Question 1

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Points a and b

Accepted Answer

A)  are most likely to reflect the final allocations after trading. 
B)  are least likely to reflect the final allocations after trading. 
C)  are equally likely to reflect the final allocations after trading than other points on the contract curve. 
D)  are definitely not the final allocations after trading. 
A)  are most likely to reflect the final allocations after trading. 
B)  are least likely to reflect the final allocations after trading. 
C)  are equally likely to reflect the final allocations after trading than other points on the contract curve. 
D)  are definitely not the final allocations after trading. D

Question 2

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 UA = 3XY so her MUX = 3Y and her MUY = 3X.Individual B's utility function is UB = 10     so his   and his MUY = 5   .Which of the following allocations are on the contract curve?

Accepted Answer

A)  (XA = 14, YA = 20), (XB = 14, YB = 20) 
B)  (XA = 15, YA = 17), (XB = 13, YB = 23) 
C)  (XA = 18, YA = 22), (XB = 10, YB = 18) 
D)  None of the above. 
A)  (XA = 14, YA = 20), (XB = 14, YB = 20) 
B)  (XA = 15, YA = 17), (XB = 13, YB = 23) 
C)  (XA = 18, YA = 22), (XB = 10, YB = 18) 
D)  None of the above. A

Question 3

Comparing the distribution of wealth of the wealthiest 1% of the population in the United States before and after the recent Great Recession to what occurred before and after the Great Depression,

Accepted Answer

A)  the percentage of the wealth of the wealthiest 1% increased after the recent Great Recession, unlike what happened after the Great Depression 
B)  the percentage of the wealth of the wealthiest 1% increased after the recent Great Recession, similar to what happened after the Great Depression. 
C)  the percentage of the wealth of the wealthiest 1% declined after the recent Great Recession, unlike what happened after the Great Depression. 
D)  the percentage of the wealth of the wealthiest 1% declined after the recent Great Recession, similar to what happened after the Great Depression. 
A)  the percentage of the wealth of the wealthiest 1% increased after the recent Great Recession, unlike what happened after the Great Depression 
B)  the percentage of the wealth of the wealthiest 1% increased after the recent Great Recession, similar to what happened after the Great Depression. 
C)  the percentage of the wealth of the wealthiest 1% declined after the recent Great Recession, unlike what happened after the Great Depression. 
D)  the percentage of the wealth of the wealthiest 1% declined after the recent Great Recession, similar to what happened after the Great Depression. A

Question 4

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 5

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

Accepted Answer

A)  prices have been allowed to adjust. 
B)  there are no further gains from trade. 
C)  the final outcome is different from the original inefficient endowment. 
D)  all members of society can be made better off. 
A)  prices have been allowed to adjust. 
B)  there are no further gains from trade. 
C)  the final outcome is different from the original inefficient endowment. 
D)  all members of society can be made better off.

Question 6

-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 horizontal intercept of

Accepted Answer

A)  10. 
B)  20. 
C)  30. 
D)  50. 
A)  10. 
B)  20. 
C)  30. 
D)  50.

Question 7

Explain how it is possible for one of two people in a two-good economy to have an absolute advantage in producing both goods,but trade can still benefit both people.

Accepted Answer

One person,when she spends all of her ti

Question 8

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 9

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 10

-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,

Accepted Answer

A)  the U.S. will specialize in food and Canada will specialize in clothing. 
B)  the U.S. will specialize in clothing and Canada will specialize in food. 
C)  each country will devote half of its resources to each industry. 
D)  joint output is minimized. 
A)  the U.S. will specialize in food and Canada will specialize in clothing. 
B)  the U.S. will specialize in clothing and Canada will specialize in food. 
C)  each country will devote half of its resources to each industry. 
D)  joint output is minimized.

Question 11

Gains from trade will be possible as long as

Accepted Answer

A)  people have different endowments. 
B)  people place different values on some goods. 
C)  marginal rates of substitution are equal across individuals. 
D)  excess supply equals excess demand. 
A)  people have different endowments. 
B)  people place different values on some goods. 
C)  marginal rates of substitution are equal across individuals. 
D)  excess supply equals excess demand.

Question 12

-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 have a slope of -3/4 over the entire frontier. 
B)  will have a slope of -2 when less than 20 units of food are produced. 
C)  will have a slope of -1 when less than 20 units of food are produced. 
D)  will have a slope of -1/2 when less than 20 units of food are produced. 
A)  will have a slope of -3/4 over the entire frontier. 
B)  will have a slope of -2 when less than 20 units of food are produced. 
C)  will have a slope of -1 when less than 20 units of food are produced. 
D)  will have a slope of -1/2 when less than 20 units of food are produced.

