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Full download Foundations of Microeconomics 7th Edition Bade Test Bank all chapter 2024 pdf
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Foundations of Microeconomics, 7e (Bade/Parkin)
Chapter 6 Efficiency and Fairness of Markets
1) Wal-Mart has a limited number of "Black Friday" (the day-after Thanksgiving Day) special items on
sale at prices well below their typical price. Wal-Mart opens at 10 PM on Thanksgiving. Wal-Mart is using
a ________ allocation method for these items.
A) first-come, first-served
B) market price
C) contest
D) majority rule
E) command
Answer: A
Topic: Allocation methods
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
2) Often people trying to withdraw money from their bank must wait in line, which reflects a ________
allocation method.
A) first-come, first-served
B) market price
C) contest
D) majority rule
E) command
Answer: A
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
3) University of Colorado reserves 5,000 free tickets to each home football game for students. Students
must stand in line to receive their ticket. Football tickets are allocated through which method?
A) market price
B) sharing equally
C) personal characteristics
D) first-come, first-served
E) force
Answer: D
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
1
Copyright © 2015 Pearson Education, Inc.
4) Auditors working for a large accounting firm are often away from the office. When they are in the
office, they are allowed to use any desk that is available. Which method is used to allocate desks?
A) lottery
B) first-come, first-served
C) command
D) contest
E) sharing equally
Answer: B
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
5) When you arrive at Olive Garden with your date, you hae to wait 25 minutes for a table. Olive Garden
is allocating tables using which method?
A) market price
B) first-come, first-served
C) command
D) personal characteristics
E) sharing equally
Answer: B
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: New
AACSB: Reflective thinking
6) Mandy saved her allowance to buy a 12 pack of cream soda. When Mandy's brother saw the soda, he
took four. Sodas were allocated between Mandy and her brother through
A) force.
B) majority rule.
C) first-come, first-served.
D) sharing equally.
E) personal characteristics.
Answer: A
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
2
Copyright © 2015 Pearson Education, Inc.
7) Which of the following situations describing a resource allocation method most resembles the force
method?
A) Seventy percent of Austin's chess club wanted to purchase new chess sets and thirty percent did not.
The club purchased the sets.
B) Lattes are sold at Starbucks.
C) Food from the Weld County Food Bank is distributed to families in need.
D) Mandy saved her allowance to buy a 12 pack of cream soda. When Mandy's brother saw the soda, he
took four.
E) Jose works at Intel. His manager tells him what work needs to be completed each month.
Answer: D
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
8) Honda will sell its vehicles to anyone who wants to and can buy one. Honda is using a ________
allocation method.
A) first-come, first-served
B) market price
C) contest
D) majority rule
E) command
Answer: B
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
9) The resource allocation method used for the online auctions on eBay is
A) market price.
B) lottery.
C) contest.
D) first-come, first-served.
E) sharing equally.
Answer: A
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
3
Copyright © 2015 Pearson Education, Inc.
10) Lattes at Starbucks are allocated to individuals in society through what type of method?
A) lottery
B) contest
C) sharing equally
D) market price
E) personal characteristics
Answer: D
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
11) Which of the following situations describing a resource allocation method most resembles the market
price method?
A) Food from the Weld County Food Bank is distributed to families in need.
B) Lattes are sold at Starbucks.
C) Jose works at Intel. His manager tells him what work needs to be completed each month.
D) Matt's mother had the rule that whoever cuts the cake chooses their slice last.
E) Seventy percent of Austin's chess club wanted to purchase new chess sets and thirty percent did not.
The club purchased the sets.
Answer: B
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
12) If a landlord will rent an apartment only to married couples, the landlord is using a ________
allocation method.
A) majority rule
B) market price
C) contest
D) personal characteristics
E) command
Answer: D
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
4
Copyright © 2015 Pearson Education, Inc.
