Ch5_Practice_Test_Questions

Ch5_Practice_Test_Questions - 5 C h a p t e EFFICIENCY r...

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5 AND EQUITY Efficiency and Social Interest Topic: Marginal Benefit Skill: Conceptual 1) All of the following statements about marginal benefit are correct EXCEPT A) the marginal benefit is the benefit a person re- ceives from consuming one more unit of a good or service. B) the marginal benefit of a good or service is measured as the maximum amount that a per- son is willing to pay for one more unit of it. C) the marginal benefit of a good is equal to zero when resource use is efficient. D) the marginal benefit of a good decreases as the quantity consumed of the good increases. Answer: C Topic: Marginal Benefit Skill: Recognition 2) Sal likes to eat pizza. The ____ is the maxim- um amount that Sal is willing to pay for one piece of pizza. A) efficient price B) efficient amount C) marginal benefit D) marginal cost Answer: C Topic: Marginal Benefit Skill: Conceptual 3) The principle of decreasing marginal benefit means that as the quantity of a good consumed A) decreases, its marginal benefit decreases. B) increases, its marginal benefit decreases. C) increases, its total benefit decreases. D) None of the above answers is correct. Answer: B Topic: Marginal Cost Skill: Recognition 5) Marginal cost is the A) extra benefit that people receive from produ- cing one more unit of a good or service. B) maximum amount consumers are willing to pay for one more unit of a good or service. C) opportunity cost of producing one more unit of a good or service. D) value of the least valuable thing given up to produce one more unit of a good or service. Answer: C Topic: Marginal Cost Skill: Recognition 6) Which of the following represents the “margin- al cost” of a soda? I. The opportunity cost of producing another soda. II The minimum price someone is willing to pay for another soda. III. The number of units of another good, say a pizza, that someone must give up to get an- other soda. A) I only. B) I and II. C) I and III. D) II and III. Answer: C Topic: Marginal Cost Skill: Conceptual 7) Marginal cost usually A) increases as more is produced. B) remains constant as more is produced. C) decreases as more is produced. D) decreases as marginal benefits decrease. Answer: A 169  C h a p t e r
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1 7 0 C H A P T E R   5 Topic: Efficiency And Inefficiency Skill: Conceptual 8) Suppose a country produces only bikes and clothing. The country achieves an efficient al- location of resources when A) it can’t produce any more bikes unless it gives up clothing. B) it produces equal amount of bikes and clothes. C) the marginal benefit of producing a bike equals the marginal cost of producing a bike. D) the prices charged for the goods are as low as possible. Answer: C Topic: Efficiency And Inefficiency Skill: Conceptual 9) Which of the following statements can used to describe efficiency?
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Ch5_Practice_Test_Questions - 5 C h a p t e EFFICIENCY r...

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