Question 1

Which of the following resource allocation methods is most likely to be used when there is no effective way to distinguish among potential users of a scarce resource?

Accepted Answer

Lottery

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 from buying the 10th slice?

Accepted Answer

$1

Question 3

If the supply curve for a good is also the marginal cost curve, what does the area above the supply curve and below the market price represent?

Accepted Answer

Producer surplus

Question 4

A competitive market is efficient when which of the following conditions is met?

Accepted Answer

$MSB = MSC$

Question 5

Which of the following is an example of a command allocation method?

Accepted Answer

A manager assigns tasks to employees in a company

Question 6

If a market produces less than the efficient quantity, what is the relationship between marginal social benefit (MSB) and marginal social cost (MSC)?

Accepted Answer

$MSB > MSC$

Question 7

Which of the following is a source of market failure that leads to overproduction?

Accepted Answer

Subsidies

Question 8

A monopoly typically results in which of the following market outcomes?

Accepted Answer

Underproduction

Question 9

If the market price of a pizza is $15 and Maria is willing to produce the 50th pizza for $10, what is Maria’s producer surplus from the 50th pizza?

Accepted Answer

$5

Question 10

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

Accepted Answer

Symmetry principle

Question 11

Suppose the market demand curve is the horizontal sum of individual demand curves. If Lisa demands 30 slices and Nick demands 10 slices at $1 per slice, what is the market quantity demanded at that price?

Accepted Answer

40 slices

Question 12

Which of the following best describes the 'big tradeoff' in microeconomics?

Accepted Answer

The tradeoff between efficiency and fairness

Question 13

If a market is producing more than the efficient quantity, what is the result?

Accepted Answer

Deadweight loss due to overproduction

Question 14

Which of the following is an example of an externality leading to market failure?

Accepted Answer

A power plant causing acid rain

Question 15

What does the area under the demand curve and above the price, up to the quantity bought, represent?

Accepted Answer

Consumer surplus

Question 16

Which allocation method is most appropriate when a scarce resource can only serve one person at a time in a sequence?

Accepted Answer

First-come, first-served

Question 17

If a government imposes a tax on a good, what is the likely effect on the quantity produced?

Accepted Answer

Quantity produced decreases

Question 18

Which of the following is a real-world example of the tragedy of the commons?

Accepted Answer

Overfishing in international waters

Question 19

According to utilitarianism, when is the greatest happiness achieved?

Accepted Answer

When income is distributed equally

Question 20

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

Accepted Answer

Auction

chapter 5

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