Exam 16: General Equilibrium

If the two goods in an Edgeworth Box are perfect complements for one person -- and if the other person has the typical tastes that satisfy our usual assumptions (without being extreme in any way), any efficient allocation will be such that the first person has equal amounts of good 1 and good 2.

(True/False)

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Question 21

Comment on the following: "The problem with models like the Edgeworth Box and the Robinson Crusoe economy is that it is silly to assume competitive behavior when there are so few individuals in the market."

(Essay)

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Question 22

The First Welfare Theorem holds that the allocation of goods resulting from competitive prices is "efficient," which is the equivalent of "equitable."

(True/False)

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Question 23

Suppose we live in an exchange economy with two goods.I own 50 of both goods, and you own 250 of both goods.My tastes are captured by the utility function and yours are captured by the utility function . a.Calculate the competitive equilibrium price. b.How much do each of us consume of good 1 in equilibrium? c.Suppose the government transfers 100 units of your good 1 endowment to me.How is your answer to (a) and (b) affected? d.Suppose the government instead transfers 100 units of good 2 from you to me.How is your answer to (a) and (b) affected? e.Do you think your answers to (c) and (d) generally hold for most types of tastes -- or do you think they arise because of some specific feature of these tastes?

(Essay)

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Question 24

Which of the following is true within exchange economies:

(Multiple Choice)

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Question 25

Showing 21 - 25 of 25

If the two goods in an Edgeworth Box are perfect complements for one person -- and if the other person has the typical tastes that satisfy our usual assumptions (without being extreme in any way), any efficient allocation will be such that the first person has equal amounts of good 1 and good 2.

Comment on the following: "The problem with models like the Edgeworth Box and the Robinson Crusoe economy is that it is silly to assume competitive behavior when there are so few individuals in the market."

The First Welfare Theorem holds that the allocation of goods resulting from competitive prices is "efficient," which is the equivalent of "equitable."

Which of the following is true within exchange economies:

Introduction

A Consumers Economic Circumstances

Economic Circumstances in Labor and Financial Markets

Tastes and Indifference Curves

Different Types of Tastes

Doing the Best We Can

Income and Substitution Effects in Consumer Goods Markets

Wealth and Substitution Effects in Labor and Capital Markets

Demand for Goods and Supply of Labor and Capital

Consumer Surplus and Deadweight Loss

One Input and One Output: a Short-Run Producer Model

Production With Multiple Inputs

Production Decisions in the Short and Long Run

Competitive Market Equilibrium

The Invisible Hand and the First Welfare Theorem

Choice and Markets in the Presence of Risk

Elasticities, Price-Distorting Policies, and Non-Price Rationing

Distortionary Taxes and Subsidies

Prices and Distortions Across Markets

Externalities in Competitive Markets

Asymmetric Information in Competitive Markets

Monopoly

Strategic Thinking and Game Theory

Oligopoly

Product Differentiation and Innovation in Markets

Public Goods

Governments and Politics

What Is Good Challenges From Psychology and Philosophy

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