Exam 19: General Equilibrium Analysis and Economic Efficiency

Assume that Bill and Terry consume two goods X and Y,so that their marginal rates of substitution are equal.Under these conditions we can conclude that:

If an Edgeworth production box for two industries,with land and labor as the inputs,has a contract curve that is same as the diagonal of the box,we can infer that:

Figure 19-3 illustrates the determination of an efficient output mix in a two good economy.The output combination is represented by point Z and the consumption point of a representative consumer is W.The slope of the line zz represents the marginal rate of transformation [MRT]. -In Figure 19-3,at point Z:

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 C:

The slope of the PPF is equal to the:

Suppose a country produces only two goods - wheat [W] and corn [C].The marginal rate of transformation [MRT] under autarkic condition is 2W/1C.The world price ratio is 1W/1C.Illustrate with the help of a suitable diagram,how the country will benefit if it indulges in international trade.

If the marginal rate of substitution between two goods is not equal for Jack and Jill it means that:

Which of the following statements about the welfare frontier is incorrect?

In Figure 19-2 given below,points A,B,C,and D show the different allocations of goods between Ann and Bill. -In Figure 19-2,which of the following allocations of goods between Ann and Bill is inefficient?

A per-unit tax imposed on a product in market A leads to an increase in its price.This causes some consumers to switch to another product in market B.This in turn drives up the price in market B.When the price in market B rises,it causes the demand for the product in market A to rise.The impact in market A is known as the:

An existing allocation of goods is said to be Pareto efficient:

If perfect competition prevails in a two good (X and Y)and two input (L and K)economy,all of the following conditions are satisfied,except that:

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,the curve TT shows:

A point off the contract curve in an Edgeworth production box means that:

The PPF is concave to the origin because:

If the marginal rates of technical substitution between inputs are not equal among firms,it means that:

( A)Discuss the importance of information in achieving economic efficiency.

The production possibility frontier [PPF] is derived by:

In an Edgeworth production box with isoquants,the contract curve reflects:

An efficient distribution of a certain quantity of goods between two parties is one in which: