$$ ½ \times 20 \times 10 = 100 $$

Question 1

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

Accepted Answer

The demand curve is a marginal benefit curve, showing the maximum price consumers are willing to pay for each quantity.

Question 2

Suppose the market price for a good is $$10, and a consumer is willing to pay 15 $$for it. What is the consumer surplus for this transaction?

Accepted Answer

$5

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 considered efficient when:

Accepted Answer

The marginal social benefit equals the marginal social cost.

Question 5

Which formula correctly calculates the area of consumer or producer surplus on a standard supply and demand graph?

Accepted Answer

$$ ½ 	imes b 	imes h $$

Question 6

If a market produces more than the equilibrium quantity, what is the result?

Accepted Answer

A deadweight loss from overproduction occurs.

Question 7

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

Accepted Answer

Perfect competition

Question 8

A city allocates scarce parking spots downtown using a lottery system. This is an example of which allocation method?

Accepted Answer

Lottery

Question 9

According to utilitarianism, what is the main criterion for fairness in the distribution of resources?

Accepted Answer

The greatest happiness for the greatest number

Question 10

If the marginal benefit of income decreases as income increases, what does utilitarianism suggest about transferring income from rich to poor?

Accepted Answer

Transferring income increases total benefit.

Question 11

Which principle states that people in similar situations should be treated similarly, emphasizing equality of opportunity?

Accepted Answer

Symmetry principle

Question 12

A government imposes a price ceiling below the equilibrium price. What is the likely result?

Accepted Answer

Underproduction and a deadweight loss

Question 13

Which of the following best describes producer surplus?

Accepted Answer

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

Question 14

If a market is producing less than the equilibrium quantity, which of the following is true?

Accepted Answer

Marginal social benefit exceeds marginal social cost.

Question 15

Which allocation method is most appropriate when the efforts of participants are hard to monitor and reward directly?

Accepted Answer

Contest

Question 16

Suppose the area of consumer surplus on a graph is a triangle with a base of 20 units and a height of $10. What is the value of consumer surplus?

Accepted Answer

$$ ½ 	imes 20 	imes 10 = 100 $$

Question 17

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

Accepted Answer

A factory pollutes a river, affecting people downstream who are not part of the market transaction.

Question 18

Which of the following statements about total surplus is correct?

Accepted Answer

Total surplus is the sum of consumer surplus and producer surplus.

Question 19

According to Nozick, which of the following is a requirement for fairness in resource allocation?

Accepted Answer

Private property may be transferred only by voluntary exchange.

Question 20

A government introduces a subsidy for electric cars, resulting in more cars being produced than the equilibrium quantity. What is the likely effect?

Accepted Answer

Overproduction and a deadweight loss

Markets, Efficiency, and Equity: Surplus, Allocation, and Fairness in Microeconomics

Study Guide - Practice Questions