Question 1

When the marginal rates of substitution for two consumers differ:

Accepted Answer

A) the consumers' indifference curves are tangent. 
B) consumers will exchange goods and can end up anywhere inside the area bounded by their indifference curves. 
C) consumers will exchange goods and will end up on the contract curve inside the area bounded by their indifference curves. 
D) consumers will exchange goods and will end up on the contract curve,but not necessarily inside the area bounded by their indifference curves. 
A) the consumers' indifference curves are tangent. 
B) consumers will exchange goods and can end up anywhere inside the area bounded by their indifference curves. 
C) consumers will exchange goods and will end up on the contract curve inside the area bounded by their indifference curves. 
D) consumers will exchange goods and will end up on the contract curve,but not necessarily inside the area bounded by their indifference curves.

Question 2

Suppose,given their initial endowments of milk [M] and cookies [C],we know that Ashley's marginal rate of substitution of cookies for milk [MRSCM] = 3M/6C,Bill's MRSCM = 8M/8C,and Carol's MRSCM = 5M/10C.Given this information we know that a mutually beneficial trade does not exist between:

Accepted Answer

A) Ashley and Carol or between Ashley and Bill. 
B) Ashley and Bill,but it does exist between Ashley and Carol. 
C) Ashley and Carol,but it does exist between Carol and Bill. 
D) any of the three individuals. 
A) Ashley and Carol or between Ashley and Bill. 
B) Ashley and Bill,but it does exist between Ashley and Carol. 
C) Ashley and Carol,but it does exist between Carol and Bill. 
D) any of the three individuals.

Question 3

How does a competitive exchange differ from a two-person model of exchange?

Accepted Answer

A) The Pareto criterion is satisfied only in a competitive exchange and not in a two-person exchange. 
B) In two-person exchanges,the exact outcome of bargaining cannot be predicted unlike with a competitive exchange. 
C) The outcomes of two-person exchanges tend to be more equitable than competitive exchanges. 
D) In two-person exchanges consumers are price-takers while competitive exchange involves price-makers. 
A) The Pareto criterion is satisfied only in a competitive exchange and not in a two-person exchange. 
B) In two-person exchanges,the exact outcome of bargaining cannot be predicted unlike with a competitive exchange. 
C) The outcomes of two-person exchanges tend to be more equitable than competitive exchanges. 
D) In two-person exchanges consumers are price-takers while competitive exchange involves price-makers.

Question 4

In choosing between points along the contract curve:

Accepted Answer

A) the decision rule is the greatest good for the greatest number of people. 
B) scientific criteria can be used to lead us to the correct distribution of goods. 
C) subjective criterion is required to allocate resources. 
D) efficiency is always preferred to inefficiency. 
A) the decision rule is the greatest good for the greatest number of people. 
B) scientific criteria can be used to lead us to the correct distribution of goods. 
C) subjective criterion is required to allocate resources. 
D) efficiency is always preferred to inefficiency.

Question 5

Which of the following statements about the contract curve is correct?

Accepted Answer

A) The slope of the contract curve reflects the relative prices of the goods to consumers. 
B) All points on the contract curve are efficient. 
C) A point below the contract curve is always preferred to a point above the curve. 
D) A point on the contract curve shows inequitable allocation of resources. 
A) The slope of the contract curve reflects the relative prices of the goods to consumers. 
B) All points on the contract curve are efficient. 
C) A point below the contract curve is always preferred to a point above the curve. 
D) A point on the contract curve shows inequitable allocation of resources.

Question 6

Use the follwoing figure to answer the questions : Figure 6-1: shows the distribution of steak and wine between Monica and Hank. 
 
-A movement from A to J in Figure 6-1 would:

Accepted Answer

A) make both Hank and Monica better off. 
B) benefit Monica but harm Hank. 
C) benefit Monica and leave Hank no worse off. 
D) benefit Hank and leave Monica no worse off. 
A) make both Hank and Monica better off. 
B) benefit Monica but harm Hank. 
C) benefit Monica and leave Hank no worse off. 
D) benefit Hank and leave Monica no worse off.

Question 7

Figure 6-1 shows the distribution of steak and wine between Monica and Hank.
 
In Figure 6-1,points on the contract curve would include _____.

Accepted Answer

A) A and J 
B) J and K 
C) H and A 
D) K and L 
A) A and J 
B) J and K 
C) H and A 
D) K and L

Question 8

Figure 6-2 shows an Edgeworth box with the preferences of Kathy and Tom toward bread and candy.  
Refer to Figure 6-2.Relative to point D,Tim's marginal rate of substitution of cookies for milk [MRSCB] at point C is _____.

Accepted Answer

A) indeterminate 
B) 0 
C) the same as at point D 
D) larger,smaller or the same as at point D 
A) indeterminate 
B) 0 
C) the same as at point D 
D) larger,smaller or the same as at point D

Question 9

When the marginal rates of substitution differ,then:

Accepted Answer

A) mutually beneficial trade is not possible. 
B) the only way to make one consumer better off is to make the other worse off. 
C) it is impossible to find a point that makes both worse off. 
D) indifference curves intersect inside the Edgeworth box. 
A) mutually beneficial trade is not possible. 
B) the only way to make one consumer better off is to make the other worse off. 
C) it is impossible to find a point that makes both worse off. 
D) indifference curves intersect inside the Edgeworth box.

