ECON 212 Chapter 7

Economists claim that markets A. provide stable employment for citizens. B. guarantees a fair income distribution. C. produces goods and services as efficiently as possible. D. provides safe neighborhoods. 2. Which of the following statements illustrate the concept of efficiency? A. The production of the good generates very little pollution. B. At equilibrium, all mutually beneficial transactions have taken place. C. The production of the good generates very few byproducts. D. The consumption of the good produces very little waste. 3. Pareto efficiency is a situation in which A. no one is made better off. B. trades remain that would make some better off without harming others. C. trades have benefited some and harmed others. D. any further trades will harm someone. 4. Excess demand in the market is evidence of A. Pareto efficiency B. the opportunity for surplusenhancing trades C. an economic pie that is too small D. equilibrium 5. Which of the following describes a surplus enhancing transaction? A. The Federal government taxes wealthy individuals to pay for income support payments to poor people. B. The public television station cancels Sesame Street because nobody pledged during that show even though many kids were watching it. C. I pay $5.00 for one scoop of ice cream at the ballgame even though I have a whole gallon at home in my freezer that cost me less than $5.00. D. Your state government imposes a higher minimum wage law than the one set by federal law. Ingrid has been waiting for the show "Mamma Mia!" to come to town. When it finally does come, ticket prices are $60. Ingrid's reservation price is $75. But when Ingrid tries to buy a ticket, they are sold out. 6. The fact that Ingrid cannot buy a ticket to "Mamma Mia!" is evidence of A. Pareto efficiency in this market. B. A price ceiling above the equilibrium price. C. A situation that is not Pareto efficient. D. The benefits of allocating resources on the firstcome, firstserved basis.