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6 Efficiency and Fairness of Markets CLICKER QUESTIONS Notes and teaching tips: 3, 4, 5, 6, 7, 13, 16, 17, 19, 20, 22. 2

Checkpoint 6.1 Checkpoint 6.3 Checkpoint 6.5 Checkpoint 6.2 Question 1 Question 5 Question 9 Question 2 Question 6 Question 10 Checkpoint 6.2 Checkpoint 6.4 Question 3 Question 7 Question 4 Question 8

CHECKPOINT 6.1 Question 1 If a person will rent an apartment only to married couples over 30 years old, that person is allocating resources using a ____ allocation method. first-come, first-served market price contest personal characteristics command Answer: D

Question 2 CHECKPOINT 6.1 Allocative efficiency occurs when _______. the most highly valued goods and services are produced all citizens have equal access to goods and services the environment is protected at all cost goods and services are free production takes place at a point on the PPF Answer: A

Question 3 CHECKPOINT 6.2 Value of a good is _________. the price we pay for the good the cost of resources used to produce the good objective so that it is determined by market forces, not preferences the marginal benefit we get from the good the price paid for a good minus the marginal cost of producing that unit of the good Answer: D

CHECKPOINT 6.2 Question 4 Suppose the price of a scooter is $200, and Cora Lee is willing to pay $250 for it. Cora Lee’s ________. consumer surplus from the scooter is $200 consumer surplus from the scooter is $50 marginal benefit from the scooter is $200 consumer surplus from the scooter is $25 Answer: B

Question 5 CHECKPOINT 6.3 A supply curve of a good shows the _______. producer surplus received from selling the good consumer surplus received from buying the good total benefit from the good marginal cost of producing the good marginal benefit received by the producer of the good Answer: D

CHECKPOINT 6.3 Question 6 Suppose you’re willing to tutor a student for $10 an hour, but the student values your service and pays you $15 an hour. What is your producer surplus? $5 an hour $10 an hour $15 an hour $25 an hour more than $25 an hour Answer: A

Question 7 CHECKPOINT 6.4 A market is efficient when _______. producers’ income is as high as possible producers’ costs equal consumers’ benefits consumer surplus equals producer surplus scarce resources are used to produce the goods and services that people value most highly scarcity is eliminated Answer: D

CHECKPOINT 6.4 Question 8 When production moves from the efficient quantity to a point of overproduction, _________. consumer surplus will increase the sum of producer surplus and consumer surplus will increase a deadweight loss arises consumers will lose but producers will gain consumers gain what producers lose Answer: C

CHECKPOINT 6.5 Question 9 The idea that “unequal income is unfair” generally uses the ____ principle of fairness. big tradeoff involuntary exchange voluntary exchange it’s not fair if the result isn’t fair it’s not fair if the rules aren’t fair Answer: D

CHECKPOINT 6.5 Question 10 Which of the following is an example in which “the big tradeoff” can occur? The government redistributes income from the rich to the poor. Ford increases the price of a pickup truck. A basketball player signs a $5 million contract. A college lowers tuition. The price of a personal computer falls year after year Answer: B