Question 1

The assumptions about tastes and behavior to model the trading between two people do NOT include

Accepted Answer

A)  utility maximization. 
B)  convex indifference curves. 
C)  nonsatiation. 
D)  interdependence. 
A)  utility maximization. 
B)  convex indifference curves. 
C)  nonsatiation. 
D)  interdependence.

Question 2

Explain why Robin Hood's practice of stealing from the rich to give to the poor is never Pareto efficient.

Accepted Answer

When Robin steals fr

Question 3

General-equilibrium analysis is the study of

Accepted Answer

A)  how an equilibrium is determined in all markets simultaneously. 
B)  how an equilibrium is determined in all closely related markets. 
C)  the effects of a change in a market, and all spillover effects in all related markets. 
D)  All of the above. 
A)  how an equilibrium is determined in all markets simultaneously. 
B)  how an equilibrium is determined in all closely related markets. 
C)  the effects of a change in a market, and all spillover effects in all related markets. 
D)  All of the above.

Question 4

A cake is to be shared by two people.Both desire the largest piece possible.One of the two will cut the cake.Under which of the following situations will the cutter adopt a Rawlsian social welfare function?

Accepted Answer

A)  The person cutting the cake chooses the first piece. 
B)  The person not cutting the cake chooses the first piece. 
C)  The two individuals will bid for the right to cut the cake and choose first. 
D)  The two individuals will toss a coin for the right to cut the cake and choose first. 
A)  The person cutting the cake chooses the first piece. 
B)  The person not cutting the cake chooses the first piece. 
C)  The two individuals will bid for the right to cut the cake and choose first. 
D)  The two individuals will toss a coin for the right to cut the cake and choose first.

Question 5

Suppose the U.S.can produce 10 units of food and five units of clothing (or any linear combination)and Canada can produce six units of food and three units of clothing (or any linear combination).What type of trade will occur between these two countries? Explain.

Accepted Answer

In both countries,two units of

Question 6

Suppose that the minimum wage covers all sectors of the economy; however,for unionized laborers,the minimum wage is ineffective.That is,the union wage is already above the minimum wage.Analyze the impact of an increase in the minimum wage on both the unionized and non-unionized labor markets.(Assume that the higher minimum wage is still ineffective in the unionized sector and that union and nonunion labor are substitutable.)

Accepted Answer

@#IMG-DLM& See the above figure.The higher minimum

Question 7

Explain why a government may select an inefficient allocation.

Accepted Answer

A government may decide the eq

Question 8

The fact that any pareto efficient equilibrium can be achieved through competition by adjusting endowments is called

Accepted Answer

A)  the second welfare theorem. 
B)  the first welfare theorem. 
C)  the third welfare theorem. 
D)  That is not possible. 
A)  the second welfare theorem. 
B)  the first welfare theorem. 
C)  the third welfare theorem. 
D)  That is not possible.

Question 9

For the following, please answer "True" or "False" and explain why.
-If MRS's are equal across all consumers,then the efficient product mix has been achieved.

Accepted Answer

A) True 
 B)False

Question 10

For the following, please answer "True" or "False" and explain why.
-If two grade-school children willingly trade their lunches with one another,we can conclude that at least one of them preferred the other's lunch to his own.

Accepted Answer

A) True 
 B)False

Question 11

Consider trade between two consumers (1 and 2)and two goods,X and Y.Suppose the total quantities of each good are 100 units.Each consumer has Cobb-Douglas preferences given by:
U(X,Y)= XY
What is the shape of the contract curve,i.e.derive the equation? How does the contract curve change is consumer one has the utility function
U(X,Y)= X²Y
while the other consumer's preferences are as before? Again,derive the equation for the contract curve.

Accepted Answer

In both cases,we find the contract curve

Question 12

Consider a two-trader/two-good exchange economy in equilibrium.If the endowment point moves to the north east,i.e.the endowment quantities to one of the consumers increase,can we determine the direction in which the equilibrium quantities will change? Demonstrate your answer with a graph including the relevant indifference curves,contract curve and price line.

Accepted Answer

Yes,as the endowment quantitie

Question 13

-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 has a kink because

Accepted Answer

A)  each country has a constant marginal rate of transformation that differs from the other country. 
B)  each country has a marginal rate of transformation that varies with the product mix. 
C)  all production possibility frontiers have kinks. 
D)  the two countries have the same marginal rate of transformation. 
A)  each country has a constant marginal rate of transformation that differs from the other country. 
B)  each country has a marginal rate of transformation that varies with the product mix. 
C)  all production possibility frontiers have kinks. 
D)  the two countries have the same marginal rate of transformation.

Question 14

For the following, please answer "True" or "False" and explain why.
-Assume a government likes a particular equilibrium along the contract curve.It can achieve that equilibrium through competition and income redistribution.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

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

Question 16

-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 will have a slope of -1

Accepted Answer

A)  only when 20-30 units of food are produced. 
B)  only when 10-20 units of food are produced. 
C)  only when 10-20 units of clothing are produced. 
D)  throughout the entire PPF. 
A)  only when 20-30 units of food are produced. 
B)  only when 10-20 units of food are produced. 
C)  only when 10-20 units of clothing are produced. 
D)  throughout the entire PPF.

Question 17

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Considering only the labeled points,point c is a possible equilibrium

Accepted Answer

A)  only if it is the endowment. 
B)  only if point a is the endowment. 
C)  if either point a or b is the endowment. 
D)  only if point d is the endowment. 
A)  only if it is the endowment. 
B)  only if point a is the endowment. 
C)  if either point a or b is the endowment. 
D)  only if point d is the endowment.

Question 18

The effects of a price change are always understated by a partial-equilibrium analysis when compared to a general-equilibrium analysis.

Accepted Answer

.If the price change affects o

Question 19

Can consumption efficiency be achieved even if the efficient product mix is not achieved?

Accepted Answer

Efficiency in consumption implies that a

Question 20

Moving away from the contract curve will

Accepted Answer

A)  harm both parties. 
B)  harm only one of the parties. 
C)  harm at least one of the parties. 
D)  harm neither of the parties. 
A)  harm both parties. 
B)  harm only one of the parties. 
C)  harm at least one of the parties. 
D)  harm neither of the parties.

The assumptions about tastes and behavior to model the trading between two people do NOT include

Explain why Robin Hood's practice of stealing from the rich to give to the poor is never Pareto efficient.

General-equilibrium analysis is the study of

A cake is to be shared by two people.Both desire the largest piece possible.One of the two will cut the cake.Under which of the following situations will the cutter adopt a Rawlsian social welfare function?

Suppose the U.S.can produce 10 units of food and five units of clothing (or any linear combination)and Canada can produce six units of food and three units of clothing (or any linear combination).What type of trade will occur between these two countries? Explain.

Explain why a government may select an inefficient allocation.

The fact that any pareto efficient equilibrium can be achieved through competition by adjusting endowments is called

For the following, please answer "True" or "False" and explain why. -If MRS's are equal across all consumers,then the efficient product mix has been achieved.

For the following, please answer "True" or "False" and explain why. -If two grade-school children willingly trade their lunches with one another,we can conclude that at least one of them preferred the other's lunch to his own.

-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 has a kink because

For the following, please answer "True" or "False" and explain why. -Assume a government likes a particular equilibrium along the contract curve.It can achieve that equilibrium through competition and income redistribution.

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

-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 will have a slope of -1

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Considering only the labeled points,point c is a possible equilibrium

The effects of a price change are always understated by a partial-equilibrium analysis when compared to a general-equilibrium analysis.

Can consumption efficiency be achieved even if the efficient product mix is not achieved?

Moving away from the contract curve will

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

The assumptions about tastes and behavior to model the trading between two people do NOT include

Explain why Robin Hood's practice of stealing from the rich to give to the poor is never Pareto efficient.

General-equilibrium analysis is the study of

A cake is to be shared by two people.Both desire the largest piece possible.One of the two will cut the cake.Under which of the following situations will the cutter adopt a Rawlsian social welfare function?

Suppose the U.S.can produce 10 units of food and five units of clothing (or any linear combination)and Canada can produce six units of food and three units of clothing (or any linear combination).What type of trade will occur between these two countries? Explain.

Explain why a government may select an inefficient allocation.

The fact that any pareto efficient equilibrium can be achieved through competition by adjusting endowments is called

For the following, please answer "True" or "False" and explain why. -If MRS's are equal across all consumers,then the efficient product mix has been achieved.

For the following, please answer "True" or "False" and explain why. -If two grade-school children willingly trade their lunches with one another,we can conclude that at least one of them preferred the other's lunch to his own.

-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 has a kink because

For the following, please answer "True" or "False" and explain why. -Assume a government likes a particular equilibrium along the contract curve.It can achieve that equilibrium through competition and income redistribution.

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

-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 will have a slope of -1

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Considering only the labeled points,point c is a possible equilibrium

The effects of a price change are always understated by a partial-equilibrium analysis when compared to a general-equilibrium analysis.

Can consumption efficiency be achieved even if the efficient product mix is not achieved?

Moving away from the contract curve will

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