ECON 1000 Study Guide - Midterm Guide: Furby, Marginal Cost, Opportunity Cost

Consider Marginal Cost and​ Price, and choose the best statement.

a. The price of one more unit of a good or service is its marginal cost.

b. The marginal cost of producing one more unit of a good or service is equal to the marginal benefit.

c. The cost of producing one more unit of a good or service is its marginal cost and we measure the marginal cost as the area above the supply curve and below the market price.

d. The cost of producing one more unit of a good or service is its marginal cost, which is the minimum price that producers must receive to induce them to offer to sell another unit of the good or service.

A price support leads to inefficiency because

1 output is more than the efficient, equilibrium quantity.

2 the marginal benefit of the last unit produced is larger than the marginal cost.

3 the price charged is less than the equilibrium price.

4 producer surplus is less than consumer surplus.

5 producers must pay a subsidy to the government.

And why, thanks

1. Consumer surplus is not

a. the value of a good minus the price paid for it, summed over the quantity bought.

b. greater on the first unit sold than on the last unit sold.

c. greater on the last unit sold than on the first unit sold.

d. equal to the area below the demand curve and above the market price line.

2. The demand curve for hamburgers is the same as the

a. marginal benefit curve for hamburgers.

b. marginal cost curve of hamburgers.

c. consumer surplus curve of hamburgers.

d. All of the above.

3. A supply curve is

a. the same as a production possibilities frontier.

b. a marginal social benefit curve.

c. a marginal benefit curve.

d. a marginal cost curve.

e. a downward-sloping curve.

4. The opportunity cost of producing one more hot dog is $1.00. The price of a hot dog is $1.50. The producer surplus from selling one more hot dog is

a. $1.00

b. $1.50

c. $0.50

d. zero.

e. $2.50

5. Markets may not achieve an efficient allocation of resources when there are

a. external costs.

b. monopolies.

c. taxes.

d. all of the above.