1. Consider a free, competitive market. If MSB>MSC, which of the following is true? (I strongly advise you graph and properly label your response before choosing). a. This is NOT efficient. We are wasting resources by not producing enough. b. This is a good thing, because more benefits is always efficient. c. None of the answers offered are accurate. d. This is NOT efficient. We are producing too much. e. It is uncertain whether this is efficient. 2. Fen really likes Prada shoes. She ends up paying $892 for them, and she receives a consumer surplus of $427. What was her willingness to pay (marginal benefit) from those shoes? a. $-465.00 b. $465.00 c. We cannot say without more information. d. $1319.00 e. $892.00 3. Nico is an efficient hairdresser. His marginal cost of providing a haircut is $4.1, and he receives a producer surplus of $5.4 per haircut. How much is he charging? a. $9.50 b. $-1.30 c. $1.30 d. $5.40 e. $4.10 4. Two competitive markets, A and B, have the same total surplus, but A has a larger consumer surplus, while B has a larger producer surplus. Which market is more efficient? a.Neither: they are both equally efficient. b.None of the answers offered are correct. c. A, because consumer surplus matter more. d. We cannot answer without actual numbers. e.B, because producer surplus is more important - there is nothing to consume unless something is produced. 5. Consider a free, competitive market without taxes or externalities. Which of the following statements is wrong? a. deadweight loss should be zero. b. Market should produce where MSB=MSC. c. Producing more than equilibrium is inefficient because it wastes resources. d. Market should produce where supply equals demand. e. Producing less than equilibrium is efficient because less output leads to saving resources. 6. Consider a free, competitive market below. If Q exceeds equilibrium Q*, which of the following is true? (I strongly advise you graph and properly label your response before choosing). a. This is NOT efficient, because MSC>MSB. We are wasting resources by producing some units that are not worth their cost. b. This is NOT efficient, because MSB>MSC. We are wasting resources by not producing enough units. c. This is a good thing, because more output means less scarcity. d. This is efficient, but unfair. e. None of the answers offered are accurate