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Eco 102 H Review (chapter 7: Consumers, Producers And The Efficiency Of Markets)

31 Questions
Eco 102 H Review (chapter 7: Consumers, Producers And The Efficiency Of Markets)

Choose the BEST answer. Read the explanation if there is.

Questions and Answers
  • 1. 
    Positive statements answers the questions (what is) while normative statements answer the question (what should be).
    • A. 

      True

    • B. 

      False

  • 2. 
    What is the study of the allocation of resources which affects the economic well-being?
    • A. 

      Welfare economics

    • B. 

      Welfare allocation

    • C. 

      Resource economics

    • D. 

      Economic allocation

  • 3. 
    • A. 

      True

    • B. 

      False

  • 4. 
    Each buyer's maximum is called his ______ , and measures how much that buyer values the good. 
    • A. 

      Max demand

    • B. 

      Willingness to pay

    • C. 

      Demand peak

    • D. 

      Willingness of deman

  • 5. 
    It is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. 
    • A. 

      Consumer Surplus

    • B. 

      Consumer Profit

    • C. 

      Consumer Benefit

    • D. 

      Consumer Income

  • 6. 
    What is the relationship between consumer surplus and the demand cruve? 
    • A. 

      They have the same slope

    • B. 

      They coincide with each other

    • C. 

      They are equal

    • D. 

      They are closely related

  • 7. 
    Marginal buyers/sellers are the ones: 
    • A. 

      Who belong to the marginalized sectors

    • B. 

      Who would think outside the box for the solution of the economy's well-being

    • C. 

      Who would stay in the market no matter what the price would be

    • D. 

      Who would leave the the market first if the price were any higher

  • 8. 
    We can't measure consumer surplus using the demand curve. 
    • A. 

      True

    • B. 

      False

  • 9. 
    • A. 

      Becomes parabolic

    • B. 

      Becomes a smooth curve

    • C. 

      Remains a step-function

    • D. 

      Becomes bigger

  • 10. 
    Our goal in developing the concept of consumer surplus is: 
    • A. 

      To measure the efficiency of the market

    • B. 

      To assess the loss of the sellers in the market

    • C. 

      To assess the benefit of the buyers in the market

    • D. 

      To make judgments about the desirability of market outcomes

  • 11. 
    Consumer surplus is a good measure of ecnomic well-being if policymakers want to respect the preferences of sellers. 
    • A. 

      True

    • B. 

      False

  • 12. 
    • A. 

      True

    • B. 

      False

  • 13. 
    The measure of a producer's willingness to sell his/her services.
    • A. 

      Price

    • B. 

      Cost

    • C. 

      Supply ceiling

    • D. 

      Maximum supply

  • 14. 
    • A. 

      Below, below

    • B. 

      Above, above

    • C. 

      Above, below

    • D. 

      Below, above

  • 15. 
    _____ and _____ are the basic tools that economists use to study the welfare of buyers and sellers. 
    • A. 

      Demand, supply

    • B. 

      Consumer surplus, producer surplus

    • C. 

      Price, invisible hand

    • D. 

      Price, tax

  • 16. 
    Total surplus = Value to buyers - Cost to sellers
    • A. 

      True

    • B. 

      False

  • 17. 
    If an allocation of resources ______ , we say that the allocation exhibits efficiency.
    • A. 

      Minimizes cost

    • B. 

      Maximizes total surplus

    • C. 

      Maximize demand

    • D. 

      Maximize tax

  • 18. 
    Equslity - that is, whether the various buyers and sellers in the market:
    • A. 

      Have similar level of economic well-being

    • B. 

      Shares the equal burden from the tax

    • C. 

      Buys and sells in the same price

    • D. 

      Are interacting through market equilibrium

  • 19. 
    2 INSIGHTS ABOUT MARKET OUTCOMES (1) Free markets allocate the supply of good to the buyers:
    • A. 

      Who has the highest consumer surplus

    • B. 

      Who pays for it the fastest

    • C. 

      Who value them most highly

    • D. 

      Who value them the lowest

  • 20. 
    2 INSIGHTS ABOUT MARKET OUTCOMES (2) Free markets allocate the demand for goods to the sellers who:
    • A. 

      Can produce them in the fastest manner

    • B. 

      Can produce them in the highest cost

    • C. 

      Can produce them at the least cost

    • D. 

      Can produce them in the best quality

  • 21. 
    The social planner cannot increase the economic well-being by changing the allocation of consumption among buyers or the allocation of production among sellers.
    • A. 

      True

    • B. 

      False

  • 22. 
    Free markets produce the quantity of goods that maximizes the: 
    • A. 

      Satisfaction of both buyers and sellers

    • B. 

      Revenue of the sellers

    • C. 

      Profit of the sellers

    • D. 

      Sum of consumer and producer surplus

  • 23. 
    The equilibrium outcome is always an efficient allocation of resources.
    • A. 

      True

    • B. 

      False

  • 24. 
    Society is lucky because social planners intervene.
    • A. 

      True

    • B. 

      False

  • 25. 
    Centrally planned government ___ work very well.
    • A. 

      Sometimes

    • B. 

      Never

    • C. 

      Often

    • D. 

      Can

  • 26. 
    What is the best way to organize the economic activity?
    • A. 

      Complete intervention of the social planners

    • B. 

      No intervention of the social planners

    • C. 

      With educated leaders

    • D. 

      Free markets

  • 27. 
    Many economists believe that there would be large benefits to allowing a free market in organs.
    • A. 

      True

    • B. 

      False

  • 28. 
    In the world, competition is sometimes far from perfect. 
    • A. 

      True

    • B. 

      False

  • 29. 
    What are the two assumptions we made in this chapter?
    • A. 

      Taxation does not cause market failure

    • B. 

      Perfect competition

    • C. 

      Action of the invisible hand

    • D. 

      Outcome in a market matters only to the buyers and sellers in the market

  • 30. 
    Market power and externalities are examples of a general phenomen called:
    • A. 

      Inequilibrium

    • B. 

      Market failure

    • C. 

      Imbalance

    • D. 

      Market deficit

  • 31. 
    French phrase that refers to free market:
    • A. 

      Ceteris paribus

    • B. 

      Laissez fair