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econ 1010 quizes

Introduction to Microeconomics (University of Lethbridge)

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Lotteries work best

Select one:
A. when potential users of scarce resources are unknown.
B. under any circumstances.
C. under a command system.
D. under the first-come, first served allocation method.
E. when there is no effective way to distinguish among potential users of a
scarce resource.

Figure 5.2.2

Consider the demand curve in Figure 5.2.2. What is the consumer surplus when
the price is $4 a unit?
Select one:
A. $4
B. $56
C. $126
D. $196
E. $98

What is the producer surplus for the market from the production of the 100th
unit of a good?
Select one:

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A. the opportunity cost of producing the 100th unit

B. the marginal benefit from the 100th unit
C. the marginal social benefit from the 100th unit minus the marginal cost of
producing the 100th unit
D. the marginal cost of producing the 100th unit
E. the price paid for the 100th unit minus the marginal social cost of producing
the 100th unit

The idea of fairness that has been developed to deal with the big tradeoff is the
idea that
Select one:
A. we should treat other people as we would like to be treated.
B. fair distribution of the economic pie is the one that costs the richest person
the least amount of money.
C. fair distribution of the economic pie is the one that makes the poorest person
as well off as possible.
D. fair distribution of the economic pie is the one that makes everyone equal.
E. we need to bake a bigger economic pie.

Figure 5.2.3

Refer to Figure 5.2.3. If the price is P0, what area on the graph indicates
consumer surplus?
Select one:

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A. A
B. B plus C
C. D plus E
D. A plus B plus C
E. A plus B plus C plus D plus E

Refer to Table 5.2.1. If the price is $6 a unit, the producer surplus on the third
unit is
Select one:
A. $5.
B. $6.
C. $2.
D. $3.
E. $4.

Which of the following is true?

Select one:
A. When the range of activities to be monitored is large and complex, a
command system allocates resources better than a market price.
B. When resources are allocated on the basis of personal characteristics, all
people who are willing and able to pay the price get the resource.
C. When resources are allocated by force, people with the "right" characteristics
get the resources.
D. When a market price allocates resources, some people who are willing and
able to pay that price don't get the resource.
E. Force provides the state with an effective method of transferring wealth from
the rich to the poor.

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Figure 5.2.7

Consider the demand and supply curves in Figure 5.2.7. If the market is at the
competitive equilibrium, which area in the diagram indicates the cost of
producing the quantity sold?
Select one:
A. 0BCD
B. ABC
C. AEC
D. 0ECD
E. EBC

Table 5.2.1 gives information on marginal cost for the XYZ firm. If XYZ sells the
first unit at a price of $6, what is the producer surplus on that unit?
Select one:
A. $6
B. $4

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C. $7
D. $9
E. $12

Suppose the market for diamonds is a monopoly. We can expect

Select one:
A. underproduction of diamonds.
B. an efficient quantity of diamonds.
C. overproduction of diamonds.
D. marginal social benefit to equal marginal social cost in the diamond market.
E. the allocation of diamonds to be first-come, first-served.

When the cost of making income transfers is recognized, we recognize the big
tradeoff between
Select one:
A. producer surplus and consumer surplus.
B. efficiency and fairness.
C. value and marginal benefit.
D. marginal benefit and marginal cost.
E. deadweight loss and utilitarianism.
Question text

In competitive equilibrium, which of the following statements is false?

Select one:
A. Willingness to pay equals marginal cost of production.
B. Deadweight loss is maximized.
C. Resources are used efficiently to produce goods and services that people
value most highly.
D. Marginal social benefit equals marginal social cost.
E. The sum of consumer surplus and producer surplus is maximized.
Question text

At current output, the marginal social benefit from Furbys is greater than
marginal social cost. To achieve an efficient allocation, which of the following
must occur? (1) Furby output must increase. (2) Furby output must decrease. (3)

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the marginal social benefit of Furbys will rise. (4) the marginal social cost of
Furbys will fall.
Select one:
A. 1 and 3
B. 2 and 4
C. 1 and 4
D. 2 and 3
E. 1 only
Question text

If you increase your consumption of pop by one additional can a week, your
marginal benefit from this last can is $1.00. For you, the ________ this last can of
pop is $1.00
Select one:
A. price of
B. consumer surplus from
C. value from
D. marginal cost of
E. producer surplus
Question text

Use the figure below to answer the following questions.

