Efficiency Quiz

Question 1

maximum prices consumers are willing to pay minus the price that they actually pay for that quantity

Answer 1

consumer surplus

Question 2

consumer surplus+ producer surplus

Answer 2

total surplus

Question 3

total surplus is a measure of

Answer 3

market efficiency

Question 4

price received for a good minus the minimum price that the supplier was willing to sell the good for

Answer 4

producer surplus

Question 5

quantity sellers are willing to offer of a good at each price, lowest P value

Answer 5

supply

Question 6

actual price received by sellers in a market

Answer 6

Pa

Question 7

additional cost of each unit of a good

Answer 7

marginal costs based on opportunity cost

Question 8

maximum price at which a consumer would buy a good

Answer 8

willingness to pay

Question 9

net gain to an individual buyer from that purchase of a good, equal to buyer’s willingness to pay minus the price paid

Answer 9

individual consumer surplus

Question 10

sum of all individual consumer surpluses of all the buyers of a good in a market

Answer 10

total consumer surplus

Question 11

where is total consumer surplus on a graph

Answer 11

area below the demand curve but above the given price

Question 12

lowest price at which a seller is willing to sell a good

Answer 12

seller’s cost

Question 13

net gain to an individual seller from selling a good, equal to the difference between the price received and the seller’s cost

Answer 13

individual producer surplus

Question 14

sum of all the individual producer surpluses of all of the sellers of a good in a market

Answer 14

total producer surplus

Question 15

where is total producer surplus on a graph

Answer 15

area above the supply curve but below the given price

Question 16

buyers and sellers meet at a specific price that benefits both

Answer 16

mutual gains

Question 17

when the total surplus is maximized in a market, the market is

Answer 17

efficient

Question 18

as the price goes up, consumer surplus

Answer 18

decreases

Question 19

as the price goes down, consumer surplus

Answer 19

increases

Question 20

as the price goes up, producer surplus

Answer 20

increases

Question 21

as the price goes down, producer surplus

Answer 21

decreases

Question 22

decrease in equilibrium quantity causes decrease in total surplus

Answer 22

deadweight (social) loss

Question 23

market transactions are the

Answer 23

total surplus

Question 24

how to reduce total surplus

Answer 24

prevent any sale that would have occurred

Question 25

efficient markets allocate goods to consumers who

Answer 25

are willing to pay the most, value the good the most

Question 26

efficient markets allocate sales to sellers who

Answer 26

have the lowest prices, most value the right to sell the good

Question 27

efficient markets ensure that every consumer values the good

Answer 27

more than the seller

Question 28

efficient markets ensure that anyone who does not buy a good values it

Answer 28

less than the seller

Question 29

rights of owners of valuable items to dispose of them as they chose

Answer 29

property rights

Question 30

any piece of information that helps people make better economic decisions

Answer 30

economic signal

Question 31

when some people could be made better off without making other people worse off

Answer 31

inefficient

Question 32

type of market failure, when a firm can change the market price alone

Answer 32

market power

Question 33

type of market failure, when actions have effects on the welfare of others

Answer 33

externalities

Question 34

type of market failure, when there are incomplete property rights

Answer 34

public goods and common resources

Question 35

type of market failure, when there is wasted valuable human capital due to opinions

Answer 35

discrimination

Question 36

caveats to market efficiency

Answer 36

1. may not be fair/equitable 2. only efficient under certain conditions (property rights, economic signals) 3. not every individual is happy

Question 37

side effects of actions that impose costs on or provide benefits for others but do not have an economic incentive to take these into account

Answer 37

externalities

Question 38

additional cost imposed on society as a whole by an additional unit of externality

Answer 38

marginal social cost

Question 39

additional gain to society as a whole by an additional unit of an externality

Answer 39

marginal social benefit

Question 40

quantity of an externality that society would choose if all the costs and benefits of it were fully accounted for

Answer 40

socially optimal quantity

Question 41

uncompensated cost that an individual or firm imposes on others

Answer 41

negative externality

Question 42

uncompensated benefit that an individual or firm imposes onothers

Answer 42

positive externality

Question 43

payment designed to encourage activities that yield external benefits

Answer 43

pigouvian subsidy

Question 44

external benefit that results when knowledge spreads among individuals and firms

Answer 44

technology spillover

Question 45

good that supplier can prevent people who do not pay for it from consuming it

Answer 45

excludable good

Question 46

when a unit of a good cannot be consumer by more than one person at a time

Answer 46

rival in consumption

Question 47

good that a supplier cannot prevent consumption by people who do not pay for it

Answer 47

nonexcludable good

Question 48

when more than one person can consume the same unit of a good at the same time

Answer 48

nonrival in consumption

Question 49

excludable and rival in consumption

Answer 49

private good

Question 50

nonexcludable and nonrival in consumption

Answer 50

public good

Question 51

nonexcludable and rival in consumption

Answer 51

common resources

Question 52

excludable and nonrival in consumption

Answer 52

artificially scarce good

Question 53

with a nonexcludable good, when individuals are not willing to pay for their own consumption and instead add on to anyone who does pay

Answer 53

free-rider problem

Question 54

with common resources, individual uses a good until their marginal benefit of its use is equal to their own marginal cost, ignoring that this depletes the amount of the resource remaining for others

Answer 54

overuse

Question 55

when not everyone has all the information

Answer 55

asymetrical information

Question 56

demonstrates what is happening with the internal costs/benefits

Answer 56

private curve

Question 57

demonstrates internal and external costs/benefits

Answer 57

social curve

Question 58

as long as there are no externalities, an activity will continue as long as the marginal benefits

Answer 58

are greater than the marginal costs

Question 59

for the last unit of a good that is produced

Answer 59

marginal benefit equals marginal costs