Question 1

Which of the following is NOT a method for allocating scarce resources discussed in microeconomics?

Accepted Answer

Perfect competition

Question 2

A command system for resource allocation works best in which of the following scenarios?

Accepted Answer

Within organizations with clear lines of authority

Question 3

Suppose a city allocates public housing by lottery. What is a key reason this method might be chosen?

Accepted Answer

It is used when there is no effective way to distinguish among potential users

Question 4

The value of one more unit of a good or service is called:

Accepted Answer

Marginal benefit

Question 5

Which of the following best describes consumer surplus?

Accepted Answer

The area under the demand curve and above the price paid, up to the quantity bought

Question 6

If the market price of a good is $$10 and a consumer is willing to pay 15 $$for the 5th unit, what is the consumer surplus for that unit?

Accepted Answer

$5

Question 7

Which equation correctly expresses consumer surplus for a single unit?

Accepted Answer

$$CS = MB - P$$

Question 8

Producer surplus is best described as:

Accepted Answer

The excess of the amount received from the sale of a good over the cost of producing it

Question 9

If the marginal cost of producing a good is $$8 and the market price is 12$$, what is the producer surplus for that unit?

Accepted Answer

$4

Question 10

Which equation correctly expresses producer surplus for a single unit?

Accepted Answer

$$PS = P - MC$$

Question 11

A competitive market is efficient when:

Accepted Answer

$$MSB = MSC$$

Question 12

What is the result when a market produces less than the equilibrium quantity?

Accepted Answer

Underproduction and a deadweight loss

Question 13

Which of the following is a source of market failure?

Accepted Answer

Externalities

Question 14

A tax on a good typically leads to:

Accepted Answer

Underproduction

Question 15

Which of the following best describes the 'tragedy of the commons'?

Accepted Answer

Overproduction due to ignoring costs imposed on others

Question 16

According to utilitarianism, when is the greatest happiness achieved?

Accepted Answer

When income is equally distributed

Question 17

Which principle states that people in similar situations should be treated similarly?

Accepted Answer

Symmetry principle

Question 18

Which of the following is a necessary condition for a market allocation to be considered fair according to Robert Nozick?

Accepted Answer

Private property may be transferred only by voluntary exchange

Question 19

Suppose a monopoly is the sole provider of a good. What is the likely result in terms of efficiency?

Accepted Answer

Underproduction and a deadweight loss

Question 20

If a market is characterized by high transactions costs, what is the likely outcome?

Accepted Answer

Underproduction

Efficiency and Equity in Competitive Markets: Microeconomics Study Guide

Study Guide - Practice Questions