Question 1

Which of the following resource allocation methods is most likely to be used in allocating seats at a popular restaurant where customers line up to be served?

Accepted Answer

First-come, first-served

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 given quantity $Q$ at price $P$?

Accepted Answer

$\sum_{i=1}^{Q} (MB_i - P)$

Question 4

A competitive market is considered efficient when which condition is met?

Accepted Answer

$MSC = MSB$

Question 5

If a government imposes a tax on a good, what is the most likely effect on the market outcome?

Accepted Answer

Underproduction

Question 6

Which allocation method 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 7

Producer surplus is best represented graphically as:

Accepted Answer

The area above the supply curve and below the market price, up to the quantity sold

Question 8

If a monopoly is the sole provider of a good, what is the typical market outcome?

Accepted Answer

Underproduction

Question 9

Which of the following is an example of an externality leading to overproduction?

Accepted Answer

A factory emits pollution that is not accounted for in its production costs

Question 10

Utilitarianism, as discussed in the context of fairness, advocates for:

Accepted Answer

Achieving the greatest happiness for the greatest number

Question 11

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

Accepted Answer

Symmetry principle

Question 12

Suppose the marginal benefit of income decreases as income increases. According to utilitarianism, what happens if a dollar is transferred from a rich person to a poor person?

Accepted Answer

Total benefit increases

Question 13

Which of the following is a cause of market failure in competitive markets?

Accepted Answer

High transactions costs

Question 14

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

Accepted Answer

$5

Question 15

Which equation represents producer surplus for a given quantity $Q$ at price $P$?

Accepted Answer

$\sum_{i=1}^{Q} (P - MC_i)$

Question 16

A public good is likely to be underproduced because:

Accepted Answer

The free-rider problem leads individuals to avoid paying for it

Question 17

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

Accepted Answer

The tradeoff between efficiency and fairness when redistributing income

Question 18

If a market is inefficient due to high transactions costs, which alternative allocation method might be used?

Accepted Answer

Majority rule

Question 19

Which of the following is an example of the tragedy of the commons?

Accepted Answer

Overfishing in a lake owned by no one

Question 20

According to Adam Smith's 'invisible hand' concept, competitive markets:

Accepted Answer

Send resources to their highest valued use in society

Efficiency and Equity: Resource Allocation Methods in Microeconomics

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