1.Which of the following is least likely to be an obstacle to the efficient allocation of resources?

A)   Price controls.

B)   Taxes.

C)   Technological advancement.

D)   Monopoly.

2.Which of the following is least accurate regarding obstacles to the efficient allocation of resources in a competitive market?

A)   Taxes and trade restrictions impede the efficient allocation of resources.

B)   Quotas result in production of less than the efficient quantity of the good.

C)   Subsidies lead to production of more than the efficient quantity of the good.

D)   Public goods, such as national defense, tend to be overproduced because they can be consumed by everyone whether they pay for the goods or not.

3.Which of the following is least likely to be considered an obstacle to the efficient allocation of an economy’s resources?

A)   Rent controls.

B)   Minimum wages.

C)   Changes in consumer tastes.

D)   Taxes.

4.Which of the following relationships most accurately describes the inefficiency resulting form government imposed production quotas?

A)   Marginal benefit exceeds marginal cost leading to underproduction.

B)   Marginal benefit exceeds marginal cost leading to overproduction.

C)   Marginal cost exceeds marginal benefit leading to overproduction.

D)   Marginal cost exceeds marginal benefit leading to underproduction.

5.Which of the following most accurately describes society's allocation of resources to the production of goods with external costs or external benefits?

A)            Over-allocation       Over-allocation

B)            Under-allocation           Under-allocation

C)            Under-allocation           Over-allocation

D)            Over-allocation       Under-allocation

6.Christine Dobbs is watching a public affairs television program on which one of the participants makes the following statements:

Statement 1: A common resource is an obstacle to the efficient allocation of resources unless it generates external benefits.

Statement 2: The idea of utilitarianism suggests that market allocation of resources does not maximize the value of an economy to all individuals. However, achieving the results that utilitarianism regards as optimal involves a loss of economic output.

Should Dobbs agree or disagree with these statements?

A)           Disagree                     Agree

B)           Agree                         Agree

C)           Agree                         Disagree

D)           Disagree                     Disagree

7.Which of the following statements regarding deadweight loss is least accurate?

A)   Deadweight loss occurs when the allocation of resources is inefficient.

B)   Deadweight loss from underproduction leads to a loss of producer surplus but not consumer surplus.

C)   Deadweight loss occurs when the quantity supplied does not maximize the sum of consumer and producer surplus.

D)   An overproduction of goods can lead to a reduction in consumer surplus.

答案和详解如下：

1.Which of the following is least likely to be an obstacle to the efficient allocation of resources?

A)   Price controls.

B)   Taxes.

C)   Technological advancement.

D)   Monopoly.

The correct answer was C)

As opposed to being an obstacle to allocative efficiency, technological advancement requires a constant reallocation of an economy’s resources to more efficient uses.

2.Which of the following is least accurate regarding obstacles to the efficient allocation of resources in a competitive market?

A)   Taxes and trade restrictions impede the efficient allocation of resources.

B)   Quotas result in production of less than the efficient quantity of the good.

C)   Subsidies lead to production of more than the efficient quantity of the good.

D)   Public goods, such as national defense, tend to be overproduced because they can be consumed by everyone whether they pay for the goods or not.

The correct answer was D)    

Public goods can be consumed by every member of a society, regardless of whether they paid for them or not. In a competitive market for public goods, fewer goods than the efficient quantity would be produced because it is not in each person’s interest to pay their share of the cost.

3.Which of the following is least likely to be considered an obstacle to the efficient allocation of an economy’s resources?

A)   Rent controls.

B)   Minimum wages.

C)   Changes in consumer tastes.

D)   Taxes.

The correct answer was C)    

Price controls and taxes are obstacles to allocative efficiency. Rent controls and minimum wages are examples of price controls. As opposed to being obstacles to the efficient allocation of resources, changes in consumer tastes lead to the reallocation of society’s resources, producing a different mix of goods or services that provide increased benefits.

4.Which of the following relationships most accurately describes the inefficiency resulting form government imposed production quotas?

A)   Marginal benefit exceeds marginal cost leading to underproduction.

B)   Marginal benefit exceeds marginal cost leading to overproduction.

C)   Marginal cost exceeds marginal benefit leading to overproduction.

D)   Marginal cost exceeds marginal benefit leading to underproduction.

The correct answer was A)

Government imposed quotas restrict production to a level below that which would occur if marginal benefit equals marginal cost. This restricted output quantity is less than the equilibrium quantity, so marginal benefit exceeds marginal cost.

5.Which of the following most accurately describes society's allocation of resources to the production of goods with external costs or external benefits?

External costs

External benefits

A)            Over-allocation       Over-allocation

B)            Under-allocation           Under-allocation

C)            Under-allocation           Over-allocation

D)            Over-allocation       Under-allocation

The correct answer was D)

External costs are costs associated with the production of goods which are not entirely borne by producers. The industrial pollution of fishing waters decreases the yield to the fishing industry. However, the lost revenue to the fishing industry is not considered a cost to the firms generating the pollution. The result is an over-allocation of resources to the production of goods made by the firms generating the pollution.

External benefits refer to benefits received by those other than the buyers of a good. Scenic gardens and fountains built by private enterprises for their own interests are examples of goods with external benefits. Since the marginal benefit to society is greater than that of the marginal cost to the producer, less than the efficient quantity is produced.

6.Christine Dobbs is watching a public affairs television program on which one of the participants makes the following statements:

Statement 1: A common resource is an obstacle to the efficient allocation of resources unless it generates external benefits.

Statement 2: The idea of utilitarianism suggests that market allocation of resources does not maximize the value of an economy to all individuals. However, achieving the results that utilitarianism regards as optimal involves a loss of economic output.

Should Dobbs agree or disagree with these statements?

Statement 1

Statement 2

A)           Disagree                     Agree

B)           Agree                         Agree

C)           Agree                         Disagree

D)           Disagree                     Disagree

The correct answer was A)

Common resources and external benefits both represent obstacles to the efficient allocation of resources. Common resources tend to be overused and external benefits suggest that less than the efficient quantity is produced. Utilitarianism is the idea that fairness means all individuals own the same amount of resources. To bring about such an outcome would require transferring wealth from high income earners to low income earners. This would result in high income earners working less, so the economy would produce less wealth overall. The time and effort required to transfer the wealth would also divert resources from productive uses.

7.Which of the following statements regarding deadweight loss is least accurate?

A)   Deadweight loss occurs when the allocation of resources is inefficient.

B)   Deadweight loss from underproduction leads to a loss of producer surplus but not consumer surplus.

C)   Deadweight loss occurs when the quantity supplied does not maximize the sum of consumer and producer surplus.

D)   An overproduction of goods can lead to a reduction in consumer surplus.

The correct answer was B)

Deadweight loss is the reduction in consumer and producer surplus due to underproduction or overproduction.

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