ch5 efficiency and equity testbank

ch5 efficiency and equity testbank - C h a p t e r 5 4) A)...

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169 5 EFFICIENCY 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 person 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 maximum 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 Benefit Skill: Conceptual 4) Marginal benefit typically A) increases as more is consumed. B) remains constant as more is consumed. C) decreases as more is consumed. D) increases as marginal costs increase. Answer: C Topic: Marginal Cost Skill: Recognition 5) Marginal cost is the A) extra benefit that people receive from producing 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 pro- duce one more unit of a good or service. Answer: C Topic: Marginal Cost Skill: Recognition 6) Which of the following represents the “marginal 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 Chapter
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170 CHAPTER 5 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 Topic: Efficiency And Inefficiency Skill: Conceptual 8) Suppose a country produces only bikes and cloth- ing. The country achieves an efficient allocation of resources when A) it can’t produce any more bikes unless it gives up clothing. B)
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ch5 efficiency and equity testbank - C h a p t e r 5 4) A)...

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