Question 1

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 2

As more producers with differing marginal rates of transformation are added,the joint production possibility curve becomes

Accepted Answer

A)  steeper. 
B)  flatter. 
C)  more convex to the origin. 
D)  smoother. 
A)  steeper. 
B)  flatter. 
C)  more convex to the origin. 
D)  smoother.

Question 3

Equity and efficiency can be achieved simultaneously through competition.

Accepted Answer

A) True 
 B)False

Question 4

In a competitive marketplace,prices adjust until

Accepted Answer

A)  MRS's are equal to zero. 
B)  excess supply equals excess demand equals zero in all markets. 
C)  each consumer has maximized utility subject to his budget constraint. 
D)  all firms earn zero profit. 
A)  MRS's are equal to zero. 
B)  excess supply equals excess demand equals zero in all markets. 
C)  each consumer has maximized utility subject to his budget constraint. 
D)  all firms earn zero profit.

Question 5

-Suppose the U.S.can produce 10 units of food and 5 units of clothing (or any such linear combination)and Canada can produce 6 units of food and 4 units of clothing (or any such linear combination).If trade occurs between these two countries,which should produce more food and which more clothing?

Accepted Answer

The U.S.has a comparative adva

Question 6

As opposed to general equilibrium analysis,partial equilibrium analysis looks

Accepted Answer

A)  at an equilibrium and changes to it in a single, isolated market. 
B)  at how changes in all other markets effect a particular market. 
C)  at how equilibrium is determined in all markets simultaneously. 
D)  at either price or quantity movements. 
A)  at an equilibrium and changes to it in a single, isolated market. 
B)  at how changes in all other markets effect a particular market. 
C)  at how equilibrium is determined in all markets simultaneously. 
D)  at either price or quantity movements.

Question 7

Explain the logic behind the First Theorem of Welfare Economics.

Accepted Answer

A competitive market allows all the volu

Question 8

If pizza is measured on the horizontal axis and pretzels are measured on the vertical axis,the slope of the production possibility frontier at a given combination reflects

Accepted Answer

A)  the total cost of producing that combination. 
B)  the total cost of producing that quantity of pizza in terms of pretzels. 
C)  the cost of making the last pizza in terms of pretzels. 
D)  the cost of making the last pretzel in terms of pizza. 
A)  the total cost of producing that combination. 
B)  the total cost of producing that quantity of pizza in terms of pretzels. 
C)  the cost of making the last pizza in terms of pretzels. 
D)  the cost of making the last pretzel in terms of pizza.

Question 9

-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 10

Joe and Rita each have some milk and cookies (Milk on the horizontal axis).Joe's MRS of cookies for milk is 2.Rita's MRS of cookies for milk is 4.Which of the following statements is TRUE?

Accepted Answer

A)  No gains from trade are possible. 
B)  Both Rita and Joe can be made better off if Rita gives Joe some cookies in exchange for milk. 
C)  Rita and Joe are on the contract curve. 
D)  Both Rita and Joe can be made better off if Joe gives Rita some cookies in exchange for milk. 
A)  No gains from trade are possible. 
B)  Both Rita and Joe can be made better off if Rita gives Joe some cookies in exchange for milk. 
C)  Rita and Joe are on the contract curve. 
D)  Both Rita and Joe can be made better off if Joe gives Rita some cookies in exchange for milk.

Question 11

-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 kink away from the origin at 20 units of food. 
B)  will kink toward the origin at 20 units of food. 
C)  will kink toward the origin at 10 units of food. 
D)  will kink away from the origin at 10 units of food. 
A)  will kink away from the origin at 20 units of food. 
B)  will kink toward the origin at 20 units of food. 
C)  will kink toward the origin at 10 units of food. 
D)  will kink away from the origin at 10 units of food.

Question 12

Only individuals A and B live on a desert island where no production is possible.A is endowed with 12 units of good X and 18 units of good Y.B is endowed with 6 units of good X and 42 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 = 12, YA = 24), (XB = 6, YB = 36) 
B)  (XA = 10, YA = 28), (XB = 8, YB = 32) 
C)  (XA = 9, YA = 30), (XB = 9, YB = 30) 
D)  None of the above. 
A)  (XA = 12, YA = 24), (XB = 6, YB = 36) 
B)  (XA = 10, YA = 28), (XB = 8, YB = 32) 
C)  (XA = 9, YA = 30), (XB = 9, YB = 30) 
D)  None of the above.

