Question 1

Which of the following is true of international trade?

Accepted Answer

A) Trade makes it possible to consume better quality goods at a high price. 
B) Trade makes the domestic producers of import substitutes better off. 
C) Trade makes it possible to consume outside of the production possibility frontier. 
D) In the absence of trade,a country always produces at a point below the production possibility frontier. 
A) Trade makes it possible to consume better quality goods at a high price. 
B) Trade makes the domestic producers of import substitutes better off. 
C) Trade makes it possible to consume outside of the production possibility frontier. 
D) In the absence of trade,a country always produces at a point below the production possibility frontier.

Question 2

Partial equilibrium analysis is the study of:

Accepted Answer

A) how equilibrium is determined in more than one market simultaneously. 
B) the determination of equilibrium in a market with incomplete information on price and output. 
C) the determination of equilibrium in a given market,considering the influence of other markets. 
D) how equilibrium is determined in a given market,independent of other markets. 
A) how equilibrium is determined in more than one market simultaneously. 
B) the determination of equilibrium in a market with incomplete information on price and output. 
C) the determination of equilibrium in a given market,considering the influence of other markets. 
D) how equilibrium is determined in a given market,independent of other markets.

Question 3

In the figure given below,the curve TT shows how the allocation of a resource affects the well-being of two individuals,Hank and Monica.  
-In Figure 19-1,point F represents a resource allocation that is:

Accepted Answer

A) is feasible but undesirable from the society's point of view. 
B) inefficient. 
C) desirable but not attainable. 
D) both undesirable and unattainable. 
A) is feasible but undesirable from the society's point of view. 
B) inefficient. 
C) desirable but not attainable. 
D) both undesirable and unattainable.

Question 4

An allocation of resources is inefficient if,through some feasible change in the allocation of resources:

Accepted Answer

A) it is impossible to make someone better off without making someone else worse off. 
B) it is impossible to make everyone better off. 
C) it is possible to make someone better off without leaving someone else worse off. 
D) it is possible to make everyone better off,provided the resources are distributed equally. 
A) it is impossible to make someone better off without making someone else worse off. 
B) it is impossible to make everyone better off. 
C) it is possible to make someone better off without leaving someone else worse off. 
D) it is possible to make everyone better off,provided the resources are distributed equally.

Question 5

Assume that Jeff and Jane both consume only two goods: burgers and soft drinks.Jeff would be willing to trade three soft drinks for one more burger,while Jane is willing to trade only two soft drinks for one more burger.Under these conditions,if Jeff and Jane are going to trade,then:

Accepted Answer

A) Jeff should trade soft drinks for burgers. 
B) Jeff should trade burgers for soft drinks. 
C) a mutual trade between Jeff and Jane will make Jeff better off and Jane worse off. 
D) a mutual trade between Jeff and Jane will make Jane better off and Jeff worse off. 
A) Jeff should trade soft drinks for burgers. 
B) Jeff should trade burgers for soft drinks. 
C) a mutual trade between Jeff and Jane will make Jeff better off and Jane worse off. 
D) a mutual trade between Jeff and Jane will make Jane better off and Jeff worse off.

Question 6

Markets fail to satisfy the conditions of Pareto optimality when:

Accepted Answer

A) exchanges that would make at least one person better off and no one else worse off go unrealized. 
B) exchanges that would produce a more equitable distribution of goods go unrealized. 
C) market exchanges allow one party to acquire some of the surplus from the other party. 
D) none of the consumers are able to achieve the maximum utility from consumption. 
A) exchanges that would make at least one person better off and no one else worse off go unrealized. 
B) exchanges that would produce a more equitable distribution of goods go unrealized. 
C) market exchanges allow one party to acquire some of the surplus from the other party. 
D) none of the consumers are able to achieve the maximum utility from consumption.

Question 7

What are the conditions for efficiency in distribution,efficiency in production,and efficiency in output?

Accepted Answer

Efficiency in distribution is reached wh

Question 8

Which of the following is not a cause of economic inefficiency?

Accepted Answer

A) Market power 
B) Externalities 
C) Free entry and exit of firms 
D) Imperfect information 
A) Market power 
B) Externalities 
C) Free entry and exit of firms 
D) Imperfect information

Question 9

Assume that the clothing (C)market is a monopoly but perfect competition prevails in the market for food (F).Which of the following is true in this context?

Accepted Answer

A) The price ratio of clothing and food equals the ratio of their marginal costs. 
B) The price ratio of clothing and food is greater than the ratio of their marginal costs. 
C) The price ratio of clothing and food is less than the ratio of their marginal costs. 
D) The price ratio of clothing and food equals unity. 
A) The price ratio of clothing and food equals the ratio of their marginal costs. 
B) The price ratio of clothing and food is greater than the ratio of their marginal costs. 
C) The price ratio of clothing and food is less than the ratio of their marginal costs. 
D) The price ratio of clothing and food equals unity.

