Question : 6.4   Are Markets Efficient? 1) In a competitive market with no : 1226491

6.4   Are Markets Efficient?

1) In a competitive market with no externalities,

A) the consumer surplus is equal to zero because of competition.

B) buyers cannot control the price, so the consumer surplus is zero.

C) at the equilibrium price, marginal benefit exceeds marginal cost.

D) at the equilibrium price, marginal benefit equals marginal cost.

E) at the equilibrium price, the total amount of consumer surplus equals the total amount of producer surplus.

2) A competitive market with no externalities is efficient when it is in equilibrium because

A) total benefit equals total cost.

B) marginal benefit equals marginal cost.

C) consumer surplus equals producer surplus.

D) the sum of consumer surplus plus producer surplus is minimized.

E) the deadweight gain equals its maximum.

3) If marginal benefit is equal to marginal cost, then the

A) producer surplus is equal to the consumer surplus.

B) sum of producer surplus and consumer surplus is as large as possible.

C) sum of producer surplus and consumer surplus equals zero.

D) market has squeezed out total surplus so that it equals zero.

E) deadweight loss is more than zero but less than its maximum.

4) Which of the following occurs when a market is efficient?

A) Consumer surplus equals producer surplus.

B) Consumer surplus is as large as possible.

C) Producer surplus is as large as possible.

D) The sum of consumer surplus and producer surplus is maximized.

E) The marginal benefit exceeds the marginal cost by as much as possible.

5) Efficiency occurs in a market when

A) the sum of consumer surplus and producer surplus is maximized.

B) consumer surplus is equal to producer surplus.

C) consumer surplus is less than producer surplus.

D) consumer surplus is greater than producer surplus.

E) total revenue is maximized.

6) Efficiency in a market occurs when the production of the good is such that

A) marginal benefit exceeds marginal cost.

B) marginal benefit equals marginal cost.

C) marginal benefit is lower than marginal cost.

D) the marginal cost stops increasing.

E) marginal benefit exceeds marginal cost by the maximum amount possible.

7) At the market equilibrium, when efficiency is attained, the marginal benefit ________ the marginal cost.

A) is equal to

B) is greater than

C) is less than

D) has no necessary relationship with

E) is equal to the marginal deadweight loss which is equal to

8) If the market for bicycles is efficient, then

A) no more bicycles can be produced.

B) marginal benefit exceeds marginal cost.

C) consumer surplus must be greater than producer surplus.

D) it is not possible to produce more bicycles without sacrificing another, more highly valued good.

E) consumer surplus must equal producer surplus.

9) When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is

A) minimized.

B) maximized.

C) equal to the deadweight loss.

D) undefined.

E) equal to zero.

10) If the marginal benefit of a hot dog is greater than its marginal cost, then to increase efficiency,

A) more hot dogs should be produced.

B) fewer hot dogs should be produced.

C) nothing should be done if the marginal benefit is greater than the marginal cost by the maximum amount because in this case the efficient quantity of hot dogs is being produced.

D) production should be halted.

E) More information is needed about the price of a hot dog in order to determine if production should be increased, decreased, or not changed.