Question 10

When the marginal rates of substitution differ for two consumers:

Accepted Answer

A) indifference curves are tangent. 
B) mutually beneficial trade is possible. 
C) multiple prices for goods emerge. 
D) the consumer with steeper indifference curves is happier. 
A) indifference curves are tangent. 
B) mutually beneficial trade is possible. 
C) multiple prices for goods emerge. 
D) the consumer with steeper indifference curves is happier.

Question 11

If the MRS at an initial market basket between books [B] and Frisbees [F] is 6B/1F for Dave and 3B/1F for Diane,then:

Accepted Answer

A) Diane will accept 3 books from Dave for 1 Frisbee. 
B) Diane will accept 2 books from Dave for 1 Frisbee. 
C) mutually beneficial trades are not possible. 
D) Dave will offer 7 books for 1 Frisbee from Diane. 
A) Diane will accept 3 books from Dave for 1 Frisbee. 
B) Diane will accept 2 books from Dave for 1 Frisbee. 
C) mutually beneficial trades are not possible. 
D) Dave will offer 7 books for 1 Frisbee from Diane.

Question 12

Are non-price allocation mechanisms efficient? Explain.

Accepted Answer

Distributing goods according to rules ot

Question 13

The market equilibrium in a many-person setting is an:

Accepted Answer

A) efficient allocation even though the terms of exchange are indeterminate. 
B) efficient allocation because all traders face the same prices. 
C) inefficient allocation.Although each pair of traders may arrive at the contract curve,the marginal rates of substitution for different trading pairs may not be equal. 
D) inefficient allocation because not everyone likes the prices the market sets. 
A) efficient allocation even though the terms of exchange are indeterminate. 
B) efficient allocation because all traders face the same prices. 
C) inefficient allocation.Although each pair of traders may arrive at the contract curve,the marginal rates of substitution for different trading pairs may not be equal. 
D) inefficient allocation because not everyone likes the prices the market sets.

Question 14

An endowment refers to _____.

Accepted Answer

A) a set of property rights 
B) a diversified portfolio 
C) an initial distribution of goods 
D) a set of least-cost production possibilities 
A) a set of property rights 
B) a diversified portfolio 
C) an initial distribution of goods 
D) a set of least-cost production possibilities

Question 15

If through prior trade,the marginal rates of substitution for two goods between two people are equal,we say that the last trade:

Accepted Answer

A) made one person better off and the other worse off. 
B) was Pareto optimal. 
C) was Edgeworth final. 
D) was inefficient. 
A) made one person better off and the other worse off. 
B) was Pareto optimal. 
C) was Edgeworth final. 
D) was inefficient.

Question 16

Which of the following describes the equilibrium in an Edgeworth box?

Accepted Answer

A) Any point where the indifference curves of the two individuals intersect 
B) All points that show an equal distribution of the two goods between the two individuals 
C) Any point inside the box representing scope for mutually beneficial trade. 
D) A point of tangency between the indifference curves of the two individuals. 
A) Any point where the indifference curves of the two individuals intersect 
B) All points that show an equal distribution of the two goods between the two individuals 
C) Any point inside the box representing scope for mutually beneficial trade. 
D) A point of tangency between the indifference curves of the two individuals.

Question 17

A distribution of goods between Jack and Jill is efficient when:

Accepted Answer

A) Jack can be made better off without harming Jill. 
B) neither Jack nor Jill can be made better off without reducing total utility. 
C) Jill can be made better off without harming Jack. 
D) both Jack and Jill can be made better off without reducing total utility. 
A) Jack can be made better off without harming Jill. 
B) neither Jack nor Jill can be made better off without reducing total utility. 
C) Jill can be made better off without harming Jack. 
D) both Jack and Jill can be made better off without reducing total utility.

Question 18

use the following table to answer the questions : Table 6.1 lists five baskets of two goods,pizza and coke,for each of two consumers,Jane and Bill.
 
-In Table 6.1,if initially Jane has basket B and Bill has basket D,then we can conclude that a mutually beneficial trade _____.

Accepted Answer

A) does not exist 
B) requires that Jane sell Pizza and Bill sell Coke 
C) requires that Jane sell either Coke or Pizza 
D) requires that Jane sell Coke and Bill sell Pizza 
A) does not exist 
B) requires that Jane sell Pizza and Bill sell Coke 
C) requires that Jane sell either Coke or Pizza 
D) requires that Jane sell Coke and Bill sell Pizza

Question 19

Two goods are allocated inefficiently between consumers when _____.

