7 Flashcards
Which for the following defines the term market failure?
A) income distribution is not equitable
B). Externalities are present in the economy
C) The best attainable outcome has not been achieved
D) The economy is not in equilibrium
C
Which choice below would be the most likely if less than the market equilibrium quantity of diet colas was produced
A) resources must have had a higher valued alternative use producing something else
D) consumer surplus will be higher than otherwise would be the case
C) Producer surplus will be higher than otherwise would be the case
D) an additional unit of diet cola would add more to society’s benefit then to its cost
D
Suppose that a technological breakthrough occurs in the production of selfless. All else being equal, the equilibrium price of cell phones will______, The equilibrium quantity of cell phones sold Will_____, consumer surplus Will______, Producer surplus well__
Decrease; increase; increased; increase
Suppose that you own a classic been a guitar. You had lost interest in it, and thus it is worth only $50 to you. Your friend Kevin loves the guitar and would be willing to pay as much as $950 for it. If you sell the guitar for $100 then social welfare
Rises by $900
It turns out that Kevin is not the only friend who is interested in the guitar would you plan to sell for $50. Then also likes it and would be willing to pay $500 seeing some would pay 1200 and Tom would pay $2000 and Kevin would pay $950 to maximize the society’s well-being, you should
Sell the guitar to Tom even if he pays no more than the others because he values at the most
Medical care is vital to society survival. From society standpoint, under which one of the following conditions should people increaser spending on healthcare?
A) as long as anyone is sick
B) as long as total benefit increases when people increase their spending
C). As long as total cost is less than total benefit
D) as long as an extra dollar of healthcare spending generates at least a dollar in added benefits
D
The price of a new car is $25,000. Consumers will continue to buy additional cars until the consumer surplus from the last car purchased is that which one of the following points? A) zero B) $25,000 C) maximized D) minimized
A
The price of a new car is $25,000 auto producers will continue to supply additional cars until the producer surplus from the last car produce is that which one of the following points? A) zero B) $25,000 C) maximized D) minimized
A
As a matter of public policy, people are not allowed to Southern Oregon’s. Which one of the following is a reason some economists believe that there would be large benefits to allowing a free market in organs?
A) this shortage of organs for transplant to disappear
B) sellers of organs would be worse off with less cash in their pockets
C) buyers of organs would be better off having the quantity of organs available
D) such a market with the to a non-efficient outcome
A
Which of the following statements best represents externalities?
A) because wealth in the market to depend on more than just a value to the buyers in the cost to sellers
B) they are side effects of production or consumption passed on to a party other than the seller and buyers in the market
D) they are examples of market efficiency
C) they are examples of market success
B
Which one the following is producer surplus?
A) total cost to sellers of participating in the market
B) difference between what the consumer offered in the actual price paid
C) inventories that cannot be sold at the market price
D). The difference between willingness to sell and willingness to buy
D
Fully describe efficiency and compare it to equity
Maximizing the total combined producer and consumer surplus from the market
- does not guarantee any particular distribution of resulting Outcome
Efficiency is objectively measured as what it is but equity requires normative or value judgments about what ought to be
Would it be more or less efficient for the buyers and sellers to be matched according to their willingness to buy and sell?
If the highest cost seller sold to the highest marginal value consumer, and the lowest cost seller sold to the consumer with the Louis marginal value, and so on, each auto would be sold in each consumer would have a car. However, it would be less efficient; there would be no consumer or producer surplus, because each buyer and seller would have broken even. Compared to the competitive solution, society would lose a $6000 total surplus
Explain how the free-market maximizes total sir plus what assumptions are required for the result to occur?
Free markets encourage the production of every good that adds more to benefits then adds to cost. If decision-makers take into account all the social benefits and social cost of their actions when they choose, then your decisions will also next to my societies total surplus. This assumes that there is no market failure, due to, for example, externalities or concentration of market power.
What happens to total sir plus if production goes beyond the equilibrium?
If production occurs beyond equilibrium, then the additional units will have marginal cost greater than the marginal benefits from their production, resulting in a net loss of social well-being because total surplus is reduced from its level at equilibrium.