Figure 5.2.3

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Refer to Figure 5.2.3. If the price falls from P1 to P0, what area on the graph
indicates the change in consumer surplus?
Select one:
A. A plus B plus C
B. A plus B
C. A plus B plus D
D. B plus C
E. A
Question text

Use the figure below to answer the following questions.

Figure 5.3.2

Refer to Figure 5.3.2. If the level of output is 200 units, the deadweight loss is
area
Select one:
A. BCF.
B. ACG.
C. DCE.
D. ACH.
E. HCG.
Question text

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At West, a restaurant in Vancouver, reservations are essential. At Cibo, a

restaurant in downtown Vancouver, reservations are recommended. At Vij's, a
restaurant near the University of British Columbia, reservations are not
accepted.

West allocates scarce table resources by ________, Cibo allocates scarce table
resources by ________, and Vij's allocates scarce table resources by ________.
Select one:
A. a command system; a combination of a command system and first-come,
first-served; first-come, first-served
B. personal characteristics; personal characteristics; first-come, first-served
C. market price; market price and force; force
D. personal characteristics; personal characteristics and first-come, first-served;
first-come, first-served
E. first-come, first-served; first-come, first-served; first-come, first-served
Question text

The main idea of fairness is based on which of the following rules?

a. The state must enforce laws that establish and protect private property.
b. Goods and services that produce externalities must be owned by the state,
monopolies must be eliminated, and common resources must follow the rules of
the competitive market.
c. The state must enforce tax laws so that after taxes are paid and benefits are
received, the gap between rich and poor is as small as possible.
d. Private property may be transferred from one person to another only by
voluntary exchange.
Select one:
A. Rules a and d
B. Rules b and c
C. Rules b and d
D. Rules a and c
E. The main idea of fairness is not based on any of these rules.
Question text

Use the figure below to answer the following questions.

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Figure 5.3.2

Refer to Figure 5.3.2. If the level of output is 150 units, the consumer surplus is
area
Select one:
A. BCF.
B. ACG.
C. DCE.
D. ACH.
E. HCG.
Question text

Contests do a good job in resource allocation

Select one:
A. only under a command system.
B. under any circumstances.
C. when the efforts of the players are hard to monitor and reward directly.
D. when the first-come, first-served allocation method has failed.
E. when the efforts of the players are easy to monitor and reward directly.

Use the figure below to answer the following questions.

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Figure 5.2.1

Consider Figure 5.2.1. If the price is $4, what is the consumer surplus from the
third unit of the good?
Select one:
A. $3
B. $2
C. $4
D. $0
E. $1
Question text

Use the figure below to answer the following questions.

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Figure 5.3.1

Refer to Figure 5.3.1. If the price is $15 a unit,

Select one:
A. production is efficient.
B. the sum of consumer surplus and producer surplus is maximized.
C. marginal social benefit equals marginal social cost.
D. deadweight loss is zero.
E. all of the above
Question text

A modified version of utilitarianism proposed by John Rawls could be

summarized as
Select one:
A. transfer everything to the poor.
B. make the poorest as well off as possible.
C. expand the size of government.
D. transfer everything to the rich.
E. minimize the size of government.
Question text

What method of resource allocation depends on willingness-to-pay and ability-

to-pay?
Select one:

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A. first-come, first-served
B. market price
C. command
D. force
E. lottery
Question text

Use the figure below to answer the following questions.

Figure 5.2.6

Figure 5.2.6 shows the supply curve of DVD rentals for Morgan's Marvellous
Movies. If Morgan's rents the fifth DVD at a price of $7, what is the producer
surplus on that rental?
Select one:
A. $6
B. $3
C. $1
D. $7
E. $28
Question text

The marginal cost of producing one more hot dog is $1.00. The price of a hot
dog is $1.50. The producer surplus from selling one more hotdog is
Select one:

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A. $1.50.
B. $0.50.
C. $2.50.
D. $1.00.
E. zero.
Question text

According to John Rawls' modified utilitarianism, income should be redistributed

until
Select one:
A. the poorest person is as well off as possible, after incorporating the costs of
income transfers.
B. opportunities are equal.
C. incomes are equal.
D. the big tradeoff is eliminated.
E. the poorest person is as well off as possible.
Question text

A used truck has a sticker price of $21,000. Arthur decides that he will pay no
more than $19,750 for this truck. He buys the truck for $19,250. Arthur obtains
a consumer surplus of
Select one:
A. $1,750.
B. $1,250.
C. $19,750.
D. $500.
E. $19,250.
Question text

Which of the following ideas describes the concept of "utilitarianism"?

