Question 1

Efficient allocation of resources makes everyone better off.

Accepted Answer

A) True 
 B)False

Question 2

Price increases always reduce economic efficiency.

Accepted Answer

A) True 
 B)False

Question 3

In a planned economy the concept of efficiency is

Accepted Answer

A)  more important than in a market economy.
B)  less important than in a market economy.
C)  not important at all.
D)  as important as in a market economy.E) B) and C)
F) A) and D)

Question 4

Which of the following statements is correct?

Accepted Answer

A)  Low prices may not always be in the public interest.
B)  If prices on scarce resources are set "too low," consumers will receive the "wrong" signals and be encouraged to consume more, thus squandering resources.
C)  Raising prices on scarce resources is generally politically unpopular.
D)  All of the above are correct.E) A) and B)
F) B) and D)

Question 5

Higher prices can discourage use/consumption,which in turn may better allocate scarce resources.

Accepted Answer

A) True 
 B)False

Question 6

An efficient solution to a pricing problem

Accepted Answer

A)  makes both buyers and sellers better off than any other possible solution.
B)  may not be the socially "fair" solution.
C)  occurs when producers' total cost of production equals consumers' total utility from the output produced.
D)  maximizes the output of the good being priced.E) B) and D)
F) None of the above

Question 7

Under laissez faire,the allocation of resources among different products depends on

Accepted Answer

A)  consumer preferences.
B)  production costs.
C)  Both a and b are correct.
D)  Neither a nor b is correct.E) C) and D)
F) B) and C)

Question 8

When all prices are set equal to marginal costs,

Accepted Answer

A)  consumers buy more than they should.
B)  consumers will get less utility.
C)  markets are giving correct signals to consumers.
D)  producers make excessive profits.E) A) and C)
F) C) and D)

Question 9

Is peak pricing economically efficient? Explain.Give an example to illustrate your answer.

Accepted Answer

Yes.Economic efficiency requires that pr...

Question 10

Efficiency in the choice of outputs requires that marginal cost be equal to marginal revenue and nothing else.

Accepted Answer

A) True 
 B)False

Question 11

If the marginal utility of apples exceeds the marginal cost of producing apples,then in a free market production of apples will ____,with the likely result that marginal utility will ____.

Accepted Answer

A)  rise; fall
B)  rise; rise
C)  rise; rise.
D)  fall; fallE) A) and C)
F) All of the above

Question 12

To be efficient,outputs should be produced that minimize total cost.

Accepted Answer

A) True 
 B)False

Question 13

If a technological breakthrough reduces input quantities needed to produce some item,

Accepted Answer

A)  cost of production will be increased.
B)  the price of the product will rise.
C)  the price of the product will fall.
D)  quantity demanded of the product will fall.E) A) and B)
F) B) and C)

Question 14

Most economists support the idea of peak-load pricing on the grounds of

Accepted Answer

A)  fairness in income distribution.
B)  efficiency in input usage.
C)  equality of opportunity.
D)  efficiency in output allocation.E) B) and C)
F) None of the above

Question 15

The nation listed below whose economy comes closest to a centrally planned economy is

Accepted Answer

A)  People's Republic of China.
B)  Japan.
C)  United Kingdom.
D)  United States.E) All of the above
F) A) and D)

Question 16

The technique that addresses the problem of assigning inputs to specific industries is

Accepted Answer

A)  known as laissez faire.
B)  input-output analysis.
C)  cost-benefit analysis.
D)  a production possibilities frontier.E) All of the above
F) None of the above

Question 17

High prices do not occur in laissez-faire markets.

Accepted Answer

A) True 
 B)False

Question 18

The graphical device that illustrates the concept of scarce resources being efficiently utilized in the economy is a(n)

Accepted Answer

A)  budget line.
B)  indifference curve.
C)  production possibilities frontier.
D)  marginal cost curve.E) A) and D)
F) None of the above

Question 19

Distribution is a major question to be answered by any economic system.

Accepted Answer

A) True 
 B)False

Question 20

Laissez-faire refers to a situation in which there is ____ with the workings of the market system.

Accepted Answer

A)  zero consumer involvement
B)  zero government interference
C)  minimal government interference
D)  complete government interferenceE) C) and D)
F) A) and B)

Exam 14: The Case for Free Markets I: the Price System

Laissez-faire refers to a situation in which there is ____ with the workings of the market system.

Correct AnswerverifiedShow Answer

If a technological breakthrough reduces input quantities needed to produce some item,

Correct AnswerverifiedShow Answer

High prices do not occur in laissez-faire markets.

Correct AnswerverifiedShow Answer

Most economists support the idea of peak-load pricing on the grounds of

Correct AnswerverifiedShow Answer

If the marginal utility of apples exceeds the marginal cost of producing apples,then in a free market production of apples will ____,with the likely result that marginal utility will ____.

Correct AnswerverifiedShow Answer

The technique that addresses the problem of assigning inputs to specific industries is

Correct AnswerverifiedShow Answer

Price increases always reduce economic efficiency.

Correct AnswerverifiedShow Answer

Efficient allocation of resources makes everyone better off.

Correct AnswerverifiedShow Answer

Under laissez faire,the allocation of resources among different products depends on

Correct AnswerverifiedShow Answer

The nation listed below whose economy comes closest to a centrally planned economy is

Correct AnswerverifiedShow Answer

Distribution is a major question to be answered by any economic system.

Correct AnswerverifiedShow Answer

Higher prices can discourage use/consumption,which in turn may better allocate scarce resources.

Correct AnswerverifiedShow Answer

The graphical device that illustrates the concept of scarce resources being efficiently utilized in the economy is a(n)

Correct AnswerverifiedShow Answer

Is peak pricing economically efficient? Explain.Give an example to illustrate your answer.

Correct AnswerverifiedYes.Economic efficiency requires that pr...View AnswerShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

An efficient solution to a pricing problem

Correct AnswerverifiedShow Answer

Efficiency in the choice of outputs requires that marginal cost be equal to marginal revenue and nothing else.

Correct AnswerverifiedShow Answer

In a planned economy the concept of efficiency is

Correct AnswerverifiedShow Answer

To be efficient,outputs should be produced that minimize total cost.

Correct AnswerverifiedShow Answer

When all prices are set equal to marginal costs,

Correct AnswerverifiedShow Answer

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If the marginal utility of apples exceeds the marginal cost of producing apples,then in a free market production of apples will ,with the likely result that marginal utility will .

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Yes.Economic efficiency requires that pr...
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