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1. Which of the following statements is correct?
a.
Buyers always want to pay less and sellers always want to be paid more.
b.
Buyers always want to pay less and sellers always want to be paid less.
c.
Buyers always want to pay more and sellers always want to be paid more.
d.
Buyers always want to pay more and sellers always want to be paid less.
2. Welfare economics is the study of how
a.
the allocation of resources affects economic well-being.
b.
a price ceiling compares to a price floor.
c.
the government helps poor people.
d.
a consumer’s optimal choice affects her demand curve.
3. Welfare economics is the study of
a.
taxes and subsidies.
b.
how technology is best put to use in the production of goods and services.
c.
government welfare programs for needy people.
d.
how the allocation of resources affects economic well-being.
4. Welfare economics is the study of
a.
the well-being of less fortunate people.
b.
welfare programs in the United States.
c.
how the allocation of resources affects economic well-being.
d.
the effect of income redistribution on work effort.
5. The study of how the allocation of resources affects economic well-being is called
a.
consumer economics.
b.
macroeconomics.
c.
willingness-to-pay economics.
d.
welfare economics.
6. An example of positive analysis is studying
a.
how market forces produce equilibrium.
b.
whether equilibrium outcomes are fair.
c.
whether equilibrium outcomes are socially desirable.
d.
if income distributions are fair.
7. An example of normative analysis is studying
a.
how market forces produce equilibrium.
b.
surpluses and shortages.
c.
whether equilibrium outcomes are socially desirable.
d.
income distributions.
8. Which of the Ten Principles of Economics does welfare economics explain more fully?
a.
The cost of something is what you give up to get it.
b.
Markets are usually a good way to organize economic activity.
c.
Trade can make everyone better off.
d.
A country’s standard of living depends on its ability to produce goods and services.
9. Which of the Ten Principles of Economics does welfare economics explain more fully?
a.
The cost of something is what you give up to get it.
b.
Rational people think at the margin.
c.
Markets are usually a good way to organize economic activity.
d.
People respond to incentives.
10. One of the basic principles of economics is that markets are usually a good way to organize economic activity. This
principle is explained by the study of
a.
factor markets.
b.
energy markets.
c.
welfare economics.
d.
labor economics.
11. A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it
a.
maximizes both the total revenue for firms and the quantity supplied of the product.
b.
maximizes the combined welfare of buyers and sellers.
c.
minimizes costs and maximizes output.
d.
minimizes the level of welfare payments.
12. The particular price that results in quantity supplied being equal to quantity demanded is the best price because it
a.
maximizes costs of the seller.
b.
maximizes tax revenue for the government.
c.
maximizes the combined welfare of buyers and sellers.
d.
minimizes the expenditure of buyers.
13. Welfare economics explains which of the following in the market for televisions?
a.
The government sets the price of televisions; firms respond to the price by producing a specific level of output.
b.
The government sets the quantity of televisions; firms respond to the quantity by charging a specific price.
c.
The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers.
d.
The market equilibrium price for televisions maximizes consumer welfare and minimizes producer profit.