Question 13

Economic growth can be depicted as

Accepted Answer

A)  a change in the country's MRS. 
B)  a change in the country's MRT. 
C)  a shift of the country's production possibilities frontier to the right. 
D)  a shift of the country's production possibilities frontier to the left. 
A)  a change in the country's MRS. 
B)  a change in the country's MRT. 
C)  a shift of the country's production possibilities frontier to the right. 
D)  a shift of the country's production possibilities frontier to the left.

Question 14

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

Accepted Answer

A)  the MRS's are equal. 
B)  the indifference curves are tangent. 
C)  no mutual gains from trade exist. 
D)  All of the above. 
A)  the MRS's are equal. 
B)  the indifference curves are tangent. 
C)  no mutual gains from trade exist. 
D)  All of the above.

Question 15

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 16

When two people are on the contract curve,the allocation of goods

Accepted Answer

A)  cannot be improved. 
B)  is pareto efficient. 
C)  is such that neither individual can be made better off without making the other worse off. 
D)  All of the above. 
A)  cannot be improved. 
B)  is pareto efficient. 
C)  is such that neither individual can be made better off without making the other worse off. 
D)  All of the above.

Question 17

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 18

Economic growth can be obtained

Accepted Answer

A)  by government legislation. 
B)  by a change in the level of inputs or an improvement in technology. 
C)  only through a change in the level of inputs, hence the desire for conquest throughout the history of the world. 
D)  only through a change in technology, which explains the explosive growth of the United States. 
A)  by government legislation. 
B)  by a change in the level of inputs or an improvement in technology. 
C)  only through a change in the level of inputs, hence the desire for conquest throughout the history of the world. 
D)  only through a change in technology, which explains the explosive growth of the United States.

Question 19

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Point a is NOT Pareto efficient because

Accepted Answer

A)  Al's MRS exceeds Bruce's MRS. 
B)  the point is not near the center of the box. 
C)  Al's indifference curve is not far enough away from the origin. 
D)  All of the above. 
A)  Al's MRS exceeds Bruce's MRS. 
B)  the point is not near the center of the box. 
C)  Al's indifference curve is not far enough away from the origin. 
D)  All of the above.

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.

The so-called "death tax" might

As more producers with differing marginal rates of transformation are added,the joint production possibility curve becomes

Equity and efficiency can be achieved simultaneously through competition.

In a competitive marketplace,prices adjust until

-Suppose the U.S.can produce 10 units of food and 5 units of clothing (or any such linear combination)and Canada can produce 6 units of food and 4 units of clothing (or any such linear combination).If trade occurs between these two countries,which should produce more food and which more clothing?

As opposed to general equilibrium analysis,partial equilibrium analysis looks

Explain the logic behind the First Theorem of Welfare Economics.

If pizza is measured on the horizontal axis and pretzels are measured on the vertical axis,the slope of the production possibility frontier at a given combination reflects

-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

Joe and Rita each have some milk and cookies (Milk on the horizontal axis).Joe's MRS of cookies for milk is 2.Rita's MRS of cookies for milk is 4.Which of the following statements is TRUE?

-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

Economic growth can be depicted as

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

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

When two people are on the contract curve,the allocation of goods

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

Economic growth can be obtained

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Point a is NOT Pareto efficient because

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

The so-called "death tax" might

As more producers with differing marginal rates of transformation are added,the joint production possibility curve becomes

Equity and efficiency can be achieved simultaneously through competition.

In a competitive marketplace,prices adjust until

-Suppose the U.S.can produce 10 units of food and 5 units of clothing (or any such linear combination)and Canada can produce 6 units of food and 4 units of clothing (or any such linear combination).If trade occurs between these two countries,which should produce more food and which more clothing?

As opposed to general equilibrium analysis,partial equilibrium analysis looks

Explain the logic behind the First Theorem of Welfare Economics.

If pizza is measured on the horizontal axis and pretzels are measured on the vertical axis,the slope of the production possibility frontier at a given combination reflects

-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

Joe and Rita each have some milk and cookies (Milk on the horizontal axis).Joe's MRS of cookies for milk is 2.Rita's MRS of cookies for milk is 4.Which of the following statements is TRUE?

-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

Economic growth can be depicted as

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

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

When two people are on the contract curve,the allocation of goods

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

Economic growth can be obtained

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Point a is NOT Pareto efficient because

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