribeye steak increases from $9 to $11,

Alex experiences a decrease in consumer surplus , but Bella does not.

Which of the Ten Principles of Economics does welfare economics explain more fully?

Markets are usually a good way to organize economic activity.

Which of the following is true when the price of a good or service rises?

Some buyers exit the market.

Which of the following is not correct?

The tools of welfare economics cannot help economists when markets are inefficient.

Consumer surplus is

a.)a concept that helps us make normative statements about the desirability of market outcomes. b.)represented on a graph by the area below the demand curve and above the price. c.)a good measure of economic welfare if buyers' preferences are the primary concern.

Market failure is the inability of

some unregulated markets to allocate resources efficiently.

One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of

welfare economics