Question 10

The rate at which one product can be "transformed" into another is referred to as:

Accepted Answer

A) the marginal rate of technical substitution. 
B) the marginal rate of substitution. 
C) the efficient transformation rate. 
D) the marginal rate of transformation. 
A) the marginal rate of technical substitution. 
B) the marginal rate of substitution. 
C) the efficient transformation rate. 
D) the marginal rate of transformation.

Question 11

The marginal rate of transformation measures the:

Accepted Answer

A) absolute cost of producing a commodity. 
B) relative price of labor. 
C) opportunity cost of one good in terms of the other. 
D) rate at which one input is substituted for the other. 
A) absolute cost of producing a commodity. 
B) relative price of labor. 
C) opportunity cost of one good in terms of the other. 
D) rate at which one input is substituted for the other.

Question 12

Assuming that Good X and Good Y are close substitutes of each other,a per-unit sales tax on Good Y will:

Accepted Answer

A) increase the demand for Good X. 
B) increase the demand for Good Y. 
C) decrease the supply of Good X. 
D) decrease the demand for Good X. 
A) increase the demand for Good X. 
B) increase the demand for Good Y. 
C) decrease the supply of Good X. 
D) decrease the demand for Good X.

Question 13

Without trade the price of one unit of product Y is 1/3 that of one unit of X in a small country. Products X and Y trade on the world market at equal prices.If the small country starts trading with the rest of the world:

Accepted Answer

A) the small country would import product Y. 
B) the small country would export both product X and product Y. 
C) the domestic price of product X would equal the world price. 
D) the relative price of X and Y would not change in the small country. 
A) the small country would import product Y. 
B) the small country would export both product X and product Y. 
C) the domestic price of product X would equal the world price. 
D) the relative price of X and Y would not change in the small country.

Question 14

Which of the following assumptions are made in a partial equilibrium analysis?

Accepted Answer

A) Positive spillover and feedback effects 
B) Constant price level in all markets but one 
C) Mutual interdependence among markets 
D) Variable prices in each and every market 
A) Positive spillover and feedback effects 
B) Constant price level in all markets but one 
C) Mutual interdependence among markets 
D) Variable prices in each and every market

Question 15

Which of the following is true of the general equilibrium analysis?

Accepted Answer

A) It assumes that a change initiated in a market does not affect prices in other markets. 
B) It determines changes in equilibrium price in a market assuming that all other markets are in equilibrium. 
C) The ceteris paribus assumption is crucial in determining changes in price and quantity in general equilibrium analysis. 
D) It is useful in determining price and quantity of goods and services when the markets mutually interdependent. 
A) It assumes that a change initiated in a market does not affect prices in other markets. 
B) It determines changes in equilibrium price in a market assuming that all other markets are in equilibrium. 
C) The ceteris paribus assumption is crucial in determining changes in price and quantity in general equilibrium analysis. 
D) It is useful in determining price and quantity of goods and services when the markets mutually interdependent.

Question 16

In the figure given below,the curve TT shows how the allocation of a resource affects the well-being of two individuals,Hank and Monica.  
-In Figure 19-1,TT is referred to as:

Accepted Answer

A) the welfare frontier. 
B) the production possibility frontier. 
C) the marginal rate of transformation curve. 
D) the community indifference curve. 
A) the welfare frontier. 
B) the production possibility frontier. 
C) the marginal rate of transformation curve. 
D) the community indifference curve.

Question 17

When the allocation of two goods between two individuals is efficient:

Accepted Answer

A) the utilities of both the individuals from the consumption of these two goods are equal. 
B) both individuals will derive the maximum utility from the consumption of these two goods. 
C) the marginal rates of substitution between two goods for both the consumers are the same. 
D) the market demand curves in all markets are identical. 
A) the utilities of both the individuals from the consumption of these two goods are equal. 
B) both individuals will derive the maximum utility from the consumption of these two goods. 
C) the marginal rates of substitution between two goods for both the consumers are the same. 
D) the market demand curves in all markets are identical.

Question 18

Explain how the three primary conditions of economic efficiency are achieved under perfect competition?

Accepted Answer

The three primary conditions of economic

Question 19

In the figure given below,the curve TT shows how the allocation of a resource affects the well-being of two individuals,Hank and Monica.  
-In Figure 19-1,a move from C to D would:

Accepted Answer

A) be desirable because it produces a more equal distribution of resources. 
B) be more desirable than a movement from C to B. 
C) be desirable because a movement from an inefficient allocation of resources to an efficient allocation of resources is always preferred. 
D) represent a movement from an inefficient allocation to an efficient allocation of resources. 
A) be desirable because it produces a more equal distribution of resources. 
B) be more desirable than a movement from C to B. 
C) be desirable because a movement from an inefficient allocation of resources to an efficient allocation of resources is always preferred. 
D) represent a movement from an inefficient allocation to an efficient allocation of resources.

