Question 1

In a competitive market the demand curve shows the ________ received by consumers and the supply curve shows the ________.

Accepted Answer

In a competitive market, the demand curve shows the marginal benefit received by consumers, as they are willing to pay a certain price for a product based on the satisfaction it brings them. The supply curve shows the marginal cost of producing the product, as producers are willing to supply a certain quantity at a certain price based on the cost of producing that quantity. Therefore, the best choice is B.

Question 2

What is economic surplus? When is economic surplus at a maximum?

Accepted Answer

The answer of What is economic surplus? When is economic...

Question 3

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.

Accepted Answer

Economic efficiency occurs when the allocation of resources results in the maximum possible benefit to society. This is achieved when the marginal benefit of consumers is equal to the marginal cost of production and the total surplus (consumer surplus plus producer surplus) is maximized.

Question 4

Figure 4-4 
-Refer to Figure 4-4.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 4-4 
-Refer to Figure 4-4.The figure...

Question 5

Will equilibrium in a market always result in an outcome that is economically efficient? Explain.

Accepted Answer

The answer of Will equilibrium in a market always result...

Question 6

If the market price is at equilibrium,the deadweight loss is maximized.

Accepted Answer

Deadweight loss is a measure of inefficiency in a market and occurs when the quantity of goods exchanged in a market is lower than the efficient quantity. In equilibrium, the quantity of goods exchanged is efficient, which means there is no deadweight loss. Deadweight loss is only present when the market is not at equilibrium.

Question 7

Figure 4-4 
-Refer to Figure 4-4.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 supplied is only 8,000 while the quantity demanded is 12,000. This shows that the market is not producing enough pecans to satisfy consumer demand, indicating that output is inefficiently low. This is because the marginal benefit that consumers receive from consuming additional pecans is greater than the marginal cost of producing these pecans. As a result, producers should increase their output by producing more pecans to meet consumer demand.

Question 8

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $9

Accepted Answer

The marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high.

Question 9

The sum of consumer surplus and producer surplus is called economic surplus.

Accepted Answer

This is the correct definition of economic surplus.

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 maximized,then

Accepted Answer

When 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 maximized, economic efficiency is achieved. This means that the market is producing the optimal quantity of goods or services at the lowest cost possible. When economic efficiency is achieved, there is no excess burden or deadweight loss in the market. Therefore, option B is the best choice.

Question 11

If marginal benefit is greater than marginal cost,output is inefficiently high.

Accepted Answer

If marginal benefit is greater than marginal cost, it means that there is still room for additional output to be produced before reaching the point of efficiency. Therefore, output cannot be inefficiently high as the production is still increasing.

Question 12

If equilibrium is achieved in a competitive market

Accepted Answer

When equilibrium is achieved in a competitive market, the quantity supplied equals the quantity demanded at the market-clearing price. At this point, there is no excess demand or supply, and the market achieves the highest possible combined consumer and producer surplus. Therefore, there is no deadweight loss, and the market operates efficiently.

Question 13

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If 8,000 pounds of pecans are sold

Accepted Answer

In a competitive market, the equilibrium occurs where marginal benefit equals marginal cost. Therefore, at the quantity of 8,000 pounds, marginal benefit is equal to marginal cost. However, we cannot conclude that producer surplus equals consumer surplus, or that deadweight loss is equal to economic surplus, without additional information about the market.

Question 14

Figure 4-4 
-Refer to Figure 4-4.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

The answer of Figure 4-4 
-Refer to Figure 4-4.The figure...

Question 15

Figure 4-4 
-Refer to Figure 4-4.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

An economically efficient output would be at the equilibrium point where the quantity demanded equals the quantity supplied. At a price of $3, the market is not in equilibrium since the quantity supplied is greater than the quantity demanded. To achieve an economically efficient output, the price would need to increase, which would result in a decrease in quantity demanded and an increase in quantity supplied until the market reaches equilibrium. Therefore, the best choice is D.

Question 16

Deadweight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.

Accepted Answer

Deadweight loss occurs when a market is not in competitive equilibrium, leading to a loss of economic surplus as the market produces less than the socially optimal level of output. This results in a net welfare loss for society.

Question 17

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If 4,000 pounds of pecans are sold

Accepted Answer

The answer of Figure 4-4 
-Refer to Figure 4-4.The figure...

Question 18

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3

Accepted Answer

The answer of Figure 4-4 
-Refer to Figure 4-4.The figure...

Question 19

If the market price is at equilibrium,the producer surplus is minimized.

Accepted Answer

When the market price is at equilibrium, both the producer and the consumer surplus are maximized. If the price is below the equilibrium point, the producer surplus will be higher, but the consumer surplus will be lower. Conversely, if the price is above the equilibrium point, the consumer surplus will be higher, but the producer surplus will be lower.

Question 20

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following is true?

Accepted Answer

At the quantity of 8,000 pounds, the market is in economic equilibrium. Any quantity of pecans produced above or below this quantity will result in an economic inefficiency. Therefore, both points 4,000 pounds and 12,000 pounds are economically inefficient rates of output.

Quiz 4: Economic Efficiency, government Price Setting, and Taxes

In a competitive market the demand curve shows the received by consumers and the supply curve shows the .

What is economic surplus? When is economic surplus at a maximum?

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9

Will equilibrium in a market always result in an outcome that is economically efficient? Explain.

If the market price is at equilibrium,the deadweight loss is maximized.

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $3

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $9

The sum of consumer surplus and producer surplus is called economic surplus.

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 maximized,then

If marginal benefit is greater than marginal cost,output is inefficiently high.

If equilibrium is achieved in a competitive market

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If 8,000 pounds of pecans are sold

Figure 4-4 -Refer to Figure 4-4.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 4-4 -Refer to Figure 4-4.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?

Deadweight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If 4,000 pounds of pecans are sold

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3

If the market price is at equilibrium,the producer surplus is minimized.

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following is true?