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If a consumer is willing to pay $20 for a shirt but only has to pay $16, the $4 difference is:
A) Consumer surplus
B) Consumer deficit
C) Producer surplus
A
The marginal benefit from consumering the third unit of a product is $12, and the marginal cost to the producer of the third unit is $8.  Which statement is most accurate?
A) Producer surplus is maximized
B) The efficient quantity is less than three
C) Producing and selling the third unit will increase efficiency
C
The idea that a competitive market allocates resources fairly as long as the same rules apply to all participants is suggested by:
A) Utilitarianism
B) the fairness principle
C) the symmetry principle
C
In an unregulated competitive market, which of the following conditions most accurately describes the condition that exists when the efficient quantity of a good or service is produced and consumed?
A) Producer surplus is maximized
B) Consumer surplus equals producer surplus
C) The sum of consumer surplus and producer surplus is maximized
C
Producer surplus is best defined as the:
A) number of units by which the supply is greater than the quantity demanded by consumers
B) the sum of the differences between the price of each unit of a good and its opportunity cost
C) Amount by which the price of the next unit of a good exceeds the consumer's marginal benefit from the good
B
Which of the following most accurately describes what will occur in an unrestricted economy when tastes change so that marginal benefit exceeds marginal cost at the current quantity produced and sold of a good or service?
A) The quantity consumed will decrease
B) The quantity of the good or service produced will increase
C) The quantity of other goods and services produced will increase
B
Which of the following is least likely an obstacle to the efficient allocation of resources?
A) Price deregulation
B) Taxes, quotas, subsidies
C) Public goods and common resources
A
As the demand (marginal benefit) curve becomes less elastic, if the equilibrium price and quantity remain unchanged, consumer surplus:
A) decreases
B) increases
C) remains unchanged
B
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