Q: Which equation correctly represents the calculation of consumer surplus for a single unit?

$$\text{Consumer Surplus} = \text{Marginal Benefit} - \text{Price Paid}$$

Q: A competitive market is efficient when:

$$\text{Marginal Social Benefit} = \text{Marginal Social Cost}$$

Q: Which of the following equations correctly expresses total surplus in a market?

$$\text{Total Surplus} = \text{Consumer Surplus} + \text{Producer Surplus}$$

Question 1

Which of the following is the best example of allocating a scarce resource using the 'first-come, first-served' method?

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 the calculation of consumer surplus for a single unit?

Accepted Answer

$$	ext{Consumer Surplus} = 	ext{Marginal Benefit} - 	ext{Price Paid}$$

Question 4

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 5

Which of the following statements about market demand is correct?

Accepted Answer

Market demand is the horizontal sum of individual demand curves.

Question 6

A competitive market is efficient when:

Accepted Answer

$$	ext{Marginal Social Benefit} = 	ext{Marginal Social Cost}$$

Question 7

Which of the following is a source of market failure that can lead to underproduction?

Accepted Answer

High transactions costs

Question 8

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

Accepted Answer

The quantity produced decreases, leading to underproduction.

Question 9

Which of the following best describes producer surplus?

Accepted Answer

The area below the market price and above the supply curve, summed over the quantity sold.

Question 10

A monopoly is likely to cause which of the following outcomes?

Accepted Answer

Underproduction

Question 11

Suppose the efficient quantity of pizzas is 10,000 per day. If only 5,000 pizzas are produced, what is the result?

Accepted Answer

Underproduction and a deadweight loss

Question 12

Which of the following equations correctly expresses total surplus in a market?

Accepted Answer

$$	ext{Total Surplus} = 	ext{Consumer Surplus} + 	ext{Producer Surplus}$$

Question 13

Which allocation method is most likely to be used for distributing organ transplants?

Accepted Answer

First-come, first-served

Question 14

If a subsidy is given to producers of a good, what is the likely effect on the market?

Accepted Answer

The quantity produced increases, leading to overproduction.

Question 15

Which of the following is an example of an external benefit?

Accepted Answer

A person installing a smoke detector that also protects neighbors

Question 16

Which of the following best describes the relationship between marginal benefit and demand?

Accepted Answer

The demand curve is a marginal benefit curve.

Question 17

A city uses majority rule to decide how to allocate its budget between building a new hospital and a new sports stadium. This is an example of:

Accepted Answer

Majority rule allocation

Question 18

If the marginal social benefit of producing one more unit of a good is less than the marginal social cost, what should happen to the quantity produced to achieve efficiency?

Accepted Answer

Decrease production

Question 19

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

Accepted Answer

Efficient allocation of resources

Question 20

A contest allocation method is most appropriate when:

Accepted Answer

The efforts of participants are difficult to monitor and reward directly.

Efficiency and Equity: Resource Allocation, Surplus, and Market Failure

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