13) Canned milk was only rationed to babies and small children during World War II. This rationing was
an example of allocation by
A) market price.
B) first-come, first-served.
C) sharing equally.
D) force.
E) personal characteristics.
Answer: E
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
14) Although Jack and Vanessa were equally qualified, Jack was promoted to manager instead of Vanessa
because the president of the company thought that the other employees would not respect a female
manager. The resource, the management position, was allocated in what manner?
A) sharing equally
B) contest
C) personal characteristics
D) command
E) lottery
Answer: C
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
15) Allocating resources by the order of someone in authority is a ________ allocation method.
A) first-come, first-served
B) market price
C) contest
D) majority rule
E) command
Answer: E
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
5
Copyright © 2015 Pearson Education, Inc.
16) Jose works at Intel. His manager tells him what work needs to be completed each month. Jose's
resource, labor, is allocated with which of the following methods?
A) command
B) majority rule
C) force
D) personal characteristics
E) lottery
Answer: A
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
17) The chair of the Department of Economics at Colorado State University decided that office space is for
tenured faculty and that graduate students are required to share cubicles. What method is used to
allocate office space?
A) lottery
B) majority rule
C) command
D) first-come, first-served
E) sharing equally
Answer: C
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
18) If you split your dessert with your date, you are using a ________ allocation method.
A) first-come, first-served
B) sharing equally
C) contest
D) personal characteristics
E) command
Answer: B
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
6
Copyright © 2015 Pearson Education, Inc.
19) When the city of Fresno holds a referendum to determine if taxes will be raised to pay for road
repairs, the city is using a ________ allocation method.
A) majority rule
B) market price
C) contest
D) personal characteristics
E) command
Answer: A
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
20) Seventy percent of Austin's chess club wanted to purchase new chess sets and thirty percent did not.
The club purchased the sets. Which method of allocation best describes the choice to purchase the sets?
A) force
B) sharing equally
C) command
D) majority rule
E) lottery
Answer: D
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
21) Which of the following situations describing a resource allocation method most resembles the
majority rule method?
A) Seventy percent of Austin's chess club wanted to purchase new chess sets and thirty percent did not.
The club purchased the sets.
B) Lattes are sold at Starbucks.
C) Food from the Weld County Food Bank is distributed to families in need.
D) Jose works at Intel. His manager tells him what work needs to be completed each month.
E) Matt's mother had the rule that whoever cuts the cake chooses their slice last.
Answer: A
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
7
Copyright © 2015 Pearson Education, Inc.
22) In 2009, tickets to a Presidential Town Hall meeting were distributed to individuals through a random
selection of those who registered on a website. The tickets were allocated by which method?
A) lottery
B) majority rule
C) contest
D) first-come, first-served
E) personal characteristics
Answer: A
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
23) The Ironman Hawaii randomly draws a few hundred slots from thousands of applicants for the race.
The method of allocation for the opportunity to participate in the race is ________, and the method of
allocation for determining the winner of the race is ________.
A) lottery; contest
B) contest; lottery
C) first-come, first-served; lottery
D) lottery; first-come, first-served
E) contest; command
Answer: A
Topic: Allocation methods
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
8
Copyright © 2015 Pearson Education, Inc.
24) The table above shows the production possibilities for an economy. When the economy produces a
combination of 900 books and 50 loaves of bread,
A) production efficiency occurs because resources are not overused.
B) allocative efficiency is achieved because both goods are produced.
C) production efficiency is not achieved.
D) allocative and production efficiency are both achieved.
E) production efficiency is not achieved but allocative efficiency might be achieved.
Answer: C
Topic: Production efficiency
Skill: Level 4: Applying models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
9
Copyright © 2015 Pearson Education, Inc.
27) When allocative efficiency occurs,
A) an economy produces the goods and services most highly valued.
B) marginal benefit exceeds marginal cost by some amount.
C) technology must be increasing.
D) we can simultaneously produce more of all goods.
