Exam 10: General Equilibrium and Economic Welfare

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.If the endowment is at point a,and trade is possible,which of the following points are possible equilibria?

Only individuals A and B live on a desert island where no production is possible.A is endowed with 15 units of good X and 17 units of good Y.B is endowed with 13 units of good X and 23 units of good Y.In the Edgeworth box,good X is measured on the horizontal axis.Individual A's utility function is U_A = 3XY so her MU_X = 3Y and her MU_Y = 3X.Individual B's utility function is UB = 10 so his and his MU_Y = 5 . Which of the following allocations are on the contract curve?

As opposed to general equilibrium analysis,partial equilibrium analysis looks

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Point c is Pareto efficient because

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

Any competitive equilibrium is Pareto efficient because,with a competitive equilibrium,

-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.Once free trade is allowed,Canada will produce

An initial allocation of goods is called a(n)

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

Gains from trade can only occur when

Explain why a government may select an inefficient allocation.

Explain why having different marginal rates of substitution is necessary for trade to occur.

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

Every point on the joint production possibilities frontier represents

-The above figure depicts the Edgeworth box for two consumers,Al and Bruce.Explain why point "a" cannot be a competitive equilibrium.

Economic growth can be depicted as

Which of the following is (are)the typical assumption(s)used in the study of mutually beneficial trades?

Suppose two people start with an initial endowment and trade until they obtain a Pareto-efficient allocation with the corresponding price line.What happens when more people who have the same tastes and endowments as the original two traders are included in the Edgeworth box analysis?

-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.If production occurs at the kink on the joint production possibility frontier,

-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