Question 1

As opposed to general-equilibrium analysis,partial equilibrium analysis looks

Accepted Answer

A)  at an equilibrium and changes to it in a single, isolated market. 
B)  at how changes in one market effect other markets. 
C)  at how equilibrium is determined in all markets simultaneously. 
D)  at either price or quantity movements. 
A)  at an equilibrium and changes to it in a single, isolated market. 
B)  at how changes in one market effect other markets. 
C)  at how equilibrium is determined in all markets simultaneously. 
D)  at either price or quantity movements.

Question 2

If society were to maximize the utility of its worst-off member,the final allocation would most likely be

Accepted Answer

A)  relatively egalitarian. 
B)  on the contract curve. 
C)  Pareto efficient. 
D)  one in which one person gets everything. 
A)  relatively egalitarian. 
B)  on the contract curve. 
C)  Pareto efficient. 
D)  one in which one person gets everything.

Question 3

By saying that MRS = MRT,an economist means that

Accepted Answer

A)  for all goods, the value that society places on the last unit produced equals the cost of making that unit. 
B)  for all goods, the value that a consumer places on the last unit consumed equals the value that all consumers would place on that unit. 
C)  society is able to produce more output of one good without reducing the output of any other good. 
D)  no other output mix is technically feasible. 
A)  for all goods, the value that society places on the last unit produced equals the cost of making that unit. 
B)  for all goods, the value that a consumer places on the last unit consumed equals the value that all consumers would place on that unit. 
C)  society is able to produce more output of one good without reducing the output of any other good. 
D)  no other output mix is technically feasible.

Question 4

When two people are on the contract curve,the allocation of goods

Accepted Answer

A)  cannot be improved. 
B)  is pareto efficient. 
C)  is such that neither individual can be made better off without making the other worse off. 
D)  All of the above. 
A)  cannot be improved. 
B)  is pareto efficient. 
C)  is such that neither individual can be made better off without making the other worse off. 
D)  All of the above.

Question 5

When comparing partial-equilibrium effects to general-equilibrium effects,one can conclude that

Accepted Answer

A)  general-equilibrium effects are always larger. 
B)  partial-equilibrium effects are always larger. 
C)  the effects are of equal size. 
D)  one cannot determine before the fact which effect is greater. 
A)  general-equilibrium effects are always larger. 
B)  partial-equilibrium effects are always larger. 
C)  the effects are of equal size. 
D)  one cannot determine before the fact which effect is greater.

Question 6

For most commonly used social welfare functions,an efficient allocation is

Accepted Answer

A)  always preferred over any inefficient allocation. 
B)  not possible. 
C)  usually preferred. 
D)  never preferred. 
A)  always preferred over any inefficient allocation. 
B)  not possible. 
C)  usually preferred. 
D)  never preferred.

Question 7

The fact that at the competitive equilibrium nobody can be made better off without making someone else worse off implies that

Accepted Answer

A)  the equilibrium is pareto efficient. 
B)  the equilibrium is not pareto efficient. 
C)  the prices need to adjust further. 
D)  further gains from trade are possible. 
A)  the equilibrium is pareto efficient. 
B)  the equilibrium is not pareto efficient. 
C)  the prices need to adjust further. 
D)  further gains from trade are possible.

Question 8

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.The contract curve can be found by connecting points

Accepted Answer

A)  a and b. 
B)  a and c. 
C)  b and d. 
D)  c and d. 
A)  a and b. 
B)  a and c. 
C)  b and d. 
D)  c and d.

Question 9

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.They can each produce any linear combination as well.Suppose each country is in competitive equilibrium prior to free trade being allowed.Once free trade is allowed,the price of food will be

Accepted Answer

A)  two times the price of clothing. 
B)  equal to the price of clothing. 
C)  one-half the price of clothing. 
D)  somewhere between one-half the price of clothing and the price of clothing, depending upon the relative bargaining power of the two countries. 
A)  two times the price of clothing. 
B)  equal to the price of clothing. 
C)  one-half the price of clothing. 
D)  somewhere between one-half the price of clothing and the price of clothing, depending upon the relative bargaining power of the two countries.

