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Microeconomics MCQ

________ is maximized in a competitive market when marginal benefit equals marginal cost.

Answer

Correct Answer: Economic surplus

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An effective price ceiling occurs at a price _____ the equilibrium price and causes a _____.

Answer

Correct Answer: Below; shortage

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One can determine the consumers' surplus if the _______________ are known

Answer

Correct Answer: Maximum buying price and price paid

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___________ means producing the desired result.

Answer

Correct Answer: Effectiveness

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Who receives most government agricultural subsidies?

Answer

Correct Answer: Large commercial operations

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The equilibrium price of soybeans is $4 per bushel, and the government believes farmers need the help of a price floor. Which price level is the government most likely to set for a bushel of soybeans?

Answer

Correct Answer: $5

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In the short term, the supply of rental units is ______.

Answer

Correct Answer: Inelastic

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Clarence believes rent is too high in his city, and he would like to pay less rent. Which government action would Clarence most likely support?

Answer

Correct Answer: Price ceilings

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How does a subsidy affect production?

Answer

Correct Answer: The market overproduces relative to efficient output.

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A subsidy can be thought of as a ______ tax.

Answer

Correct Answer: Negative

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How does elasticity of a supply or demand curve affect deadweight loss?

Answer

Correct Answer: A more elastic curve increases deadweight loss.

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When an economy maximizes the sum of consumer and producer surplus, it has reached ______.

Answer

Correct Answer: Market efficiency

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A supply curve is smooth when there ______.

Answer

Correct Answer: Are many producers

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Producer surplus for a particular unit is the difference between the market price and the ______.

Answer

Correct Answer: Seller’s cost of producing the unit

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Marginal cost is the cost of ______.

Answer

Correct Answer: Producing one more unit of a good

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A decrease in price ______ consumer surplus.

Answer

Correct Answer: Increases

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The existence of a consumer surplus on a product means ______.

Answer

Correct Answer: Consumers believe they have received a good deal

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What happens as people consume additional units of a good?

Answer

Correct Answer: They are less willing to pay for additional units.

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Consumer surplus occurs when the market price is ______ customers are willing and able to pay.

Answer

Correct Answer: Less than

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Welfare effects is The ___ associated with government intervention in markets

Answer

Correct Answer: Both of these

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The Sum of ______ Surpluses is called Total welfare gains

Answer

Correct Answer: Consumer and producer

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The area above the market supply curve and below the market price is known as

Answer

Correct Answer: Producer surplus

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The cost of producing one more unit of a good is known as

Answer

Correct Answer: Marginal cost

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Deadweight loss is The net loss of ____ that results from an action that alters a market equilibrium

Answer

Correct Answer: Total surplus

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The area below the market demand curve and above the market price is called

Answer

Correct Answer: Consumer Surplus

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