Chapter 5_2: Efficiency and Equity

Chapter 5_2: Efficiency and Equity; Time: 40 phút

Question 1: Consider the market for hot dogs. As long as the marginal benefit of consuming hot dogs is greater than the price of hot dogs,
a. there is no decreasing marginal benefit of eating hot dogs.
b. we will receive consumer surplus from eating hot dogs.
c. the price of hot dogs will rise.
d. the value of hot dogs will rise.

Question 2: Nick can purchase each milkshake for $2. For the first milkshake purchased Nick is willing to pay $4, for the second milkshake $3, for the third milkshake $2 and for the fourth milkshake $1. What is the value of Nick's consumer surplus?
a. $3
b. $9
c. $10
d. $2

Question 3: A used car was recently priced at $20,000.00. Seeing the car, Bobby thought, "It's nice, but if I have to pay more than $19,500 for this car, then I would rather do without it." After negotiations, Bobby purchased the car for $19,250.00. His consumer surplus was equal to
a. $1,750.00.
b. $19,500.00.
c. $250.00.
d. $0.00.

Question 5 - 8

Question 4: The figure above shows Clara's demand for CDs. If the market price for a CD is $10, then Clara
a. receives a total of $10 of consumer surplus.
b. receives a total of $40 of consumer surplus.
c. will buy no CDs.
d. receives no consumer surplus on the 6th CD she buys.

Question 5: The figure above shows Clara's demand for CDs. The market price for a CD is $15. Which statement is true?
a. When Clara buys 6 CDs, she receives a total of $15 of consumer surplus.
b. When Clara buys 6 CDs, she receives a total of $45 of consumer surplus.
c. When Clara buys 6 CDs, she receives $15 of consumer surplus on her 6th CD.
d. When Clara buys 6 CDs, she receives a total of $30 of consumer surplus.

Question 6: The figure above shows Clara's demand for CDs. At a price of $20 for a CD, the value of Clara's total consumer surplus for all the CDs she buys would be
a. $4.
b. $30.
c. $40.
d. $20.

Question 7: The figure above shows Clara's demand for CDs. At a price of $5 for a CD, the value of Clara's total consumer surplus for all the CDs she buys would be
a. $5.
b. $125.
c. $25.
d. $10.

Question 8: The figure above shows Clara's demand for CDs. If the price of a CD were to increase from $15 to $25, Clara's total consumer surplus for all the CDs she buys would
a. decrease by $90.
b. decrease by $40.
c. increase by $80.
d. remain unchanged.

Question 10 - 14

Question 9: The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then the maximum that Dana is willing to pay for the 8th gallon of ice cream is
a. $3.
b. $2.
c. $5.
d. $1.

Question 10: In the above figure, the individual's consumer surplus will be highest if
a. the price of ice cream is $5 per gallon.
b. the price of ice cream is $3 per gallon.
c. ice cream is free.
d. the price of ice cream is $2 per gallon.

Question 11: The above figure shows Dana's marginal benefit curve for ice cream. If the market price is $2 per gallon, then Dana's consumer surplus from the 4th gallon of ice cream is
a. $0.
b. $3.
c. $10.
d. $2.

Question 12: The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then Dana's consumer surplus from the 4th gallon
a. is less than her consumer surplus from the 8th gallon.
b. is the same as her consumer surplus from the 8th gallon.
c. is greater than her consumer surplus from the 8th gallon.
d. could be greater than, equal to, or less than the consumer surplus from the 8th gallon.

Question 13: The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then the gallon that gives Dana exactly zero consumer surplus is
a. the 20th gallon.
b. the 16th gallon.
c. the 12th gallon.
d. the 8th gallon.

Question 14: The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon and Dana is allowed to buy only 8 gallons of ice cream, then her consumer surplus on the 8th gallon is
a. $3.
b. $2.
c. $1.
d. $8.

Question 15: In the above figure, consumer surplus is measured in
a. gallons of ice cream.
b. gallons of ice cream per dollar.
c. dollars per gallon of ice cream.
d. dollars.

Question 16: Consumer surplus is
a. the opportunity cost of making a good minus the price paid for it.
b. the price paid for a good minus the value of the good.
c. the value of a good minus the price paid for it.
d. the price paid for a good minus the opportunity cost of making it.

Question 17

Question 17: In the above figure, if the price is $2, then the total consumer surplus will be
a. triangle cef.
b. trapezoid adec.
c. triangle abc.
d. trapezoid bdfc.

Question 18: The marginal cost curve
a. is the same as the demand curve.
b. shows what buyers are willing to give up to get one more unit of a good or service.
c. shows the maximum price that a producer must receive to induce it to produce a unit of a good or service.
d. shows the minimum price sellers must receive to produce a unit of a good or service.

Question 19: If there are no external costs or benefits, a good's marginal cost curve
a. is the same as its supply curve.
b. measures the minimum price that producers must be offered to produce a given quantity of the good.
c. None of the above answers are correct.
d. Both answers a and b are correct.

Question 20: Currently tire producers must receive a price of $50 per tire to produce 5000 tires. If the supply curve of tires is upward sloping, then to produce one additional tire, tire producers will need to receive a price
a. less than $50.
b. of $50.
c. $0.
d. more than $50.

Question 21: If there are no external costs, the supply curve shows the quantity supplied at each price and also shows the
a. total surplus of the good.
b. benefit from each unit of the good.
c. maximum price for which suppliers will sell each unit of the good.
d. marginal cost of each unit of the good.

Question 22: Marginal cost
a. is equal to price times quantity sold.
b. is the opportunity cost of producing one more unit of a good and, hence, is the same as the supply curve.
c. decreases as more of a good is produced and, hence, is depicted by a downward sloping curve.
d. is the additional cost to the consumer of consuming another unit of a good.

Question 23: Producer surplus is the
a. price paid for a good minus the opportunity cost of making it.
b. price paid for a good minus the value of the good.
c. opportunity cost of making a good minus the price paid for it.
d. value of a good minus the price paid for it.

Question 24: Producer surplus is the
a. difference between the price of a good or service and the opportunity cost of producing the good or service.
b. number of dollars' worth of other goods and services forgone to produce one more unit of a good or service.
c. difference between the marginal benefit and the marginal cost.
d. difference between the total cost of a good or service and the marginal cost.

Question 25: When the Smith's were shopping for their present home, the asking price from the previous owner was $250,000.00. The Smith's had decided they would pay no more than $245,000.00 for the house. After negotiations, the Smith's actually purchased the house for $239,000.00. Therefore, the previous owner earned a producer surplus of
a. $11,000.00.
b. $250,000.00.
c. $5,000.00.
d. an amount unknown given the information in the question.

Time Coundown: