Exam 30: Exchange-Part A

In a competitive pure exchange economy, if the initial endowment is on the diagonal line between the two origins, then, according to the first welfare theorem of economics, there must always be a competitive equilibrium in which no trade takes place.

(True/False)

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Question 41

Xavier and Yvette are the only two persons on a desert island.There are only two goods, nuts and berries.Xavier's utility function is U(N_x, B_x)= N_xB_x.Yvette's utility function is U(N_y, B_y)= 2N_y + B_y.Xavier is endowed with 3 units of berries and 8 units of nuts.Yvette is endowed with 6 units of berries and 8 units of nuts.In a competitive equilibrium for this economy, how many units of berries does Xavier consume?

(Multiple Choice)

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Question 42

The second welfare theorem of economics states that if preferences are convex, then any Pareto optimal allocation could be achieved as a competitive equilibrium after some reallocation of initial endowments.

(True/False)

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Question 43

Jack Spratt's utility function is U(F, L)= L.His wife's utility function is U(F, L)= F.If Jack's initial endowment is 40 units of F and 20 units of L and if Jack's wife's initial endowment is 24 units of F and 40 units of L, then in an Edgeworth box for Jack and his wife, an allocation of F and L will be Pareto optimal only if it is at a corner of the box.

(True/False)

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Question 44

Astrid's utility function is U(H_A, C_A)= H_AC_A.Birger's utility function is min{H_B, C_B}.If Astrid's initial endowment is no cheese and 13 units of herring and if Birger's initial endowments are 8 units of cheese and no herring, then where p is a competitive equilibrium price of herring and cheese is the numeraire, it must be that demand equals supply in the herring market.This implies that

(Multiple Choice)

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Question 45

An economy has two people, Charlie and Doris.There are two goods, apples and bananas.Charlie has an initial endowment of 6 apples and 6 bananas.Doris has an initial endowment of 12 apples and 3 bananas.Charlie's utility function is U(A C, B C)= A C B C, where A C is his apple consumption and B C is his banana consumption.Doris's utility function is U(A D, B D)= A D B D, where A D and B D are her apple and banana consumptions.At every Pareto optimal allocation,

(Multiple Choice)

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Question 46

Jack Spratt's utility function is U(F, L)= L.His wife's utility function is U(F, L)= F.If Jack's initial endowment is 100 units of F and 50 units of L and if Jack's wife's initial endowment is 60 units of F and 100 units of L, then in an Edgeworth box for Jack and his wife, an allocation of F and L will be Pareto optimal only if it is at a corner of the box.

(True/False)

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Question 47

Mutt's utility function is U(m, j)= max{3m, j} and Jeff's utility function is U(m, j)= 3m + j.Mutt is initially endowed with 6 units of milk and 2 units of juice and Jeff is initially endowed with 2 units of milk and 6 units of juice.If we draw an Edgeworth box with milk on the horizontal axis and juice on the vertical axis and if we measure goods for Mutt by the distance from the lower left corner of the box, then the set of Pareto optimal allocations includes the

(Multiple Choice)

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Question 48

An economy has two people, Charlie and Doris.There are two goods, apples and bananas.Charlie has an initial endowment of 6 apples and 6 bananas.Doris has an initial endowment of 12 apples and 3 bananas.Charlie's utility function is U(A C, B C)= A C B C, where A C is his apple consumption and B C is his banana consumption.Doris's utility function is U(A D, B D)= A D B D, where A D and B D are her apple and banana consumptions.At every Pareto optimal allocation,

(Multiple Choice)

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Question 49

Xavier and Yvette are the only two persons on a desert island.There are only two goods, nuts and berries.Xavier's utility function is U(N_x, B_x)= N_xB_x.Yvette's utility function is U(N_y, B_y)=2N_y + B_y.Xavier is endowed with 5 units of berries and 13 units of nuts.Yvette is endowed with 6 units of berries and 8 units of nuts.In a competitive equilibrium for this economy, how many units of berries does Xavier consume?

(Multiple Choice)

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Question 50

If two people have identical homothetic preferences and if their indifference curves have a diminishing marginal rate of substitution, then in an Edgeworth box, the locus of Pareto optimal allocations between them is a diagonal straight line.

(True/False)

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Question 51

Abduls utility is U(X A, Y A)= min{X A, Y A}, where X A and Y A are his consumptions of goods X and Y respectively.Babettes utility function is U(X B, Y B)= X B Y B, where X B and Y B are her consumptions of goods X and Y.Abduls initial endowment is no units of Y and 5 units of X.Babettes initial endowment is no units of X and 11 units of Y.If X is the numeraire good and p is the price of good Y, then supply will equal demand in the market for Y if

(Multiple Choice)

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Question 52

Kens utility function is U(Q K, W K)= Q K W K and Barbies utility function is U(Q B, W B)= Q B W B.If Kens initial endowment were 5 units of quiche and 9 units of wine and Barbies endowment were 10 units of quiche and 9 units of wine, then at any Pareto optimal allocation where both persons consumed some of each good,

(Multiple Choice)

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Question 53

An economy has 2,000 people.1,000 of them have utility functions U(x, y)= x + y and 1,000 of them have utility functions U(x, y)= min{2x, y}.Everybody has an initial allocation of 1 unit of x and 1 unit of y.Find the competitive equilibrium prices and consumptions for each type of person.

(Essay)

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Question 54

Professor Nightsoils utility function is U N (B N, P N)= B_N + 4P^1/2_N and Dean Interfaces utility function is U I (B I, P I)= B_I + 2P^1/2_I, where B N and B I are the number of bromides and P N and P I are the number of platitudes consumed by Nightsoil and Interface respectively.If Nightsoils initial endowment is 5 bromides and 20 platitudes and if Interfaces initial endowment is 3 bromides and 20 platitudes, then at any Pareto efficient allocation in which both consume positive amounts of both goods,

(Multiple Choice)

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Question 55

Astrids utility function is U(H A, C A)= H A C A.Birgers utility function is min{H B, C B}.If Astrids initial endowment is no cheese and 5 units of herring and if Birgers initial endowments are 6 units of cheese and no herring, then where p is a competitive equilibrium price of herring and cheese is the numeraire, it must be that demand equals supply in the herring market.This implies that

(Multiple Choice)

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Question 56

In a pure exchange economy with two goods, if there is a competitive equilibrium with prices p₁ = $12 and p₂ = $27, then there must also be a competitive equilibrium with prices p₁ = $24 and p₂ = $54.

(True/False)

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Question 57

If the initial endowment is on the contract curve, then there must always be a competitive equilibrium in which no trade takes place.

(True/False)

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Question 58

According to the first theorem of welfare economics:

(Multiple Choice)

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Question 59

In a competitive pure exchange economy, if the total value of excess demand for all types of food is zero, then the total value of excess demand for all nonfood commodities must be zero.

(True/False)

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Question 60

Showing 41 - 60 of 72

Exam 30: Exchange-Part A

In a competitive pure exchange economy, if the initial endowment is on the diagonal line between the two origins, then, according to the first welfare theorem of economics, there must always be a competitive equilibrium in which no trade takes place.

The second welfare theorem of economics states that if preferences are convex, then any Pareto optimal allocation could be achieved as a competitive equilibrium after some reallocation of initial endowments.

If two people have identical homothetic preferences and if their indifference curves have a diminishing marginal rate of substitution, then in an Edgeworth box, the locus of Pareto optimal allocations between them is a diagonal straight line.

An economy has 2,000 people.1,000 of them have utility functions U(x, y)= x + y and 1,000 of them have utility functions U(x, y)= min{2x, y}.Everybody has an initial allocation of 1 unit of x and 1 unit of y.Find the competitive equilibrium prices and consumptions for each type of person.

In a pure exchange economy with two goods, if there is a competitive equilibrium with prices p1 = $12 and p2 = $27, then there must also be a competitive equilibrium with prices p1 = $24 and p2 = $54.

If the initial endowment is on the contract curve, then there must always be a competitive equilibrium in which no trade takes place.

According to the first theorem of welfare economics:

In a competitive pure exchange economy, if the total value of excess demand for all types of food is zero, then the total value of excess demand for all nonfood commodities must be zero.

Budget Constraint-Part A

Budget Constraint-Part B

Preferences-Part A

Preferences-Part B

Utility-Part A

Utility-Part B

Choice-Part A

Choice-Part B

Demand-Part A

Demand-Part B

Revealed Preference-Part A

Revealed Preference-Part B

Slutsky Equation-Part A

Slutsky Equation-Part B

Buying and Selling-Part A

Buying and Selling-Part B

Intertemporal Choice-Part A

Intertemporal Choice-Part B

Asset Markets-Part A

Asset Markets-Part B

Uncertainty-Part A

Uncertainty-Part B

Risky Assets-Part A

Risky Assets-Part B

Consumers Surplus-Part A

Consumers Surplus-Part B

Market Demand-Part A

Market Demand-Part B

Equilibrium-Part A

Equilibrium-Part B

Auctions-Part A

Auctions-Part B

Technology-Part A

Technology-Part B

Profit Maximization-Part A

Profit Maximization-Part B

Cost Minimization-Part A

Cost Minimization-Part B

Cost Curves-Part A

Cost Curves-Part B

Firm Supply-Part A

Firm Supply-Part B

Industry Supply-Part A

Industry Supply-Part B

Monopoly-Part A

Monopoly-Part B

Monopoly Behavior-Part A

Monopoly Behavior-Part B

Factor Markets-Part A

Factor Markets-Part B

Oligopoly-Part A

Oligopoly-Part B

Game Theory-Part A

Game Theory-Part B

Game Applications-Part A

Game Applications-Part B

Behavioral Economics

Exchange-Part B

Production-Part A

Production-Part B

Welfare-Part A

Welfare-Part B

Externalities-Part A

Externalities-Part B

Information Technology-Part A

Information Technology-Part B

Public Goods-Part A

Public Goods-Part B

Asymmetric Information-Part A

Asymmetric Information-Part B

Filters

In a pure exchange economy with two goods, if there is a competitive equilibrium with prices p₁ = $12 and p₂ = $27, then there must also be a competitive equilibrium with prices p₁ = $24 and p₂ = $54.