__172.20.40.61_Materials_l2xie-0010_Chapter_7 - Chapter 7...

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Chapter 7 Student: ___________________________________________________________________________ 1. Which of the following statements illustrate the concept of efficiency? A. The production of the good generates very little pollution. B. At equilibrium, all mutually beneficial transactions have taken place. C. The production of the good generates very few by-products. D. The consumption of the good produces very little waste. 2. Excess demand in the market is evidence of A. Pareto efficiency B. the opportunity for surplus-enhancing trades C. an economic pie that is too small D. equilibrium 3. Which of the following describes a surplus enhancing transaction? A. The Federal government taxes wealthy individuals to pay for income support payments to poor people. B. The public television station cancels Sesame Street because nobody pledged during that show even though many kids were watching it. C. I pay $5.00 for one scoop of ice cream at the ballgame even though I have a whole gallon at home in my freezer that cost me less than $5.00. D. Your state government imposes a higher minimum wage law than the one set by federal law. 4. Market equilibrium is considered efficient because A. prices are low. B. the price consumers pay equals the profit producers receive. C. no more trades remain that benefit some without harming others. D. it assures that both the buyer and seller earn equal surplus. 5. Suppose the market for sugar is in equilibrium at $3 per pound. This means
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__172.20.40.61_Materials_l2xie-0010_Chapter_7 - Chapter 7...

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