1) Two criteria used to judge the performance of any economic system are A) effi
ID: 1114387 • Letter: 1
Question
1) Two criteria used to judge the performance of any economic system are
A) efficiency and equity.
B) profit opportunities and technological progress.
C) efficiency and profit opportunities.
D) technological progress and achieving general equilibrium.
2) ________ occurs when the economy is producing what people want at least possible cost.
A) Efficiency
B) Equity
C) Stability
D) Maximum profit
3) A gas tax holiday would
A) affect the market for gasoline.
B) affect the market for air travel.
C) affect the level of congestion on roads.
D) All of the above are correct.
4) Initially the wheat and corn markets are in equilibrium, then preferences shift away from wheat and into corn. If you are a wheat farmer, the best profit-maximizing strategy is to
A) shut down.
B) increase output so as to increase your market share.
C) shift more of your farming capacity wheat production.
D) decrease output so as to minimize short run losses.
5) Suppose there is a permanent shift of consumer preferences toward frozen yogurt and away from ice cream. The most likely result would be in the
A) short run, economic losses in the frozen yogurt market.
B) long run, a fall in the supply of frozen yogurt.
C) short run, a rise in the price of ice cream.
D) short run, profits in the frozen yogurt market.
6) Pareto optimality occurs when
A) the distribution of income is equal.
B) it is not possible to make some members of society better off without making at least one other member of society worse off.
C) firms are forced to internalize the effects of all externalities.
D) it is possible to make one person better off without making someone else worse off.
7) ________ is a change that makes some people better off and nobody worse off.
A) A government transfer program such as Social Security
B) A reduction in interest rates
C) A price floor that increases income to suppliers
D) Voluntary exchange
8) Assume some gain and some lose as the result of a change. If we can demonstrate the value of the gains exceeds the value of the losses, then we say the change is
A) potentially efficient.
B) inefficient.
C) unequivocally Pareto optimal.
D) technically efficient.
9) A voluntary exchange between Samantha (the purchaser) and Adriana (the seller) occurs because
A) Samantha stands to gain and Adriana stands to lose.
B) Samantha stands to lose and Adriana stands to gain.
C) they both gain from the transaction.
D) they had no choice.
10) A household will only buy a good as long as the utility from the good's consumption is ________ its market price.
A) less than
B) less than or equal to
C) greater than
D) greater than or equal to
11) ________ is the cost of using resources to produce another unit of a good.
A) Marginal revenue
B) Marginal cost
C) Price
D) Total cost
12) In making labor supply decisions, ________ weigh the market wage against the value of leisure and time spent in unpaid household production.
A) businesses
B) financial markets
C) households
D) None of the above is correct.
13) ________ is a good measure of what society gives up by using resources to produce more of a good or service.
A) Marginal revenue
B) Marginal revenue product
C) Marginal cost
D) Total cost of production
14) With respect to private goods, a ________ system is one in which all possible trades that make some societal members better off without making others worse off have been exhausted.
A) Pareto maximized
B) Pareto optimal
C) market
D) general equilibrium
15) Under perfect competition,
A) resources are allocated among firms equitably.
B) final products are distributed among households equitably.
C) the system produces the goods and services consumers want.
D) All of the above are correct.
16) Under perfect competition, firms produce the ________ level of output because price equals marginal cost.
A) greatest
B) most costly
C) equitable
D) efficient
17) Price reflects the ________ household willingness to pay, and marginal cost reflects the ________ of the resources needed to produce a good.
A) minimum; quantity
B) minimum; opportunity cost
C) maximum; productivity
D) maximum; availability
18) Society will produce the efficient mix of output if ________ are equated for all firms.
A) price and marginal cost
B) price and average total cost
C) marginal cost and average total cost
D) price and marginal revenue
19) Relating to the Economics in Practice on page 252: Subsidies for ethanol, a fuel produced from corn, have affected the market for
A) corn.
B) wheat.
C) farm land.
D) All of the above are correct.
20) Relating to the Economics in Practice on page 252: Ethanol subsidies have increased the supply of corn, and ethanol is a fuel produced from corn. As a result, ________ farm land has increased. Further, supply of ________ has decreased.
A) demand for; corn
B) supply of; other grains
C) demand for; other grains
D) supply of; corn
Explanation / Answer
The right answer is option A) efficiency and equity.
Explanation: Efficiency and equity are two objective criteria for judging the performance of an economy. Efficiency refers to how resources are used in an economy to minimize wastage and equity refer to how the benefits of economic activities are shared among all stakeholders in the economy.
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