Question 1

Figure 11-1 
-Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3,

Accepted Answer

C

Question 2

Figure 11-1 
-Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9,what changes in the market would result in an economically efficient output?

Accepted Answer

A

Question 3

Figure 11-1 
-Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.If 4000 kilograms of pecans are sold,

Accepted Answer

A

Question 4

Figure 11-1 
-Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3,what changes in the market would result in an economically efficient output?

Accepted Answer

The economically efficient output is achieved at the intersection of the supply and demand curves, which is the equilibrium price and quantity. If the price is currently $3 and changes are needed for economically efficient output, the price must increase to incentivize suppliers to produce more pecans, resulting in an increase in quantity supplied. At the same time, the higher price will reduce the quantity demanded, resulting in a decrease in quantity demanded. The economically efficient output will be achieved when the higher price leads to the quantity supplied being equal to the quantity demanded. Therefore, the correct choice is D.

Question 5

Figure 11-1 
-Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $3,

Accepted Answer

At a price of $3, the quantity demanded is 6,000 pounds and the quantity supplied is only 4,000 pounds. This means that the marginal benefit (value to consumers) of the last unit of pecans sold is greater than the marginal cost (cost to producers) of producing that unit. This creates a situation where too few pecans are being produced and consumed, resulting in inefficiently low output.

Question 6

One difference between the demand for a private good and that for a public good is that

Accepted Answer

With a private good, each consumer can choose the quantity she wants to consume based on her own preferences and ability to pay. However, with a public good, everyone consumes the same quantity because the good is non-excludable and non-rivalrous. This means that no one can be prevented from consuming the good and that consumption by one person does not reduce the amount available for others to consume. As a result, the quantity consumed is determined collectively rather than individually.

Question 7

Figure 11-1 
-Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.If 8000 kilograms of pecans are sold,

Accepted Answer

In a competitive market, the equilibrium point is where marginal benefit equals marginal cost. Therefore, if 8000 kilograms of pecans are sold, it must be the equilibrium quantity, and the marginal benefit of each of the 8000 kilograms of pecans equals the market price of pecans. Thus, D is the correct answer. A is incorrect because deadweight loss is the loss of economic surplus due to a market inefficiency or market distortion, which is not necessarily equal to economic surplus. B is incorrect because producer surplus and consumer surplus can be different. C is incorrect because the marginal benefit of each of the 8000 kilograms of pecans equals the price of pecans, which is not necessarily $9.

Question 8

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

Accepted Answer

Economic efficiency occurs when the marginal benefit to consumers is equal to the marginal cost of production. At this point, the sum of consumer surplus and producer surplus is maximized. This means that both consumers and producers are benefiting from the market outcome, and resources are allocated efficiently. Therefore, choice A is the correct answer.

Question 9

Economic efficiency in a competitive market is achieved when

Accepted Answer

Economic efficiency in a competitive market is achieved when the marginal benefit equals the marginal cost from the last unit sold. This is because at this point, there is no potential for further gain from either the consumer or the producer's perspective. Therefore, the market efficiently allocates resources to satisfy both consumer and producer preferences. Economic surplus being equal to consumer surplus (A), consumers and producers being satisfied (B), and producer surplus equaling the total amount firms receive from consumers minus the cost of production (D) are concepts related to economic efficiency but not the sole condition for achieving it.

Question 10

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production,and consumer surplus plus producer surplus is maximised,then

Accepted Answer

When there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production, it means that the market is operating at its efficient level. This is because the price paid by consumers reflects the value they place on the good or service, and the cost of production reflects the resources that are used to produce it. Therefore, economic efficiency is achieved, and consumer surplus plus producer surplus is maximised. This outcome does not result in deadweight loss, as resources are not being misallocated, and profits may or may not be maximised depending on the industry and market structures. Therefore, B is the correct answer.

Question 11

How does the construction of a market demand curve for a private good differ from that for a public good?

Accepted Answer

The answer of How does the construction of a market...

Question 12

Figure 11-1 
-Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $9,

Accepted Answer

The answer of Figure 11-1 
-Refer to Figure 11-1.The figure...

Question 13

The market demand for a public good can be determined by

Accepted Answer

The market demand for a public good can be determined by adding up how much each consumer is willing to pay for each unit of the public good. This is often done through surveys or by observing actual market behavior in related goods or services. Choice A is incorrect because it assumes that external benefits are always present and can be quantified. Choice B is incorrect because it assumes that each citizen has a specific expectation of consumption, and ignores the fact that individuals have different preferences and values for the public good. Choice D is incorrect because it assumes that the value of the benefit is the same for all consumers, and ignores the fact that people have different willingness to pay for the public good.

Question 14

For certain public projects such as building a dam on a river or a bridge to an island,what procedure is a government likely to use to determine what quantity of a public good should be supplied?

Accepted Answer

The government is likely to evaluate the costs and benefits of producing the public good to determine the appropriate quantity to supply. This ensures that the public good is efficiently produced and the benefits outweigh the costs. While public surveys and estimating market demand may be useful, they are not necessarily the best indicators of how much of a public good should be produced. Taking a vote in parliament is a political process that may not necessarily consider economic efficiency or welfare.

Question 15

In a competitive market equilibrium,

Accepted Answer

In a competitive market equilibrium, the marginal benefit (the additional benefit that a consumer receives from consuming one more unit of a good) is equal to the marginal cost (the additional cost incurred by producing one more unit of a good) of the last unit sold. This ensures that resources are allocated efficiently, as society gains the most from the production and consumption of goods and services at this point. Therefore, the correct choice is D.

Question 16

Which of the following displays these two characteristics: non-rivalry and non-excludability in consumption?

Accepted Answer

Public goods possess both non-rivalry and non-excludability in consumption. Non-rivalry means the consumption of the good by one individual does not reduce the ability of others to consume it, and non-excludability means it is difficult or impossible to prevent anyone from consuming the good once it is provided.

Question 17

Private producers have no incentive to provide public goods because

Accepted Answer

Private producers have no incentive to provide public goods because once produced, it will not be possible to exclude those who do not pay for the good. Since everyone benefits from public goods, no one has an incentive to pay for them voluntarily, leading to a free-rider problem. This makes it difficult for private producers to make a profit from providing public goods.

Question 18

Which of the following displays these two characteristics: rivalry and non-excludability?

Accepted Answer

A common resource, such as a fishery or a forest, exhibits both rivalry and non-excludability. The resource is rivalrous because one person's use of it reduces the amount available to others, and it is non-excludable because it is difficult to prevent people from accessing and using the resource.

Question 19

Figure 11-1 
-Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following is true?

Accepted Answer

Both 4000 kilograms and 12 000 kilograms are economically inefficient rates of output, as they are not at the intersection of the supply and demand curve, which represents the economically efficient output level. The economically efficient output level is 8000 kilograms, where the supply and demand curves intersect, and the price is $6. Therefore, any quantity produced other than 8000 kilograms will result in a deadweight loss.

Question 20

Figure 11-1 
-Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9,

Accepted Answer

The answer of Figure 11-1 
-Refer to Figure 11-1.The figure...

Quiz 11: Monopolistic Competition and Oligopoly

Figure 11-1 -Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3,

Figure 11-1 -Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9,what changes in the market would result in an economically efficient output?

Figure 11-1 -Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.If 4000 kilograms of pecans are sold,

Figure 11-1 -Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3,what changes in the market would result in an economically efficient output?

Figure 11-1 -Refer to Figure 11-1.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $3,