Question 10

No clearly defined socially preferred outcome may result when majority voting on outcomes because

Accepted Answer

A)  often voters don't understand the outcomes. 
B)  voting may violate the independence of irrelevant alternatives. 
C)  voting may lead to incomplete preferences. 
D)  voting may lead to non-transitive preference. 
A)  often voters don't understand the outcomes. 
B)  voting may violate the independence of irrelevant alternatives. 
C)  voting may lead to incomplete preferences. 
D)  voting may lead to non-transitive preference.

Question 11

A general-equilibrium analysis of a price change in the corn chip market would include an investigation of the impacts in

Accepted Answer

A)  the television market. 
B)  the coffee market. 
C)  the salsa market. 
D)  All of the above. 
A)  the television market. 
B)  the coffee market. 
C)  the salsa market. 
D)  All of the above.

Question 12

If a society relies on competitive markets to allocate goods,then

Accepted Answer

A)  an equitable distribution is assured. 
B)  an equitable distribution is certain to not occur. 
C)  the competitive equilibrium will be Pareto superior to any other. 
D)  social welfare as measured by consumer surplus plus producer surplus will equal zero. 
A)  an equitable distribution is assured. 
B)  an equitable distribution is certain to not occur. 
C)  the competitive equilibrium will be Pareto superior to any other. 
D)  social welfare as measured by consumer surplus plus producer surplus will equal zero.

Question 13

A competitive equilibrium is Pareto efficient because at the competitive equilibrium,

Accepted Answer

A)  prices reflect the differences in marginal rates of substitution across individuals. 
B)  there are no further gains from trade. 
C)  there is an equal distribution of the goods. 
D)  everyone has the same level of utility. 
A)  prices reflect the differences in marginal rates of substitution across individuals. 
B)  there are no further gains from trade. 
C)  there is an equal distribution of the goods. 
D)  everyone has the same level of utility.

Question 14

In a competitive marketplace,prices adjust until

Accepted Answer

A)  MRS's are equal to zero. 
B)  excess supply equals excess demand equals zero in all markets. 
C)  each consumer has maximized utility subject to his budget constraint. 
D)  all firms earn zero profit. 
A)  MRS's are equal to zero. 
B)  excess supply equals excess demand equals zero in all markets. 
C)  each consumer has maximized utility subject to his budget constraint. 
D)  all firms earn zero profit.

Question 15

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.They can each produce any linear combination as well.Measuring food on the horizontal axis,the joint production possibility frontier

Accepted Answer

A)  will kink away from the origin at 20 units of food. 
B)  will kink toward the origin at 20 units of food. 
C)  will kink toward the origin at 10 units of food. 
D)  will kink away from the origin at 10 units of food. 
A)  will kink away from the origin at 20 units of food. 
B)  will kink toward the origin at 20 units of food. 
C)  will kink toward the origin at 10 units of food. 
D)  will kink away from the origin at 10 units of food.

Question 16

For a given set of prices,two consumers choose bundles that are off the contract curve.In a competitive market,

Accepted Answer

A)  prices will adjust until the consumers choose bundles that are on the contract curve. 
B)  the indifference curves will shift back to the contract curve. 
C)  the contract curve will shift to connect these bundles. 
D)  no adjustments need to be made. 
A)  prices will adjust until the consumers choose bundles that are on the contract curve. 
B)  the indifference curves will shift back to the contract curve. 
C)  the contract curve will shift to connect these bundles. 
D)  no adjustments need to be made.

Question 17

When considering trade of two goods between two people,if one person has all the endowment of both goods this allocation

Accepted Answer

A)  is never on a contract curve. 
B)  will result in trade so each person has all of one good. 
C)  will result in trade to a equal division of goods between the two people. 
D)  is Pareto efficient. 
A)  is never on a contract curve. 
B)  will result in trade so each person has all of one good. 
C)  will result in trade to a equal division of goods between the two people. 
D)  is Pareto efficient.