I. Utilitarianism was introduced in the 1930s.
II. Utilitarians believed that a society should strive to make as many people as
happy as possible.
III. Utilitarians claimed that taking money from rich people and giving it to
poorer people would not make an economy better off.
Select one:
A. I only
B. II only

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C. I and III
D. II and III
E. I, II, and III
Question text

When overproduction of a good occurs

Select one:
A. marginal social benefit exceeds marginal social cost.
B. marginal social cost exceeds marginal social benefit.
C. the good is a public good.
D. the sum of consumer surplus and producer surplus is maximized.
E. deadweight loss is eliminated.

Use the figure below to answer the following questions.

Figure 5.3.1

Refer to Figure 5.3.1. If the quantity produced is 100,

Select one:
A. marginal social benefit is minimized.
B. marginal social benefit exceeds marginal social cost.
C. production is efficient.
D. deadweight loss is zero.

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E. marginal social cost exceeds marginal social benefit.

Question text

An idea of fairness that emphasizes equality of opportunity is

Select one:
A. utilitarianism.
B. modified utilitarianism.
C. fair rules.
D. fair results.
E. fair incomes.
Question text

Use the figure below to answer the following questions.

Figure 5.3.2

Refer to Figure 5.3.2. If the level of output is 150 units, the producer surplus is
area
Select one:
A. BCF.
B. ACG.
C. DCE.
D. ACH.
E. HCG.

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Question text

The marginal cost of producing an additional basket of tomatoes is $5.00. The

consumer is willing to pay a maximum of $9.00 for an additional basket. A
farmer sells a basket of tomatoes for $6.00 each. The farmer receives a
producer surplus from selling an additional basket of tomatoes equal to
Select one:
A. $3.00.
B. $4.00.
C. $9.00.
D. $5.00.
E. $1.00.
Question text

Use the figure below to answer the following questions.

Figure 5.2.4a Figure 5.2.4b

Figure 5.2.4 shows Leo's demand curve for pizza in the left graph and Kate's
demand curve for pizza in the right graph. Leo and Kate are the only two
consumers in the market. If the market price is $3 a slice, what is the quantity
demanded in the market?
Select one:
A. 10 slices
B. 15 slices
C. 5 slices

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D. 25 slices
E. 20 slices
Question text

Use the figure below to answer the following questions.

Figure 5.2.6

Figure 5.2.6 shows the supply curve of DVD rentals for Morgan's Marvellous
Movies. If the price of a rental is $5, what is Morgan's producer surplus?
Select one:
A. $4.50
B. $2.25
C. $24.50
D. $5.00
E. $15.00
Question text

If the owner of an apartment building rents only to married couples over the age
of 30, the method of resource allocation is
Select one:
A. market price.
B. majority rule.
C. contest.
D. personal characteristics.

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E. force.
Question text

Consumer surplus
Select one:
A. is low for inexpensive goods.
B. is high for expensive goods.
C. is high for inexpensive goods.
D. is low for expensive goods.
E. may be low or high for any type of good, expensive or inexpensive, depending
on the characteristics of demand.
Question text

Use the figure below to answer the following questions.

Figure 5.2.5a Figure 5.2.5b

Figure 5.2.5 shows the supply curve for Pizza House's pizzas in the left graph
and the supply curve for Pizza Club's pizzas in the right graph. If the price of a
pizza is $20, what is the quantity supplied by the market if Pizza House and
Pizza Club are the only firms?
Select one:
A. 50
B. 25
C. 75
D. zero

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E. 20
Question text

In 2017, a severe drought led to an increase in the price of corn. Farmer Lyle was
not affected by the drought. In 2016 there was no drought. In 2017, Farmer
Lyle's
Select one:
A. producer surplus increased.
B. consumer surplus increased.
C. supply of corn became perfectly elastic.
D. consumer surplus decreased and his producer surplus increased.
E. producer surplus increased and his consumer surplus increased.
Question text

Use the figure below to answer the following questions.

Figure 5.2.2

Consider the demand curve in Figure 5.2.2. If the price rises from $4 to $11 a
unit, consumer surplus
Select one:
A. increases by $21.00.
B. decreases by $73.50.
C. decreases by $24.50.

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D. increases by $73.50.
E. decreases by $21.00.
Question text

When 2,000 hamburgers a day are produced, the marginal social benefit from
the 2000th hamburger is $1.50 and its marginal social cost is $1.00. And when
7,500 hamburgers a day are produced, the marginal social benefit from the
7,500th hamburger is $1.00 and its marginal social cost is $1.50. The efficient
quantity of hamburgers is ________ a day
Select one:
A. more than 7,500
B. less than 2,000
C. zero
D. between 2,000 and 7,500
E. 2,000
Question text

At the Stratford Festival Theatre no reservations are accepted on the day of the
performance; at matinees, reservations are accepted; at opening night
performances reservations are essential. On the day of the performance,
Stratford Festival Theatre allocates seats by ________; at matinees, it allocates
seats by ________; at opening night performances, it allocates seats by ________.
Select one:
A. force; first-come, first-served; a command system
B. first-come, first served; a command system; a combination of first-come, first-
served and a command system
C. first-come, first served; first-come, first-served; first-come, first-served
D. a lottery; first-come, first-served; personal characteristics
E. personal characteristics; personal characteristics; personal characteristics
Question text

Use the figure below to answer the following questions.

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Figure 5.3.1

Refer to Figure 5.3.1. If the quantity produced is 200,

Select one:
A. the sum of consumer surplus and producer surplus is maximized.
B. a deadweight loss exists.
C. the sum of consumer surplus and producer surplus is zero.
D. production is efficient.
E. deadweight loss is minimized.
Question text

When a market price allocates a scarce resource,

Select one:
A. only those who are willing and able to pay get the resource.
B. everyone in the economy can use the resource.
C. willingness-to-pay is not an issue.
D. ability to pay for the resource is less important than willingness-to-pay.
E. the richest people get the resource.
Question text

Use the figure below to answer the following questions.

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Figure 5.2.4a Figure 5.2.4b

Refer to Figure 5.2.4. If the market price is $3 a slice, what is the consumer
surplus in the market?
Select one:
A. $60.00
B. $11.25
C. zero
D. $12.50
E. $1.25
Question text

According to the "big tradeoff,"

Select one:
A. efficiency requires income transfers.
B. property rights and voluntary exchange insure equality of opportunity.
C. a more equally shared pie results in a larger pie.
D. income transfers reduce efficiency.
E. income transfers should make the poorest person as well off as possible.
Question text

When a scarce resource is allocated to someone who is the winner, the method
of resource allocation is
Select one:

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A. first-come, first-served.
B. a contest.
C. majority rule.
D. personal characteristics.
E. force.
Question text

Use the figure below to answer the following questions.

Figure 5.3.1

Refer to Figure 5.3.1. The efficient quantity is

Select one:
A. 50 units.
B. 250 units.
C. 150 units.
D. 200 units.
E. 100 units.
Question text

In a command system, resources are allocated by

Select one:
A. the order of someone in authority.
B. market price.

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C. those people who come first in line.

D. force.
E. people who are able to pay for the resources.

When the efficient quantity is produced

Select one:
A. the quantity demanded equals the quantity supplied.
B. resources are used in the activities in which they are most highly valued.
C. the sum of consumer surplus and producer surplus is maximized.
D. marginal social benefit equals marginal social cost.
E. all of the above.
Question text

Economists tend to
Select one:
A. agree about efficiency but disagree about fairness.
B. be more agreeable than philosophers about fairness.
C. disagree about efficiency but agree about fairness.
D. be more disagreeable than philosophers about fairness.
E. agree about efficiency and about fairness.
Question text

A market demand curve is constructed by

Select one:
A. determining the quantity supplied by all producers at all possible prices.
B. adding the prices all consumers are willing to pay for any given quantity.
C. subtracting the quantity demanded by all individuals from the quantity
supplied by all producers at each price.
D. adding the quantities demanded by all individuals at each price.
E. subtracting the quantity supplied by all producers from the quantity
demanded by all individuals at each price.
Question text

One big problem with the utilitarian ideal is that it

Select one:
A. ignores the costs of making income transfers.

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B. ignores fairness.
C. ignores equality.
D. all of the above
E. none of the above
Question text

Use the figure below to answer the following questions.

Figure 5.2.1

Consider the demand curve in Figure 5.2.1. What is the value of the first unit of
the good?
Select one:
A. zero
B. $4
C. $9
D. $8
E. $10
Question text

Use the figure below to answer the following questions.

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Figure 5.3.2

Refer to Figure 5.3.2. If the level of output is 100 units, the deadweight loss is
area
Select one:
A. BCF.
B. ACG.
C. DCE.
D. ACH.
E. HCG.
Question text

An oil painting has an opportunity cost of $1,000. The painting is purchased for
$1,500. How much consumer surplus does the buyer obtain?
Select one:
A. $1,000
B. $500
C. zero
D. $1,500
E. cannot be determined from the information given
Question text

Producer surplus is
Select one:

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A. the value producers place on a good minus the price of the good.
B. equal to consumer surplus.
C. the price of the good minus the value producers place on it.
D. zero if price equals marginal cost.
E. equal to marginal benefit minus marginal cost.
Question text

The symmetry principle is based on

Select one:
A. the idea that there is symmetry between buyers and sellers in a market.
B. the fact that taxes create a deadweight loss.
C. the idea that income should be redistributed from the rich to the poor.
D. the idea that people in similar situations should be treated similarly.
E. the idea that markets operate fairly.
Question text

Suppose that the Hot Dog House can produce hotdogs at a constant cost of
$0.25 each. If the Hot Dog House sells hotdogs for $0.50 each, then the Hot Dog
House
Select one:
A. has no producer surplus.
B. will allow consumers to receive a consumer surplus.
C. will raise the price of hot dogs.
D. has an opportunity cost of $0.50 for each hot dog it produces.
E. receives a producer surplus.

Market demand is the

Select one:
A. sum of the quantity demanded by each individual at each price.
B. sum of the consumer surplus of each individual.
C. sum of the prices that each individual is willing to pay for each quantity
demanded.
D. difference between the maximum amount each individual is willing to pay for
a good and the market price.
E. difference between the market price and the maximum amount each
individual is willing to pay for a good.

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Question text

Use the figure below to answer the following questions.

Figure 5.2.1

Consider Figure 5.2.1. When the price is $4 a unit, what is the consumer surplus
from the second unit of the good?
Select one:
A. $10
B. $7
C. $1
D. $4
E. $3
Question text

Use the figure below to answer the following questions.

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Figure 5.2.3

Refer to Figure 5.2.3. If the price rises from P0 to P1, what area on the graph
indicates the change in consumer surplus?
Select one:
A. A
B. B plus C
C. D plus E
D. A plus B plus C
E. A plus B plus C plus D plus E
Question text

Which of the following can lead to an inefficient outcome?

I. Price regulations
II. Increasing marginal cost
III. Monopoly
Select one:
A. I only
B. II only
C. III only
D. I and III
E. I, II, and III
Question text

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Suppose the government places a tax on business profits so that businesses

decrease production and generate a deadweight loss. Revenues from the tax are
used to boost the incomes of the poor. The decision to levy the tax implies that
in this case the government
Select one:
A. is unaware of the deadweight loss it is creating.
B. profits from collecting taxes.
C. values people but not businesses.
D. values its view of fairness more than efficiency.
E. values efficiency more than its view of fairness.
Question text

The price of pizza increases. Everything else remaining the same, the consumer
surplus from pizza
Select one:
A. is less than the producer surplus from pizza.
B. increases.
C. does not change.
D. is greater than the producer surplus from pizza.
E. decreases.
Question text

In the Canadian economy, the command system is

Select one:
A. used only by private companies.
B. used extensively in place of markets.
C. used extensively inside firms and government departments.
D. not used at all.
E. used occasionally inside firms and government departments.
Question text

Use the figure below to answer the following questions.