Accepted Answer

A) both consumers will lose from any further trades 
B) it is impossible to make further trades and increase welfare 
C) further trade will make one consumer worse off and not affect the other 
D) welfare of both consumer can be increased with further trade 
A) both consumers will lose from any further trades 
B) it is impossible to make further trades and increase welfare 
C) further trade will make one consumer worse off and not affect the other 
D) welfare of both consumer can be increased with further trade

Question 20

A Pareto optimal distribution of goods is _____.

Accepted Answer

A) always efficient and equitable 
B) efficient but not always equitable 
C) not always efficient but equitable 
D) neither efficient nor inequitable 
A) always efficient and equitable 
B) efficient but not always equitable 
C) not always efficient but equitable 
D) neither efficient nor inequitable

When the marginal rates of substitution for two consumers differ:

Suppose,given their initial endowments of milk [M] and cookies [C],we know that Ashley's marginal rate of substitution of cookies for milk [MRS_CM] = 3M/6C,Bill's MRS_CM = 8M/8C,and Carol's MRS_CM = 5M/10C.Given this information we know that a mutually beneficial trade does not exist between:

How does a competitive exchange differ from a two-person model of exchange?

In choosing between points along the contract curve:

Which of the following statements about the contract curve is correct?

Use the follwoing figure to answer the questions : Figure 6-1: shows the distribution of steak and wine between Monica and Hank. -A movement from A to J in Figure 6-1 would:

Figure 6-1 shows the distribution of steak and wine between Monica and Hank. In Figure 6-1,points on the contract curve would include _____.

Figure 6-2 shows an Edgeworth box with the preferences of Kathy and Tom toward bread and candy. Refer to Figure 6-2.Relative to point D,Tim's marginal rate of substitution of cookies for milk [MRS_CB] at point C is _____.

When the marginal rates of substitution differ,then:

When the marginal rates of substitution differ for two consumers:

If the MRS at an initial market basket between books [B] and Frisbees [F] is 6B/1F for Dave and 3B/1F for Diane,then:

Are non-price allocation mechanisms efficient? Explain.

The market equilibrium in a many-person setting is an:

An endowment refers to _____.

If through prior trade,the marginal rates of substitution for two goods between two people are equal,we say that the last trade:

Which of the following describes the equilibrium in an Edgeworth box?

A distribution of goods between Jack and Jill is efficient when:

use the following table to answer the questions : Table 6.1 lists five baskets of two goods,pizza and coke,for each of two consumers,Jane and Bill. -In Table 6.1,if initially Jane has basket B and Bill has basket D,then we can conclude that a mutually beneficial trade _____.

Two goods are allocated inefficiently between consumers when _____.

A Pareto optimal distribution of goods is _____.

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

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

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 6: Exchange, Efficiency, and Prices

When the marginal rates of substitution for two consumers differ:

Suppose,given their initial endowments of milk [M] and cookies [C],we know that Ashley's marginal rate of substitution of cookies for milk [MRSCM] = 3M/6C,Bill's MRSCM = 8M/8C,and Carol's MRSCM = 5M/10C.Given this information we know that a mutually beneficial trade does not exist between:

How does a competitive exchange differ from a two-person model of exchange?

In choosing between points along the contract curve:

Which of the following statements about the contract curve is correct?

Use the follwoing figure to answer the questions : Figure 6-1: shows the distribution of steak and wine between Monica and Hank. -A movement from A to J in Figure 6-1 would:

Figure 6-1 shows the distribution of steak and wine between Monica and Hank. In Figure 6-1,points on the contract curve would include _____.

Figure 6-2 shows an Edgeworth box with the preferences of Kathy and Tom toward bread and candy. Refer to Figure 6-2.Relative to point D,Tim's marginal rate of substitution of cookies for milk [MRSCB] at point C is _____.

When the marginal rates of substitution differ,then:

When the marginal rates of substitution differ for two consumers:

If the MRS at an initial market basket between books [B] and Frisbees [F] is 6B/1F for Dave and 3B/1F for Diane,then:

Are non-price allocation mechanisms efficient? Explain.

The market equilibrium in a many-person setting is an:

An endowment refers to _____.

If through prior trade,the marginal rates of substitution for two goods between two people are equal,we say that the last trade:

Which of the following describes the equilibrium in an Edgeworth box?

A distribution of goods between Jack and Jill is efficient when:

use the following table to answer the questions : Table 6.1 lists five baskets of two goods,pizza and coke,for each of two consumers,Jane and Bill. -In Table 6.1,if initially Jane has basket B and Bill has basket D,then we can conclude that a mutually beneficial trade _____.

Two goods are allocated inefficiently between consumers when _____.

A Pareto optimal distribution of goods is _____.

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

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

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Suppose,given their initial endowments of milk [M] and cookies [C],we know that Ashley's marginal rate of substitution of cookies for milk [MRS_CM] = 3M/6C,Bill's MRS_CM = 8M/8C,and Carol's MRS_CM = 5M/10C.Given this information we know that a mutually beneficial trade does not exist between:

Figure 6-2 shows an Edgeworth box with the preferences of Kathy and Tom toward bread and candy. Refer to Figure 6-2.Relative to point D,Tim's marginal rate of substitution of cookies for milk [MRS_CB] at point C is _____.