Question 1

Competition results in the efficient product mix because

Accepted Answer

A)  producers are setting MRT equal to minus the price ratio while consumers are setting MRS equal to minus the price ratio ensuring that MRT will equal MRS. 
B)  consumers are on the contract curve. 
C)  the slope of the production possibility frontier will equal the slope of the contract curve. 
D)  the distribution of the final output is Pareto efficient. 
A)  producers are setting MRT equal to minus the price ratio while consumers are setting MRS equal to minus the price ratio ensuring that MRT will equal MRS. 
B)  consumers are on the contract curve. 
C)  the slope of the production possibility frontier will equal the slope of the contract curve. 
D)  the distribution of the final output is Pareto efficient.

Question 2

In a perfectly competitive equilibrium with production and trade,which of the following results occur(s)?

Accepted Answer

A)  Pareto-efficiency is obtained. 
B)  The First Welfare Theorem is satisfied. 
C)  There is efficiency in production. 
D)  All of the above. 
A)  Pareto-efficiency is obtained. 
B)  The First Welfare Theorem is satisfied. 
C)  There is efficiency in production. 
D)  All of the above.

Question 3

If a market is controlled by one perfect price discriminator who is able to charge each consumer the highest price that consumer is willing to pay,the seller will produce output until the price paid by the last consumer is equal to the marginal cost of making the good.That is,the price of the last good equals the marginal cost of making the good.If welfare is measured as consumer surplus plus producer surplus,compare this market structure to a competitive market in terms of efficiency and equity.

Accepted Answer

A perfect price discriminator is Pareto

Question 4

-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 5

Most of the debates in the U.S.Congress center on

Accepted Answer

A)  efficiency concerns. 
B)  equity concerns. 
C)  both efficiency and equity equally. 
D)  market inefficiency. 
A)  efficiency concerns. 
B)  equity concerns. 
C)  both efficiency and equity equally. 
D)  market inefficiency.

Question 6

Assume Congress holds a hearing on the impact of gasoline prices on the price of corn.Most likely,this hearing will be

Accepted Answer

A)  a partial equilibrium analysis. 
B)  a general equilibrium analysis. 
C)  about consumer rather than producer surplus. 
D)  an analysis of efficiency. 
A)  a partial equilibrium analysis. 
B)  a general equilibrium analysis. 
C)  about consumer rather than producer surplus. 
D)  an analysis of efficiency.

Question 7

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)  Any 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)  Any of the above.

Question 8

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 9

The end of slavery in the United States represented

Accepted Answer

A)  a large wealth transfer from the South to the North. 
B)  a large wealth transfer from the future to the present. 
C)  a large wealth transfer from Southern slave-holders to newly freed slaves. 
D)  a nominal wealth transfer from Southern slave-holders to newly freed slaves. 
A)  a large wealth transfer from the South to the North. 
B)  a large wealth transfer from the future to the present. 
C)  a large wealth transfer from Southern slave-holders to newly freed slaves. 
D)  a nominal wealth transfer from Southern slave-holders to newly freed slaves.

Question 10

Robinson starts out with 10 lobsters and 5 coconuts.Friday starts out with 10 lobsters and 15 coconuts.After trading,Robinson ends up with 8 lobsters and 10 coconuts.Robinson feels neither better nor worse off than when he started but cannot get Friday to agree to any more trades.Friday feels better off than when he started.Draw the Edgeworth box consistent with this story.

Accepted Answer

@#IMG-DLM& See the a

Question 11

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 12

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 13

If two or more markets are closely related,

Accepted Answer

A)  a partial equilibrium analysis will tend to overstate the price impact of a supply shock. 
B)  a partial equilibrium analysis will tend to accurately predict the price impact of a supply shock. 
C)  a partial equilibrium analysis will tend to understate the price impact of a supply shock. 
D)  they should be analyzed concurrently but using partial equilibrium analysis alone. 
A)  a partial equilibrium analysis will tend to overstate the price impact of a supply shock. 
B)  a partial equilibrium analysis will tend to accurately predict the price impact of a supply shock. 
C)  a partial equilibrium analysis will tend to understate the price impact of a supply shock. 
D)  they should be analyzed concurrently but using partial equilibrium analysis alone.