Question 18

The ability to produce a good at a lower opportunity cost than someone else is called

Accepted Answer

A)  competitive production. 
B)  comparative advantage. 
C)  selective advantage. 
D)  absolute advantage. 
A)  competitive production. 
B)  comparative advantage. 
C)  selective advantage. 
D)  absolute advantage.

Question 19

Gains from trade can only occur when

Accepted Answer

A)  marginal rates of substitutions differ across people. 
B)  marginal rates of substitution are equal across people. 
C)  indifference curves are convex. 
D)  people find themselves on the contract curve. 
A)  marginal rates of substitutions differ across people. 
B)  marginal rates of substitution are equal across people. 
C)  indifference curves are convex. 
D)  people find themselves on the contract curve.

Question 20

For the following, please answer "True" or "False" and explain why.
-According to the Fundamental Theorems of Welfare Economics,the competitive equilibrium is dependent on the relative bargaining powers of the parties trading.

Accepted Answer

A) True 
 B)False

As opposed to general-equilibrium analysis,partial equilibrium analysis looks

If society were to maximize the utility of its worst-off member,the final allocation would most likely be

By saying that MRS = MRT,an economist means that

When two people are on the contract curve,the allocation of goods

When comparing partial-equilibrium effects to general-equilibrium effects,one can conclude that

For most commonly used social welfare functions,an efficient allocation is

The fact that at the competitive equilibrium nobody can be made better off without making someone else worse off implies that

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.The contract curve can be found by connecting points

No clearly defined socially preferred outcome may result when majority voting on outcomes because

A general-equilibrium analysis of a price change in the corn chip market would include an investigation of the impacts in

If a society relies on competitive markets to allocate goods,then

A competitive equilibrium is Pareto efficient because at the competitive equilibrium,

In a competitive marketplace,prices adjust until

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.They can each produce any linear combination as well.Measuring food on the horizontal axis,the joint production possibility frontier

For a given set of prices,two consumers choose bundles that are off the contract curve.In a competitive market,

When considering trade of two goods between two people,if one person has all the endowment of both goods this allocation

The ability to produce a good at a lower opportunity cost than someone else is called

Gains from trade can only occur when

For the following, please answer "True" or "False" and explain why. -According to the Fundamental Theorems of Welfare Economics,the competitive equilibrium is dependent on the relative bargaining powers of the parties trading.

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 10: General Equilibrium and Economic Welfare

As opposed to general-equilibrium analysis,partial equilibrium analysis looks

If society were to maximize the utility of its worst-off member,the final allocation would most likely be

By saying that MRS = MRT,an economist means that

When two people are on the contract curve,the allocation of goods

When comparing partial-equilibrium effects to general-equilibrium effects,one can conclude that

For most commonly used social welfare functions,an efficient allocation is

The fact that at the competitive equilibrium nobody can be made better off without making someone else worse off implies that

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.The contract curve can be found by connecting points

No clearly defined socially preferred outcome may result when majority voting on outcomes because

A general-equilibrium analysis of a price change in the corn chip market would include an investigation of the impacts in

If a society relies on competitive markets to allocate goods,then

A competitive equilibrium is Pareto efficient because at the competitive equilibrium,

In a competitive marketplace,prices adjust until

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.They can each produce any linear combination as well.Measuring food on the horizontal axis,the joint production possibility frontier

For a given set of prices,two consumers choose bundles that are off the contract curve.In a competitive market,

When considering trade of two goods between two people,if one person has all the endowment of both goods this allocation

The ability to produce a good at a lower opportunity cost than someone else is called

Gains from trade can only occur when

For the following, please answer "True" or "False" and explain why. -According to the Fundamental Theorems of Welfare Economics,the competitive equilibrium is dependent on the relative bargaining powers of the parties trading.

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

Monopoly and Monopsony

Pricing and Advertising

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, externalities, rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters