Faculty of Commerce Third grade

English Section Dr.Nanis Fekry

Public finance
Tutorial three

Choose the best answer for the following questions:

1-At the current level of output, the marginal social cost of bread exceeds the marginal social benefit of
bread. Compared to the allocatively efficient quantity we are producing too ________ bread and too
________ of other goods.
A) many; little
B) many; much
C) few; little
D) few; much
2-At the efficient level of production, ________.
A) producer surplus must be greater than consumer surplus
B) consumer surplus must be greater than producer surplus
C) there is no deadweight loss
D) the market price is greater than the monopoly price
3-Underproduction of good ________ create a deadweight loss and overproduction of a good ________
create a deadweight loss.
A) will; will
B) will; will not
C) will not; will
D) will not; will not
4-Among the sources of economic inefficiency are all the following EXCEPT………
A) taxes.
B) external costs.
C) competition.
D) Subsidies
5- Underproduction implies that for the last unit produced
A) marginal social cost exceeds marginal social benefit.
B) marginal social benefit exceeds marginal social cost.
C) marginal social benefit equals marginal social cost.
D) the deadweight loss is zero.
6- Overproduction implies that for the last unit produced
A) marginal social benefit equals marginal social cost.
B) marginal social benefit exceeds marginal social cost.
C) the deadweight loss is zero.
D) marginal social cost exceeds marginal social benefit.
7- Deadweight loss can be the result of
A) underproduction, but not overproduction.
B) overproduction, but not underproduction.
C) both overproduction and underproduction.
D) neither overproduction, nor underproduction.
Use Table (1) that shows the supply schedules for Fred's Pizza and Johnny's Pizza, the only
sellers of pizza in the market to answer questions 18 to 21
Table (1)
Price Fred's quantity supplied Johnny's quantity
(dollars per slice) (slices per month) supplied
(slices per month)
1.50 0 0
2.00 100 150
2.50 200 300
3.00 300 450
3.50 400 600
4.00 500 750

8-Fred's marginal cost of the 200th slice of pizza is

A) $2.50.
B) $6.
C) $0.50.
D) $20.

9. Johnny's marginal cost of the 600th slice of pizza is:

A) $3.50.
B) $12.50.
C) Zero.
D) $1.50.

10. what is the minimum prices that Fred is willing to accept to supply 400 slices of pizza per month?
A) $3.50
B) $2.50
C) $3
D) $4

11. what is the marginal social cost when the market quantity supplied is 750 slices of pizza per month?
A) $3
B) $7
C) $9
D) $3.50

Use Table (2) that gives the marginal social benefit and marginal social cost of a DVD. to
answer questions 22 to 24
Table (2)
Quantity Marginal social benefit Marginal social cost
(DVDs per week) (dollars per DVDs) (dollars per DVDs)
1 24 16
2 22 18
3 20 20
4 18 22
5 16 24
12. If there are no external benefits or external costs, the efficient number of DVDs to produce is
________ a week.
A) 1
B) 3
C) 5
D) any number less than 3

13-At the efficient quantity, the minimum supply-price of a DVD is ________ and the value of a DVD is
________.
A) $16; $24
B) $16; $20
C) $20; $16
D) $20; $20

14. If the number of DVD produced is cut to 2 a week, then the ________.
A) minimum supply-price of the second DVD is $18
B) price is $18 a DVD
C) opportunity cost of the second DVD is $22
D) value of the second DVD is $20