Test Bank: II Topic: MarketFailures in Competitive Markets
If many people in a communityget flu shots, the whole communitybenefits, including those that did not get flu shots. Therefore, not enough peoplemay decide to get the shots. This is one illustration of
Test Bank: II Topic: MarketFailures in Competitive Markets
When producers do not producethe efficient amount of a product because they are unable tocharge consumers what they need to get in order to produce the efficientamount, then we have a
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
The difference between the maximum price a consumeriswilling to pay for a product and the actual price the consumerpays is called
Learning Objective: 04-02 Explainthe origin of both consumer surplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
The value that consumers get (from consuming a product) over and above what they actually paid for the product is called
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
Charlie is willingto pay $10 for a T-shirt that is priced at $9. If Charlie buys the T-shirt, then his consumersurplus is A. $19.
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
In the market for a particular pair of shoes, Jena is willing to pay $75 for a pair, while Jane is willing to pay $85 for a pair. The actual price that each has to pay for a pair of these shoes is $65. What is the totalamount of the two girls’ combined consumer surplus? A. $10
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
Consumer surplus arises in a market because
the quantity supplied is greater than quantity demanded at the current market price.
the quantity demanded is greater than quantitysupplied at the current market price.
C. the marketprice is below what some consumers are willing to pay for the product.
D. the market price is higherthan what some consumers are willingto pay for the product.
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
If the unit price of a productis P, then the amount of money buyers would need to pay for a given quantityQ is equal to
Learning Objective: 04-02 Explainthe origin of both consumer surplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
If the market priceof a productincreases, then the total
Learning Objective: 04-02 Explainthe origin of both consumer surplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
149.
In the provided graph, the equilibrium point in the market is where the S and D curves intersect. At equilibrium, consumersurplus would be represented by the area
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
150.
In the providedgraph, the equilibrium point in the market is where the S and D curves intersect. At equilibrium, the total amount of spending that consumers wouldbe paying for the productis represented by the area
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
151.
In the providedgraph, the equilibrium point in the marketis where the S and D curves intersect. At equilibrium, the total maximum amount that consumers would have beenwilling to pay for the product is represented by the area
Learning Objective: 04-02 Explainthe origin of both consumer surplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
The difference between the actualprice that a producer receives and the minimum acceptable price the produceris willing to take is called the producer
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
The minimum acceptable price for a product that producerSamis willing to receive is $15. The price he could get for the productin the market is $18. How much is Sam's producersurplus?
Learning Objective: 04-02 Explainthe origin of both consumer surplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
The amount of revenue that sellers actually receive over and above the minimum acceptable amount that they are willing to receive for selling a product is called
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
If the unit price of a product is P and buyers buy a given quantityQ, then sellers wouldcollect total revenuesequal to
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
The market supply curve indicates the
minimum acceptable pricesthat sellers are willingto accept for the product.
maximum prices that buyers are willingand able to payfor the product.
total revenues that sellers would receive from sellingvarious quantities of the product.
total amount that buyers will pay in buying a given quantityof the product.
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
At equilibrium in a marketfor a product, the total revenues receivedby sellers equal the
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
158.
In the providedgraph, the equilibrium point in the market is where the S and D curves intersect. At equilibrium, the producer surplus would be represented by the area
Learning Objective: 04-02 Explainthe origin of both consumer surplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
159.
In the providedgraph, the equilibrium point in the market is where the S and D curves intersect. At equilibrium, the total revenuesreceived by sellers wouldbe represented by the area
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
160.
In the providedgraph, the equilibrium point in the market is where the S and D curves intersect. At equilibrium, the minimumacceptable total revenue that sellers would have been willing to receiveis represented by the area
Learning Objective: 04-02 Explainthe origin of both consumer surplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
When economic efficiency is attained, it implies all of the following, except
per-unit cost of output produced is at minimum.
allocative efficiencyis achieved.
total consumer and producer surplus is at a maximum.
D. the gap between marginalbenefits and marginal costs ofproduction is at maximum.
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
When a competitive market achievesallocative efficiency, it implies that
the marginal benefit of having the productis greater than the marginal cost.
the buyers are gettingthe maximum consumer surplus from the product.
C. the combined consumerand producer surplusis maximized.
D. the quantity demanded is lower than the quantitysupplied.
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
Deadweight losses occur when the quantity of an output produced is
less than, but not when it is greater than, the competitive equilibrium quantity.
greater than, but not when it is less than, the competitive equilibrium quantity.
C. less than or greaterthan the competitive equilibrium quantity.
D. such that the marginal benefit of the output is just equal to the marginal cost.
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
When there is overproduction of a good,
the marginal benefit of the good exceedsits marginal cost.
B. the marginalcost of the good exceeds its marginal benefit.
the net benefit of producing extra units if the good is positive.
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
When the marginal benefit of an output exceeds the marginal cost,
production of that outputshould be increased, in order to achieve efficiency.
production of that output should be decreased, in order to achieveefficiency.
increasing the production of that output would increase the deadweight loss.
reducing the production of that outputwould reduce efficiency losses.
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
169.
Refer to the provided graph of a competitive market. If the output level is Q2, then there will be
A. allocative efficiency.
maximum deadweight losses.
maximum consumer surplus.
greater marginal benefits than marginal costs of the product.
Learning Objective: 04-02 Explainthe origin of both consumer surplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
170.
Refer to the provided graph of a competitive market. If the output levelis Q1, then there are efficiency losses indicated by the area
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
171.
Refer to the provided graph of a competitive market. If the output levelis Q1, then the sum of the consumerand producer surplus is
Learning Objective: 04-02 Explainthe origin of both consumersurplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
172.
Refer to the provided graph of a competitive market. If the output level increases from Q2 to Q3, then the
A. marginal cost of the product becomes closerto its marginalbenefit.
B. marginalcost of the productincreases, while its marginalbenefit decreases.
marginal cost of the product decreases, while its marginal benefitincreases.
marginal cost of the product stays constant,while its marginalbenefit increases.
Learning Objective: 04-02 Explainthe origin of both consumer surplus and producersurplus, and explain how properly functioning markets maximizetheir sum, total surplus,while optimally allocating resources.
Test Bank: II Topic: Efficiently Functioning Markets
What are the two characteristics that differentiate private goods from publicgoods?
Learning Objective: 04-03 Describe free riding and public goods, and illustrate why private firms cannot normally produce public goods.
Test Bank: II Topic: Public Goods
Assume there is no wayto prevent someone from using an interstate highway, regardless of whether or not he or she helps payfor it. This characteristic is called
Learning Objective: 04-03 Describe free riding and public goods, and illustrate why private firmscannot normally produce public goods.
Test Bank: II Topic: Public Goods
182.
Refer to the provided supply and demand graph for a public good. Which line segmentwould indicate the amount by which the marginal benefit of this public good exceedsthe marginal cost at a certain quantity?