Question 20

General equilibrium analysis is more appropriate than partial equilibrium analysis when:

Accepted Answer

A) all product markets are in equilibrium. 
B) change in the price of one commodity does not affect the demand for other commodities. 
C) a change in condition affects many markets at the same time and in similar magnitudes. 
D) a change in condition affects primarily one market. 
A) all product markets are in equilibrium. 
B) change in the price of one commodity does not affect the demand for other commodities. 
C) a change in condition affects many markets at the same time and in similar magnitudes. 
D) a change in condition affects primarily one market.

Which of the following is true of international trade?

Partial equilibrium analysis is the study of:

In the figure given below,the curve TT shows how the allocation of a resource affects the well-being of two individuals,Hank and Monica. -In Figure 19-1,point F represents a resource allocation that is:

An allocation of resources is inefficient if,through some feasible change in the allocation of resources:

Assume that Jeff and Jane both consume only two goods: burgers and soft drinks.Jeff would be willing to trade three soft drinks for one more burger,while Jane is willing to trade only two soft drinks for one more burger.Under these conditions,if Jeff and Jane are going to trade,then:

Markets fail to satisfy the conditions of Pareto optimality when:

What are the conditions for efficiency in distribution,efficiency in production,and efficiency in output?

Which of the following is not a cause of economic inefficiency?

Assume that the clothing (C)market is a monopoly but perfect competition prevails in the market for food (F).Which of the following is true in this context?

The rate at which one product can be "transformed" into another is referred to as:

The marginal rate of transformation measures the:

Assuming that Good X and Good Y are close substitutes of each other,a per-unit sales tax on Good Y will:

Without trade the price of one unit of product Y is 1/3 that of one unit of X in a small country. Products X and Y trade on the world market at equal prices.If the small country starts trading with the rest of the world:

Which of the following assumptions are made in a partial equilibrium analysis?

Which of the following is true of the general equilibrium analysis?

In the figure given below,the curve TT shows how the allocation of a resource affects the well-being of two individuals,Hank and Monica. -In Figure 19-1,TT is referred to as:

When the allocation of two goods between two individuals is efficient:

Explain how the three primary conditions of economic efficiency are achieved under perfect competition?

In the figure given below,the curve TT shows how the allocation of a resource affects the well-being of two individuals,Hank and Monica. -In Figure 19-1,a move from C to D would:

General equilibrium analysis is more appropriate than partial equilibrium analysis when:

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

Public Goods and Externalities

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Exam 19: General Equilibrium Analysis and Economic Efficiency

Which of the following is true of international trade?

Partial equilibrium analysis is the study of:

In the figure given below,the curve TT shows how the allocation of a resource affects the well-being of two individuals,Hank and Monica. -In Figure 19-1,point F represents a resource allocation that is:

An allocation of resources is inefficient if,through some feasible change in the allocation of resources:

Assume that Jeff and Jane both consume only two goods: burgers and soft drinks.Jeff would be willing to trade three soft drinks for one more burger,while Jane is willing to trade only two soft drinks for one more burger.Under these conditions,if Jeff and Jane are going to trade,then:

Markets fail to satisfy the conditions of Pareto optimality when:

What are the conditions for efficiency in distribution,efficiency in production,and efficiency in output?

Which of the following is not a cause of economic inefficiency?

Assume that the clothing (C)market is a monopoly but perfect competition prevails in the market for food (F).Which of the following is true in this context?

The rate at which one product can be "transformed" into another is referred to as:

The marginal rate of transformation measures the:

Assuming that Good X and Good Y are close substitutes of each other,a per-unit sales tax on Good Y will:

Without trade the price of one unit of product Y is 1/3 that of one unit of X in a small country. Products X and Y trade on the world market at equal prices.If the small country starts trading with the rest of the world:

Which of the following assumptions are made in a partial equilibrium analysis?

Which of the following is true of the general equilibrium analysis?

In the figure given below,the curve TT shows how the allocation of a resource affects the well-being of two individuals,Hank and Monica. -In Figure 19-1,TT is referred to as:

When the allocation of two goods between two individuals is efficient:

Explain how the three primary conditions of economic efficiency are achieved under perfect competition?

In the figure given below,the curve TT shows how the allocation of a resource affects the well-being of two individuals,Hank and Monica. -In Figure 19-1,a move from C to D would:

General equilibrium analysis is more appropriate than partial equilibrium analysis when:

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Product Pricing With Monopoly Power

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

Public Goods and Externalities

Filters