Microeconomics Unit 6 Quiz

What does allocative efficiency mean?

• Producing at the lowest cost possible

• Producing without considering costs

• Producing where the marginal benefit equals the marginal cost

• Producing the maximum quantity of output

What is the benefit of a product to the entire economy called?

• External benefit

• Social benefit

• Marginal benefit

• Private benefit

What is the socially optimal output in a market with no externalities?

• Equilibrium

• Underproduction

• Overproduction

• Deadweight loss

What is an example of a negative externality in production?

• Traffic congestion

• Factory pollution

• Vaccines

• Safety training programs

What is the preferred method to correct for negative externalities?

• Per unit tax

• Pollution permits

• Quantity restrictions

• Subsidy to consumers

What type of goods are reduced in quantity as they are consumed?

• Rival goods

• Excludable goods

• Public goods

• Non-rival goods

What is the impact of a subsidy on a market?

• Decreases price and decreases quantity

• Increases price and decreases quantity

• Decreases price and increases quantity

• Decreases price and quantity

What is the impact of a per unit tax on a market?

• Increases price and decreases quantity

• Increases price and quantity

• Decreases price and quantity

• Decreases price and decreases quantity

What do natural monopolies capture?

• No economies of scale

• Decreasing average total costs

• Constantly increasing average total costs

• Economies of scale