Question 13

Employers in a city must pay a specific tax of $t per hour worked by their employees while employers in the suburbs of the city do not have an employment tax.What does a general equilibrium approach predict regarding the wages and employment of both the city and suburban workers if the city decides to substantially reduce their employment tax rate?

Accepted Answer

A)  Wages will increase in the city, but not in the suburbs, and employment will increase in both. 
B)  Wages will increase in both the city and the suburbs, but employment will fall in both. 
C)  Wages will increase in both the city and suburbs, employment will increase in the city, but decrease in the suburbs. 
D)  Wages will increase in both the city and the suburbs, employment will decrease in the city, but increase in the suburbs. 
A)  Wages will increase in the city, but not in the suburbs, and employment will increase in both. 
B)  Wages will increase in both the city and the suburbs, but employment will fall in both. 
C)  Wages will increase in both the city and suburbs, employment will increase in the city, but decrease in the suburbs. 
D)  Wages will increase in both the city and the suburbs, employment will decrease in the city, but increase in the suburbs.

Question 14

If only two people are trading their endowments and no production is possible,then the equilibrium they reach will

Accepted Answer

A)  be on their contract curve. 
B)  result in unequal marginal rates of substitution for the two people. 
C)  result in one person being worse off than with his or her endowment. 
D)  All of the above. 
A)  be on their contract curve. 
B)  result in unequal marginal rates of substitution for the two people. 
C)  result in one person being worse off than with his or her endowment. 
D)  All of the above.

Question 15

Economic growth can be depicted as a

Accepted Answer

A)  shift in the contract curve. 
B)  a change in the dimensions of the Edgeworth box. 
C)  a change in the preference curves of individuals. 
D)  a change in the number of people in the Edgeworth box. 
A)  shift in the contract curve. 
B)  a change in the dimensions of the Edgeworth box. 
C)  a change in the preference curves of individuals. 
D)  a change in the number of people in the Edgeworth box.

Question 16

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 17

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 18

There are two closely related crops,X and Y,with the following demand functions QX = 180 - 2PX + PY and QY = 150 + PX - PY where QX is the quantity of X,PX is the price of X,QY is the quantity of Y,and PY is the price of Y.These two crops are grown in two widely separated countries so there is no interrelationship between the supply curves.The short-run perfectly inelastic supply for X is 150 while the short-run perfectly inelastic supply for Y is 100.In equilibrium,the prices are

Accepted Answer

A)  PX = 80, PY = 130 
B)  PX = 40, PY = 65 
C)  PX = 60, PY = 120 
D)  PX = 30, PY = 80 
A)  PX = 80, PY = 130 
B)  PX = 40, PY = 65 
C)  PX = 60, PY = 120 
D)  PX = 30, PY = 80

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

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.If the endowment is at point a,and Al has no ability to bargain,the final allocation will be at point

Accepted Answer

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

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Points a and b

Comparing the distribution of wealth of the wealthiest 1% of the population in the United States before and after the recent Great Recession to what occurred before and after the Great Depression,

If two or more markets are closely related,

A competitive equilibrium is Pareto-efficient because at the 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.Measuring food on the horizontal axis,the joint production possibility frontier has a horizontal intercept of

Explain how it is possible for one of two people in a two-good economy to have an absolute advantage in producing both goods,but trade can still benefit both people.

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.

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

-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,

Gains from trade will be possible as long as

-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

If only two people are trading their endowments and no production is possible,then the equilibrium they reach will

Economic growth can be depicted as a

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

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

Gains from trade can only occur when

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.If the endowment is at point a,and Al has no ability to bargain,the final allocation will be at point

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

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Points a and b

Comparing the distribution of wealth of the wealthiest 1% of the population in the United States before and after the recent Great Recession to what occurred before and after the Great Depression,

If two or more markets are closely related,

A competitive equilibrium is Pareto-efficient because at the 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.Measuring food on the horizontal axis,the joint production possibility frontier has a horizontal intercept of

Explain how it is possible for one of two people in a two-good economy to have an absolute advantage in producing both goods,but trade can still benefit both people.

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.

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

-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,

Gains from trade will be possible as long as

-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

If only two people are trading their endowments and no production is possible,then the equilibrium they reach will

Economic growth can be depicted as a

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

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

Gains from trade can only occur when

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.If the endowment is at point a,and Al has no ability to bargain,the final allocation will be at point

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