1. © 2013 Pearson

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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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