E) marginal benefit exceeds marginal cost by as much as possible.
Answer: A
Topic: Allocative efficiency
Skill: Level 1: Definition
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
10
Copyright © 2015 Pearson Education, Inc.
30) When a society achieves allocative efficiency, it
A) is not achieving production efficiency.
B) is producing that combination of goods and services that society values most highly.
C) might or it might not be producing at a point on society's PPF.
D) is producing a combination of goods and services whose marginal cost exceeds their marginal benefit.
E) is producing the combination of goods and services for which marginal benefit exceeds marginal cost
by as much as possible.
Answer: B
Topic: Allocative efficiency
Skill: Level 1: Definition
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
31) Marginal benefit is the benefit that a person receives from consuming
A) a good or service until the person has grown tired of it.
B) only goods and services that are free.
C) one more unit of a good or service.
D) all of the possible units of a good or service that can be consumed.
E) one more unit of a good and is equal to the cost of producing the unit of the good.
Answer: C
Topic: Marginal benefit
Skill: Level 1: Definition
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
11
Copyright © 2015 Pearson Education, Inc.
33) The marginal benefit of a taco is measured by
A) the price of the taco.
B) the amount of another good a person is willing to give up to get one more taco.
C) the amount of another good a person must give up to get one more taco.
D) a point on the PPF.
E) the opportunity cost of producing another taco.
Answer: B
Topic: Marginal benefit
Skill: Level 1: Definition
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
12
Copyright © 2015 Pearson Education, Inc.
36) The principle of decreasing marginal benefit explains why the marginal benefit curve
A) is upward sloping.
B) has an infinite slope.
C) is vertical.
D) is downward sloping.
E) is horizontal.
Answer: D
Topic: Marginal benefit
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
38) The point that each glass of lemonade consumed on a hot day brings lower and lower levels of
satisfaction is known as the principle of
A) total benefits.
B) increasing marginal cost.
C) decreasing marginal benefit.
D) increasing opportunity cost.
E) decreasing marginal price.
Answer: C
Topic: Marginal benefit
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
13
Copyright © 2015 Pearson Education, Inc.
39) The marginal benefit of the first hotdog consumed is ________ the marginal benefit of the fifth hotdog
consumed.
A) equal to
B) less than
C) greater than
D) the inverse of
E) equal to 5 times
Answer: C
Topic: Marginal benefit
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
40) Suppose Jennifer derives $100 in marginal benefits from her first skiing trip and $80 from her third
trip. Her marginal benefit from her second trip is likely to be
A) more than $100.
B) between $100 and $80.
C) between $79 and $51.
D) less than $51.
E) some amount that cannot be calculated without additional information.
Answer: B
Topic: Marginal benefit
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
14
Copyright © 2015 Pearson Education, Inc.
42) Marginal cost equals
A) the profitability derived from producing another unit of output.
B) all the opportunity cost of producing the amount of output.
C) or exceeds the marginal benefit.
D) productive efficiency.
E) the opportunity cost of producing one more unit of output.
Answer: E
Topic: Marginal cost
Skill: Level 1: Definition
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
44) Moving ________ along the marginal cost curve, the ________.
A) upward; opportunity cost of one more unit increases
B) upward; marginal cost decreases
C) downward; marginal cost increases
D) upward; opportunity cost of one more unit does not change
E) downward; opportunity cost of one more unit does not change
Answer: A
Topic: Marginal cost
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
15
Copyright © 2015 Pearson Education, Inc.
45) The marginal cost of a good or service
A) can be calculated from the marginal benefit of that good or service.
B) decreases as more of the good or service is produced.
C) can be derived from the production possibilities frontier.
D) graphs as a positively sloped curve, so it cannot be derived from the production possibilities frontier,
which is downward sloping.
E) None of the above answers is correct.