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Figure 5.2.3

Refer to Figure 5.2.3. If the price is P0, then the value of the last unit consumed
is
Select one:
A. P0.
B. 0.
C. P1- P0.
D. equal to the consumer surplus on the last unit consumed.
E. P1.
Question text

A new car has a sticker price of $24,000. Fred decides that he will pay no more
than $23,000 for this car. He bought the car for $21,000. Fred obtains a
consumer surplus of
Select one:
A. $23,000.
B. $2,000.
C. $3,000.
D. $1,000.
E. $21,000.
Question text

Choose the correct statement.

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Select one:
A. Consumer surplus is an external benefit.
B. A government subsidy paid to a producer is an external benefit.
C. Subsidies lead to overproduction.
D. Producer surplus is an external cost.
E. Consumer surplus is an external cost.

If production is not at an efficient level, which of the following must be true?

Select one:
A. Production will decrease.
B. Total surplus is not maximized.
C. Production will increase.
D. Marginal social cost exceeds marginal social benefit.
E. Marginal social benefit exceeds marginal social cost.
Feedback

The correct answer is: Total surplus is not maximized.

Question 2
Correct
Mark 10.00 out of 10.00

Question text

What is the consumer surplus for the market from the consumption of the 100th
unit of a good?
Select one:
A. the marginal social benefit from the 100th unit minus the price paid for the
100th unit
B. the marginal social cost of the 100th unit
C. the opportunity cost of producing the 100th unit
D. the marginal social benefit from the 100th unit
E. the marginal social benefit from the 100th unit minus the marginal social cost
of the 100th unit
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The correct answer is: the marginal social benefit from the 100th unit minus the
price paid for the 100th unit

Question 3

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Correct
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Use the figure below to answer the following questions.

Figure 5.2.3

Refer to Figure 5.2.3 If the price is P1, what area on the graph indicates
consumer surplus?
Select one:
A. A
B. B plus C
C. D plus E
D. A plus B plus C
E. A plus B plus C plus D plus E
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The correct answer is: A

Question 4
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The first-come, first-served method of resource allocation allocates resources to

Select one:
A. the wealthiest.
B. people who are willing to take risks.
C. the first in line.
D. people who are not willing to take risks.
E. honest, hard-working people.
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The correct answer is: the first in line.

Question 5
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A negative externality results in

Select one:
A. underproduction.
B. efficient production.
C. overproduction.
D. zero production.
E. zero deadweight loss.
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The correct answer is: overproduction.

Question 6
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Sam's demand curve for pizza

Select one:
A. lies above his marginal benefit curve from pizza.
B. lies below his marginal benefit curve from pizza.
C. is the same as his marginal benefit curve from pizza.

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D. lies below his marginal cost curve of pizza.

E. is the same as his marginal cost curve of pizza.
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The correct answer is: is the same as his marginal benefit curve from pizza.

Question 7
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Use the information below to answer the following questions.

Fact 5.3.1

Only 1 percent of the world supply of water is fit for human consumption. Some
places have more water than they can use; some could use much more than
they have. The 1 percent available would be sufficient if only it were in the right
place.

Refer to Fact 5.3.1. If there were a global market in water like there is in oil,
Select one:
A. supply and demand would determine the price of water and those who are
willing to pay the equilibrium price would get the water.
B. countries with a shortage of water would pay an exorbitant price for water.
C. less water would be made available to countries that experience drought.
D. the demand for water would increase.
E. the supply of water would decrease.
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The correct answer is: supply and demand would determine the price of water
and those who are willing to pay the equilibrium price would get the water.

Question 8
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Marginal cost

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Select one:
A. is less than price.
B. is greater than price.
C. can be negative.
D. decreases as more of a good or service is produced.
E. is the minimum price that producers must receive to induce them to offer one
more unit of a good or service for sale.
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The correct answer is: is the minimum price that producers must receive to
induce them to offer one more unit of a good or service for sale.

Question 9
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As the quantity of hot dogs demanded increases,

Select one:
A. the quantity of hot dogs supplied increases.
B. the hot dog market becomes more efficient.
C. the marginal social benefit from a hot dog decreases.
D. the marginal social cost of a hot dog decreases.
E. the hot dog market becomes less efficient.
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The correct answer is: the marginal social benefit from a hot dog decreases.

Question 10
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A contest allocates resources to

Select one:
A. an athlete.
B. private firms.
C. a winner or a group of winners.

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D. the government.
E. a gambler.
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The correct answer is: a winner or a group of winners.

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