Question :
61) If one producer has control over an entire market : 1226497
61) If one producer has control over an entire market and underproduces, the producer will
A) increase producer surplus by lowering pollution costs.
B) increase consumer surplus by lowering producer surplus.
C) increase both consumer and producer surplus.
D) create a deadweight loss.
E) decrease the deadweight loss that would exist if the market were efficient.
62) Deadweight loss and market failure is created when a market produces
A) either more or less than the efficient quantity.
B) more than the efficient quantity but not when less than the efficient quantity is produced.
C) less than the efficient quantity but not when more than the efficient quantity is produced.
D) the efficient quantity.
E) None of the above answers is correct because deadweight loss has nothing to do with the efficient quantity.
63) The figure above shows the market for pants. If the efficient quantity is produced,
A) there will be no consumer surplus.
B) the sum of consumer and producer surplus will be maximized.
C) a small deadweight loss will result.
D) the sum of consumer and producer surplus will be minimized.
E) the consumer surplus on all the pants must equal the producer surplus on all the pants.
64) The figure above shows the market for pants. If 6 million pairs of pants are produced the deadweight loss is
A) zero.
B) the triangle ABE.
C) the triangle BCE.
D) the triangle ACE.
E) the triangle BCE minus the triangle ABE.
65) The figure above shows the market for pants. If the production of the pants results in an external cost from pollution that is the result of the dye used, then
A) 6 million pairs is the efficient quantity.
B) fewer than 6 million pairs is the efficient quantity.
C) more than 6 million pairs is the efficient quantity.
D) None of the above answers is necessarily correct because more information is needed about the size of the external cost.
E) None of the above answers are correct because it is impossible to tell whether the external cost results in underproduction or overproduction.
66) The figure above shows the market for pants. If the government subsidizes the production of pants so that production expands from 6 million pairs to 7 million pairs,
A) there would be no deadweight loss.
B) the government’s policy would have no effect on the sum of consumer surplus and producer surplus.
C) a deadweight loss would result.
D) the government’s policy would increase the sum of consumer surplus and producer surplus.
E) production would be even more efficient than if 6 million pairs of pants are produced because more is always better than less.
67) When a market is efficient, the
A) sum of consumer surplus and producer surplus is maximized.
B) deadweight gain is maximized.
C) quantity produced is maximized.
D) marginal benefit of the last unit produced exceeds the marginal cost by as much as possible.
E) total benefit equals the total cost.
68) Which of the following occurs when a market is efficient?
A) Producers earn the highest income possible.
B) Production costs equal total benefit.
C) Consumer surplus equals producer surplus.
D) Scarce resources are used to produce the goods and services that people value most highly.
E) Every consumer has all of the good or service he or she wants.
69) The concept of “the invisible hand” suggests that markets
A) do not produce the efficient quantity.
B) are always fair.
C) produce the efficient quantity.
D) are unfair.
E) allocate resources unfairly and inefficiently.
70) When underproduction occurs,
A) producers gain more surplus at the expense of consumers.
B) marginal cost is greater than marginal benefit.
C) consumer surplus increases to a harmful amount.
D) there is a deadweight loss that is borne by the entire society.
E) the deadweight loss harms only consumers.
71) When production moves from the efficient quantity to a point of overproduction,
A) consumer surplus definitely increases.
B) the sum of producer surplus and consumer surplus increases.
C) there is a deadweight loss.
D) consumers definitely lose and producers definitely gain.
E) consumers definitely gain and producers definitely lose.
72) Which of the following can result in a market producing an inefficient quantity of a good?
i.competition
ii.an external cost or an external benefit
iii.a tax
A) i only
B) iii only
C) ii only
D) ii and iii
E) i and iii
