Question 1

Canned milk was only rationed to babies and small children during World War II. This rationing was an example of allocation by

Accepted Answer

The rationing of canned milk was based on personal characteristics, specifically age, as it was only allocated to babies and small children.

Question 2

The tickets to the Rugby World Cup grand final are usually distributed to fans through a random selection of those people who registered on a website. The tickets are allocated by which method?

Accepted Answer

The tickets are allocated through a lottery system, which means they are randomly distributed among those who registered on the website.

Question 3

-The table above shows the production possibilities for an economy. When the economy produces a combination of 900 books and 50 loaves of bread,

Accepted Answer

Without the table, it's impossible to determine the specific production possibilities and compare them directly. However, the concept of production efficiency involves producing goods in such a way that you cannot produce more of one good without producing less of another. If an economy is producing a combination that is not on its production possibilities frontier (PPF), it is not achieving production efficiency. The statement does not provide enough information to assess allocative efficiency, which depends on whether the mix of goods produced matches consumer preferences. Therefore, the correct answer is that production efficiency is not achieved, as the scenario does not specify that the combination of 900 books and 50 loaves of bread is on the PPF.

Question 4

The resource allocation method used for the online auctions on eBay is

Accepted Answer

The resource allocation method used for the online auctions on eBay is market price. eBay's auction system determines the market price as buyers compete against each other to bid on items for sale. The highest bidder at the end of the auction wins the item, and the seller receives the market price for it. This method ensures that the price of the item is fair and reflective of its market value, as well as encourages competitive bidding.

Question 5

The organisers of the Australian Open randomly draw a few people from hundreds of applicants to compete in the junior section of the championship. The method of allocation for the opportunity to participate in competition is ________, and the method of allocation for determining the winner of the competition is ________.

Accepted Answer

The method of allocation for the opportunity to participate in the competition is a lottery, as random drawing is mentioned. The method of allocation for determining the winner is a contest, as it is based on skill and performance.

Question 6

If you split your dessert with your date, you are using a ________ allocation method.

Accepted Answer

Sharing equally is the allocation method being used when the dessert is split between the two individuals. This is because both parties are receiving an equal portion of the dessert.

Question 7

To achieve allocative efficiency, an economy

Accepted Answer

Allocative efficiency means that an economy is producing the combination of goods and services that best satisfies the wants and needs of the people, given the available resources. This means that the economy must produce on its PPF, as this is the combination of goods and services that maximizes output given the available resources.

Question 8

Which of the following situations describing a resource allocation method most resembles the market price method?

Accepted Answer

The market price method involves determining prices based on supply and demand in a market. Selling lattes at Starbucks is an example of using the market price method, as the price is determined by supply and demand in the coffee market. The other options do not use supply and demand to determine resource allocation.

Question 9

Marginal benefit is the benefit that a person receives from consuming

Accepted Answer

Marginal benefit is the additional benefit that a person receives from consuming one more unit of a good or service. It is not the total benefit from consuming all units or only free goods, nor is it necessarily equal to production cost. It is also not dependent on how much the person has already consumed, so the answer is not E. Therefore, B is the correct choice.

Question 10

Myer has a small number of 'Black Fridays' (that is, days when people do not shop, such as the day after Christmas Day). So, to get people to shop, Myer offers special items on sale at prices that are well below their usual prices. When Myer opens at 7am on Boxing Day, Myer is using a ________ allocation method for these items.

Accepted Answer

Myer is using a first-come, first-served allocation method for these items because customers who arrive at the store earlier will be able to purchase the special items on sale before other customers.

Question 11

As more of a good is consumed, the marginal benefit of the good

Accepted Answer

This is the law of diminishing marginal utility, which states that as more of a good is consumed, the additional satisfaction (or marginal benefit) derived from each additional unit of the good will eventually decrease.

Question 12

In general, the marginal benefit curve

Accepted Answer

The marginal benefit curve typically has a negative slope because as more of a good or service is consumed, the additional benefit (or utility) derived from consuming an additional unit tends to decrease. This concept is known as diminishing marginal utility.

Question 13

The chair of the Department of Economics at Melbourne University decided that office space is for tenured staff and that graduate students are required to share cubicles. What method is used to allocate office space?

Accepted Answer

The department chair made the decision unilaterally without consulting the graduate students or using a formal process to allocate office space, indicating the use of the command method.

Question 14

The marginal benefit of an apple is measured by

Accepted Answer

The marginal benefit of an apple is the additional satisfaction or utility that a person receives from consuming one more apple. This is measured by the amount of another good a person is willing to give up to get one more apple, or their willingness to pay for the apple. Therefore, choice C is the correct answer. A is incorrect because the opportunity cost of producing another apple is a measure of the marginal cost, not the marginal benefit. B is incorrect because the price of the apple reflects the market value, not necessarily the marginal benefit to the consumer. D is incorrect because the amount of another good a person must give up to get one more apple is a measure of the opportunity cost of acquiring the apple, not the marginal benefit. E is incorrect because a point on the PPF represents the combination of goods that can be produced with the given resources, and does not directly relate to the marginal benefit of an apple.

Question 15

Allocative efficiency refers to

Accepted Answer

The answer of Allocative efficiency refers to
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Question 16

Seventy per cent of Austin's chess club wanted to purchase new chess sets and thirty per cent did not. The club purchased the sets. Which method of allocation best describes the choice to purchase the sets?

Accepted Answer

Majority rule best describes the choice to purchase the sets since the decision was made based on the preference of 70% of the club members. This method reflects a democratic approach where the decision is made by the majority rather than forcing, sharing equally, allocating through command or lottery.

Question 17

The Adelaide Football Club reserves 5,000 free tickets to each home football game for its members, but members must stand in line to receive their ticket. Football tickets are allocated through which method?

Accepted Answer

The allocation of tickets is based on the principle of first-come, first-served, as members must stand in line to receive their ticket.

Question 18

Allocating resources by the order of someone in authority is a ________ allocation method.

Accepted Answer

The allocation method described in the question is the command allocation method, where resources are allocated based on the orders or decisions of someone in authority. The other options mentioned in the question (first-come, first-served, contest, market price, and majority rule) are different allocation methods.

Question 19

Usually, when you arrive at your favourite restaurant with your date, you have to wait 25 minutes for a table. This restaurant is allocating tables using which method?

Accepted Answer

The restaurant is using a first-come, first-served method by allocating tables to customers who arrived first. They are not allocating based on personal characteristics (C), market price (D), or sharing equally (A).

Question 20

Which of the following situations describing a resource allocation method most resembling the force method?

Accepted Answer

The force method involves using power or force to allocate resources, often resulting in an unequal distribution. In this scenario, Mandy's brother used his power to take some of Mandy's resources without her consent or agreement, resulting in an unequal distribution. The other options describe more equitable or planned methods of resource allocation.

Quiz 6: Efficiency and Fairness of Markets