Question 14

Suppose that productivity-enhancing technological progress affected more the production of chairs than the production of tables.This can be depicted using a production possibilities frontier in which

Accepted Answer

A)  only the chair axis intercept increases. 
B)  only the table axis intercept decreases. 
C)  both intercepts increase; however, the chair intercept increases by more. 
D)  both intercepts increase; however, the chair intercept increases by less. 
A)  only the chair axis intercept increases. 
B)  only the table axis intercept decreases. 
C)  both intercepts increase; however, the chair intercept increases by more. 
D)  both intercepts increase; however, the chair intercept increases by less.

Question 15

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Part of 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 16

Reparations for slavery in the United States would

Accepted Answer

A)  be consistent with the Pareto principle. 
B)  be inconsistent with the Pareto principle. 
C)  have nothing to do with the Pareto principle. 
D)  be unconstitutional. 
A)  be consistent with the Pareto principle. 
B)  be inconsistent with the Pareto principle. 
C)  have nothing to do with the Pareto principle. 
D)  be unconstitutional.

Question 17

-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 18

The so-called "death tax" might

Accepted Answer

A)  aim to alter endowments so as to attain an inefficient outcome. 
B)  aim to alter endowments consistent with the First Theorem of Welfare Economics. 
C)  aim to alter endowments consistent with the Second Theorem of Welfare Economics. 
D)  aim to alter prices consistent with the First Theorem of Welfare Economics. 
A)  aim to alter endowments so as to attain an inefficient outcome. 
B)  aim to alter endowments consistent with the First Theorem of Welfare Economics. 
C)  aim to alter endowments consistent with the Second Theorem of Welfare Economics. 
D)  aim to alter prices consistent with the First Theorem of Welfare Economics.

Question 19

A competitive equilibrium is not Pareto efficient if some members of society are unable to afford a necessary good.

Accepted Answer

A) True 
 B)False

Question 20

In a competitive market,prices adjust until all consumers find themselves

Accepted Answer

A)  maximizing utility. 
B)  on the contract curve. 
C)  happy with their original endowment. 
D)  with many opportunities to gain from additional exchange. 
A)  maximizing utility. 
B)  on the contract curve. 
C)  happy with their original endowment. 
D)  with many opportunities to gain from additional exchange.

Competition results in the efficient product mix because

In a perfectly competitive equilibrium with production and trade,which of the following results occur(s)?

-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

Most of the debates in the U.S.Congress center on

Assume Congress holds a hearing on the impact of gasoline prices on the price of corn.Most likely,this hearing will be

General equilibrium analysis is the study of

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

The end of slavery in the United States represented

By saying that MRS = MRT,an economist means that

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

If two or more markets are closely related,

Suppose that productivity-enhancing technological progress affected more the production of chairs than the production of tables.This can be depicted using a production possibilities frontier in which

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

Reparations for slavery in the United States would

The so-called "death tax" might

A competitive equilibrium is not Pareto efficient if some members of society are unable to afford a necessary good.

In a competitive market,prices adjust until all consumers find themselves

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 10: General Equilibrium and Economic Welfare

Competition results in the efficient product mix because

In a perfectly competitive equilibrium with production and trade,which of the following results occur(s)?

-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

Most of the debates in the U.S.Congress center on

Assume Congress holds a hearing on the impact of gasoline prices on the price of corn.Most likely,this hearing will be

General equilibrium analysis is the study of

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

The end of slavery in the United States represented

By saying that MRS = MRT,an economist means that

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

If two or more markets are closely related,

Suppose that productivity-enhancing technological progress affected more the production of chairs than the production of tables.This can be depicted using a production possibilities frontier in which

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

Reparations for slavery in the United States would

The so-called "death tax" might

A competitive equilibrium is not Pareto efficient if some members of society are unable to afford a necessary good.

In a competitive market,prices adjust until all consumers find themselves

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

Monopoly

Pricing and Advertising

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters