Principles of Economics 6th Edition By N. Gregory Mankiw – Test Bank

Principles of Economics 6th Edition By N. Gregory Mankiw – Test Bank

Chapter 7 Consumers, Producers, and the Efficiency of Markets
MULTIPLE CHOICE
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.
ANS: A PTS: 1 DIF: 1 REF: 7-0
NAT: Analytic LOC: Supply and demand TOP: Welfare
MSC: Interpretive
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.
ANS: A PTS: 1 DIF: 1 REF: 7-0
NAT: Analytic LOC: Supply and demand TOP: Welfare
MSC: Definitional
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.
ANS: D PTS: 1 DIF: 1 REF: 7-0
NAT: Analytic LOC: Supply and demand TOP: Welfare
MSC: Definitional
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.
ANS: C PTS: 1 DIF: 1 REF: 7-0
NAT: Analytic LOC: Supply and demand TOP: Welfare
MSC: Definitional
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.
ANS: D PTS: 1 DIF: 1 REF: 7-0
NAT: Analytic LOC: Supply and demand TOP: Welfare
MSC: Definitional
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.
ANS: A PTS: 1 DIF: 1 REF: 7-0
NAT: Analytic LOC: Supply and demand TOP: Positive statements
MSC: Definitional
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.
ANS: C PTS: 1 DIF: 1 REF: 7-0
NAT: Analytic LOC: Supply and demand TOP: Normative statements
MSC: Definitional
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.
ANS: B PTS: 1 DIF: 2 REF: 7-0
NAT: Analytic LOC: Supply and demand TOP: Welfare
MSC: Interpretive