Answer: C
Topic: Marginal cost
Skill: Level 1: Definition
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
46) The marginal cost curves slope upward because of the principle of
A) decreasing marginal benefits.
B) increasing marginal cost.
C) increasing marginal benefits.
D) decreasing marginal cost.
E) decreasing total benefit.
Answer: B
Topic: Marginal cost
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
16
Copyright © 2015 Pearson Education, Inc.
48) As more of a good is consumed, marginal benefit ________ and as more of a good is produced,
marginal cost ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) does not change; does not change
Answer: C
Topic: Marginal benefit, marginal cost
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
17
Copyright © 2015 Pearson Education, Inc.
51) To achieve allocative efficiency, one must compare the
A) marginal cost of a good to its opportunity cost.
B) opportunity cost to the attainable point on the production possibilities frontier.
C) marginal benefit of a good to its marginal cost.
D) marginal cost to the production efficiency cost.
E) point of production efficiency to the point of allocative efficiency.
Answer: C
Topic: Allocative efficiency
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Reflective thinking
18
Copyright © 2015 Pearson Education, Inc.
54) Allocative efficiency is achieved when the production is such that
A) the marginal benefit exceeds the marginal cost by as much as possible.
B) marginal cost equals zero.
C) marginal benefit is equal to marginal cost.
D) the production point is on the PPF.
E) None of the above is true.
Answer: C
Topic: Efficient use of resources
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: New
AACSB: Reflective thinking
56) When the marginal benefit and marginal cost of sodas are equal, then
A) the production of sodas might be allocatively efficient but it is definitely production inefficient.
B) the allocatively inefficient amount of sodas is being produced.
C) more sodas should be produced to reach the allocatively efficient quantity.
D) fewer sodas should be produced to reach the allocatively efficient quantity.
E) the allocatively efficient amount of sodas is being produced.
Answer: E
Topic: Efficient use of resources
Skill: Level 2: Using definitions
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
19
Copyright © 2015 Pearson Education, Inc.
57) When the marginal cost of producing a bike is greater than the marginal benefit of the bike, for
resource use to be allocatively efficient,
A) more bikes should be produced.
B) fewer bikes should be produced.
C) no more and no fewer bikes should be produced.
D) it must be determined if the production of bikes can be increased.
E) people must be educated to demand more bikes.
Answer: B
Topic: Efficient use of resources
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
58) For resource use to be allocatively efficient, when the marginal benefit of a slice of pizza exceeds the
marginal cost, ________.
A) more slices of pizza should be produced
B) fewer slices of pizza should be produced
C) no more slices of pizza should be produced
D) allocative efficiency is reached only if the marginal benefit exceeds the marginal cost by as much as
possible
E) None of the above answers is correct.
Answer: A
Topic: Allocative efficiency
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
59) If the difference between the marginal benefit and the marginal cost of a good is as large as possible,
A) resources are being used with maximum efficiency.
B) resources would create more value producing other goods and hence the production of this good
should be decreased.
C) more of the good should be produced.
D) allocative efficiency has been attained.
E) Both answers A and D are correct.
Answer: C
Topic: Efficient use of resources
Skill: Level 3: Using models
Section: Checkpoint 6.1
Status: Old
AACSB: Analytical thinking
20
Copyright © 2015 Pearson Education, Inc.
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rewarded? If they had indeed served him aright, would he
not have stretched forth his hand to help and deliver them?
For a young girl like myself, away from all near friends,
and, above all, one who had only lately conformed, there
would be no hope. Even a suspicion of relapse would lead at
once to a convent with all its possible horrors. No, there
was no escape. I had left my Lord, and he had left me. I
had denied him, and he would deny me. I must go on as I
had begun, and that to the bitter end.
CHAPTER XIX.
ANOTHER CHANGE.
WE remained in the neighborhood of Paris all that
winter, sometimes at Fontainebleau, sometimes in the city
itself, for, as I have said, my uncle had some office or
command which kept him about the court.