Question :
8) Production efficiency requires that
A) the economy be producing : 1241559
8) Production efficiency requires that
A) the economy be producing on the PPF but the marginal cost of a good does not need to equal its marginal benefit.
B) the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit.
C) the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF.
D) the society be producing at the point of allocative efficiency.
E) opportunity costs be minimized.
9) If an economy is producing on its PPF, then it is definitely achieving
A) both production and allocative efficiency.
B) only production efficiency, but it definitely is not achieving allocative efficiency.
C) only allocative efficiency, but it is definitely not achieving production efficiency.
D) neither production nor allocative efficiency.
E) only production efficiency.
10) If society can produce more of one good but must forgo some of another good to do so, it is definitely achieving
A) both production and allocative efficiency.
B) only production efficiency.
C) only allocative efficiency.
D) neither production nor allocative efficiency.
E) None of the above answers is correct because when society must forgo another good to produce more of one good, then society might be production efficient or it might be allocatively efficient.
11) Which of the following is true?
i.Production efficiency occurs only when resources are used to produce the combination of goods that has the greatest value.
ii.Allocative efficiency occurs when marginal benefit equals marginal cost.
iii.A demand curve is a marginal cost curve.
A) only ii
B) only i
C) only iii
D) i and ii
E) ii and iii
12) Which of the following is true?
i.Marginal cost is measured by the maximum price that consumers are willing to pay for another unit of a good or service.
ii.Producer surplus equals marginal benefit minus price, summed over the quantity produced.
iii.A supply curve is a marginal cost curve.
A) only iii
B) only i
C) only ii
D) i and ii
E) i and iii
13) Which of the following is true? When there are no externalities, public goods, common resources, taxes or subsidies, then
i.allocative efficiency occurs when marginal benefit exceeds marginal cost by as much as possible.
ii.an a competitive equilibrium, resource allocation is efficient.
iii.fair rules require income transfers from the rich to the poor.
A) only ii
B) only i
C) only iii
D) i and ii
E) i and iii
14) To achieve ________, marginal cost ________ marginal benefit.
A) production efficiency; must equal
B) production efficiency; must be greater than
C) allocative efficiency; must be greater than
D) allocation efficiency; must be less than
E) allocative efficiency; must equal
15) When marginal benefit exceeds marginal cost in a market,
A) only consumer surplus is reduced.
B) only producer surplus is reduced.
C) consumer surplus and producer surplus are not affected compared to when production is such that marginal cost equals marginal benefit.
D) the deadweight loss is negative.
E) None of the above answers is correct.
16) At a competitive equilibrium with no externalities, taxes, subsidies, public goods, common resources, or high transactions costs, which of the following occurs?
i.an efficient outcome
ii.definitely a fair outcome when judged by the fair-results approach
iii.marginal cost equals marginal benefit
iv.producer surplus equals consumer surplus
A) i and iii
B) i, ii and iii
C) ii and iii
D) i, ii, iii and iv
E) only i
17) The price of a shirt is $20. Charlie can produce a shirt at a marginal cost of $10, Mac can produce a shirt for $18, and Dennis can produce a shirt for $22. For a shirt, Deandra has a marginal benefit of $25, Frank has marginal benefit of $20, and Artemis has a marginal benefit of $18. Which of the following statements is correct?
A) The sum of consumer surplus is $5 and the sum of producer surplus is $12.
B) The sum of consumer surplus is $12.
C) Only Frank and Artemis will purchase a shirt.
D) Only Dennis will produce a shirt.
E) The sum of producer surplus is $10.
18) The fair results approach to fairness
A) requires property rights and voluntary exchange.
B) supports transferring income from the rich and giving it to the poor.
C) requires efficient market outcomes.
D) ensures that marginal cost equals marginal benefit.
E) never creates a big tradeoff.
19) The fair rules approach to fairness requires
A) consumer surplus equals producer surplus.
B) income transfers from rich to poor.
C) property rights and voluntary exchange.
D) that marginal cost equal marginal benefit.
E) consumer surplus exceed producer surplus because there are more consumers than producers.
20) Consumer surplus equals
A) producer surplus at a market equilibrium.
B) marginal benefit minus price, summed over the quantity consumed.
C) price minus marginal cost.
D) the deadweight loss if there is underproduction.
E) the deadweight loss plus the producer surplus.
21) Suppose a market produces 5,000 tons of wheat. At this quantity, the marginal cost exceeds the marginal benefit. This outcome could be the result of
A) a quantity regulation limiting the amount that can be produced.
B) a monopoly.
C) a subsidy.
D) an external benefit.
E) producing a public good.
