Question 1

Which of the following is the best example of a resource allocation method based on 'first-come, first-served'?

Accepted Answer

A concert venue sells tickets to the first people who line up at the box office.

Question 2

Suppose the market price for a slice of pizza is $1. Lisa is willing to pay $2 for her 10th slice. What is Lisa's consumer surplus for the 10th slice?

Accepted Answer

$1

Question 3

Which equation correctly represents consumer surplus for a single unit?

Accepted Answer

$CS = MB - P$

Question 4

A market is considered efficient when:

Accepted Answer

Marginal social benefit equals marginal social cost.

Question 5

If a tax is imposed on a good, what is the most likely effect on the market?

Accepted Answer

The quantity produced decreases, leading to underproduction.

Question 6

Which of the following best describes the 'invisible hand' as proposed by Adam Smith?

Accepted Answer

Competitive markets allocate resources to their highest valued use through individuals pursuing their own self-interest.

Question 7

A monopoly typically results in which of the following outcomes?

Accepted Answer

Underproduction and a deadweight loss.

Question 8

Which formula correctly calculates producer surplus for a single unit?

Accepted Answer

$PS = P - MC$

Question 9

If the marginal social benefit (MSB) of producing a good is less than the marginal social cost (MSC), what does this imply?

Accepted Answer

There is overproduction.

Question 10

Which of the following is an example of a market failure caused by an externality?

Accepted Answer

A factory emits pollution that affects nearby residents who are not compensated.

Question 11

Suppose Maria is willing to produce her 50th pizza for $10, but the market price is $15. What is Maria's producer surplus for the 50th pizza?

Accepted Answer

$5

Question 12

Which of the following statements about public goods is correct?

Accepted Answer

Public goods often lead to underproduction due to the free-rider problem.

Question 13

Which allocation method is most likely to be used when efforts are hard to monitor and reward directly?

Accepted Answer

Contest

Question 14

If the government sets a maximum price below the equilibrium price, what is the likely result?

Accepted Answer

A shortage and underproduction.

Question 15

Which of the following best describes the symmetry principle in economics?

Accepted Answer

People in similar situations should be treated similarly.

Question 16

A common resource, such as a fishery, is likely to be overused because:

Accepted Answer

Individuals ignore the costs their use imposes on others.

Question 17

Which of the following is a key assumption of utilitarianism in evaluating fairness?

Accepted Answer

The greatest happiness is achieved when income is equally distributed.

Question 18

If a subsidy is provided to producers, what is the most likely effect on the market?

Accepted Answer

The quantity produced increases, leading to overproduction.

Question 19

Which of the following best describes the relationship between individual and market demand curves?

Accepted Answer

The market demand curve is the horizontal sum of individual demand curves.

Question 20

Which of the following is NOT a source of market failure?

Accepted Answer

Perfect competition

Efficiency and Equity in Competitive Markets: Resource Allocation, Surplus, and Fairness

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