7. If the marginal social benefit of smoke detectors exceeds its marginal social cost, then additional net gains are possible from an increased annual smoke detector production.
8. Monopoly power causes losses in efficiency because the marginal social benefit of output exceeds its marginal social cost at the monopoly output.
9. Government regulations that require airlines to serve routes for which the maximum price that passengers are willing to pay for a trip fall short of the minimum price that sellers are willing to accept are likely to cause losses in efficiency.
10. Points lying below a utility possibility curve are efficient.
11. Government programs can achieve efficiency when the gains to gainers from those policies exceed the losses to those who bear the costs.
12. If the marginal social cost of beer production exceeds its marginal social benefit, then more than the efficient about of beer is being produced.
13. Efficient outcomes are often viewed as inequitable.
14. If it is not possible to make someone better off without harming another, then resource allocation is efficient.
15. Compensation criteria are used to argue that changes in resource allocation should be made if the gains to some groups outweigh the losses to others, even though compensation for losses is not actually made.
16. All points on a utility possibility curve are efficient but differ in terms of the distribution of well-being.
17. A tax on a product shifts the demand curve.
18. A government subsidized price for a commodity that is higher than the market driven price results in oversupply relative to the efficient allocation.
19. When comparing the allocation of two goods relative to two consumers with individual utility functions, multiple points of Pareto efficiency can exist.
Multiple Choice Questions 1. Positive economics: a. makes recommendations designed to achieve certain goals.