Reading 14: Efficiency and Equity- LOS d ～ Q1-3 following, economic, style, black, class

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1.Which of the following conditions exists when the economic gain to society is maximized?

A)   The sum of consumer and producer surpluses for a good or service is maximized.

B)   The difference between consumer and producer surpluses for a good or service is maximized.

C)   The price and quantity for a good or service is such that consumer and producer surpluses are equal.

D)   The price and quantity for a good or service is such that producer surplus equal zero.

2.Equilibrium in a perfectly competitive market results in a quantity for which the:

A)   difference between consumer and producer surpluses is maximized.

B)   consumer and producer surpluses are equal.

C)   producer surplus equals zero.

D)   sum of consumer and producer surpluses is maximized.

3.For a given good or service, the marginal social benefit (MSB) and the marginal social cost (MSC) curves are least accurately described by which of the following?

A)   Producer surplus is determined by price and the MSC curve and consumer surplus is determined by price and the MSB curve.

B)   The efficient allocation of resources occurs where the difference between the MSB and MSC curves is maximized.

C)   The market demand curve is the same as the MSB curve, and the market supply curve is the same as the MSC curve.

D)   The sum of consumer and producer surpluses is maximized at the intersection of the MSB and MSC curves.

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答案和详解如下：

1.Which of the following conditions exists when the economic gain to society is maximized?

A)   The sum of consumer and producer surpluses for a good or service is maximized.

B)   The difference between consumer and producer surpluses for a good or service is maximized.

C)   The price and quantity for a good or service is such that consumer and producer surpluses are equal.

D)   The price and quantity for a good or service is such that producer surplus equal zero.

The correct answer was A)

In competitive market, the economic gain to society is maximized when the sum of the consumer and producer surpluses for a good or service is maximized.

2.Equilibrium in a perfectly competitive market results in a quantity for which the:

A)   difference between consumer and producer surpluses is maximized.

B)   consumer and producer surpluses are equal.

C)   producer surplus equals zero.

D)   sum of consumer and producer surpluses is maximized.

The correct answer was D)

In a competitive market, the equilibrium quantity is the one for which the sum of the consumer and producer surpluses is maximized.

3.For a given good or service, the marginal social benefit (MSB) and the marginal social cost (MSC) curves are least accurately described by which of the following?

A)   Producer surplus is determined by price and the MSC curve and consumer surplus is determined by price and the MSB curve.

B)   The efficient allocation of resources occurs where the difference between the MSB and MSC curves is maximized.

C)   The market demand curve is the same as the MSB curve, and the market supply curve is the same as the MSC curve.

D)   The sum of consumer and producer surpluses is maximized at the intersection of the MSB and MSC curves.

The correct answer was B)

The marginal social benefit (MSB) curve is the market demand curve and the marginal cost (MSC) curve and is the market supply curve. At the intersection of the MSB and MSC curves, the sum of producer and consumer surpluses is maximized and society’s resources are being efficiently allocated.

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