ANSWER ONLY - No further explanation is needed for all questions

When a market achieves economic efficiency

Select one:

a.consumer surplus is maximised and producer surplus is high enough to guarantee supply.

b.producer surplus is maximised.

c.the sum of consumer surplus and producer surplus is maximised.

d.price is equal to marginal cost and is below marginal benefit

How would you describe the effect of a negative externality in a competitive market?

Select one:

a.The externality causes consumer surplus to exceed producer surplus

b.The externality causes a difference between the private cost of production and the private benefit from consumption

c.The externality causes a difference between the private cost of production and the equilibrium price

d.The externality causes a difference between the private cost of production and the social cost

If 11 workers can produce a total of 54 units of a product and a 12th worker has a marginal product of 6 units, then the average product of 12 workers is ________.

Select one:

a.none of the answers is correct

b.6 units

c.54 units

d.48 units

When the marginal cost of production is lower than the price, the firm should

Select one:

a.lower the price.

b.increase its output.

c.keep output constant and enjoy the above normal profit.

d.reduce its output.

When all goods are produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it, one would say that an economy has attained

Select one:

a.Long run equilibrium

b.Allocative efficiency

c.Economies of scale

d.Productive efficiency

Which of the following is not a characteristic of a monopoly?

Select one:

a.Entry barriers are high.

b.The firm has market power.

c.There are no close substitutes to the firm's product.

d.There are only a few sellers each selling a unique product.