Chapter 5 Efficienc
y
and Equit
y
Test Bank
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) All of the following statements about marginal benefit are correct EXCEPT
A) the marginal benefit of a good decreases as the quantit
y
consumed of the good increases.
B) the marginal benefit of a good is equal to zero when resource use is efficient.
C) 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.
D) the marginal benefit is the benefit a person receives from consuming one more unit of
a
good or service.
1)
2) Sal likes to eat pizza. The ________ is the maximum amount that Sal is willing to pa
y
for on
e
piece of pizza.
A) marginal benefi
t
B) efficient price
C) efficient amoun
t
D) marginal cost
2)
3) The principle of decreasing marginal benefit means that as the quantit
y
of a good consumed
A) decreases, its marginal benefit decreases. B) increases, its total benefit decreases.
C) increases, its marginal benefit decreases. D) None of the above answers is correct.
3)
4) Marginal benefit t
y
picall
y
A) increases as marginal costs increase. B) decreases as more is consumed.
C) increases as more is consumed. D) remains constant as more is consumed.
4)
5) Marginal cost is the
A) opportunit
y
cost of producing one more unit of a good or service.
B) maximum amount consumers are willing to pa
y
for one more unit of a good or service.
C) extra benefit that people receive from 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.
5)
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
another soda.
A) I onl
y
B) I and III C) I and II D) II and III
6)
7) Marginal cost usuall
y
A) remains constant as more is produced. B) decreases as marginal benefits decrease.
C) increases as more is produced. D) decreases as more is produced.
7)
8) Suppose a countr
y
produces onl
y
bikes and clothing. The countr
y
achieves an efficien
t
allocation of resources when
A) it produces equal amount of bikes and clothes.
B) the prices charged for the goods are as low as possible.
C) it can't produce an
y
more bikes unless it gives up clothing.
D) the marginal benefit of producing a bike equals the marginal cost of producing a bike.
8)
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