Question 1

The three conditions for an efficient allocation of resources are fulfilled:

Accepted Answer

A) when the distribution of income is equal. 
B) whenever all consumers have the same willingness to pay for a good. 
C) if the product and input markets are competitive. 
D) only at the midpoint of the welfare frontier. 
A) when the distribution of income is equal. 
B) whenever all consumers have the same willingness to pay for a good. 
C) if the product and input markets are competitive. 
D) only at the midpoint of the welfare frontier.

Question 2

Which of the following is true of general equilibrium analysis?

Accepted Answer

A) It is useful for analyzing markets when changes are initiated in one market and repercussions are almost nonexistent. 
B) It considers the impact of a change in government policy on a market in isolation. 
C) It is useful for analyzing markets when changes are initiated in one market but they affect prices and output in other markets. 
D) It is useful for analyzing market conditions when there is no mutual interdependence among markets. 
A) It is useful for analyzing markets when changes are initiated in one market and repercussions are almost nonexistent. 
B) It considers the impact of a change in government policy on a market in isolation. 
C) It is useful for analyzing markets when changes are initiated in one market but they affect prices and output in other markets. 
D) It is useful for analyzing market conditions when there is no mutual interdependence among markets.

Question 3

If Good P and Good Q are perfect complements,explain with the help of suitable diagrams,the spillover and feedback effects of a per-unit tax on Good P.

Accepted Answer

Complementary goods (like tea and sugar)

Question 4

The length and height of an Edgeworth production box for any two industries:

Accepted Answer

A) have no economic meaning. 
B) must always be equal. 
C) indicate the amount of each input that is employed by the two industries. 
D) indicate the amount of an input that is employed by any two industries. 
A) have no economic meaning. 
B) must always be equal. 
C) indicate the amount of each input that is employed by the two industries. 
D) indicate the amount of an input that is employed by any two industries.

Question 5

In the absence of trade between a small country and the rest of the world,product X costs 1/3 as much per-unit as does product Y in the small country.However,in the world market X and Y trade at equal prices.If trade were now made possible between the small country and the rest of the world:

Accepted Answer

A) the small country would adjust by importing X. 
B) the small country would adjust by exporting X. 
C) the small country would end up importing both Y and X from the rest of the world. 
D) the rest of the world would not find it advantageous to trade with the small country. 
A) the small country would adjust by importing X. 
B) the small country would adjust by exporting X. 
C) the small country would end up importing both Y and X from the rest of the world. 
D) the rest of the world would not find it advantageous to trade with the small country.

Question 6

If the marginal rates of technical substitution between two firms are not equal,then:

Accepted Answer

A) the society is not on the production possibility frontier. 
B) the economy ends up producing on the contract curve of the economy's Edgeworth production box. 
C) goods are not allocated between consumers efficiently. 
D) the isoquants of the firms do not intersect each other. 
A) the society is not on the production possibility frontier. 
B) the economy ends up producing on the contract curve of the economy's Edgeworth production box. 
C) goods are not allocated between consumers efficiently. 
D) the isoquants of the firms do not intersect each other.

Question 7

What is the difference between partial and general equilibrium analysis?

Accepted Answer

Partial equilibrium analysis is the stud

Question 8

A general competitive equilibrium in input markets:

Accepted Answer

A) is attained at a point where the isoquants of the two goods intersect each other. 
B) involves an allocation of inputs such that the ratio of the input prices equals the ratio of the marginal revenue of the firms. 
C) is shown by an allocation of inputs that lies on the contract curve of an Edgeworth production box. 
D) is essentially related to an inefficient allocation of inputs between the production of any two commodities. 
A) is attained at a point where the isoquants of the two goods intersect each other. 
B) involves an allocation of inputs such that the ratio of the input prices equals the ratio of the marginal revenue of the firms. 
C) is shown by an allocation of inputs that lies on the contract curve of an Edgeworth production box. 
D) is essentially related to an inefficient allocation of inputs between the production of any two commodities.

Question 9

General equilibrium analysis is the study of:

Accepted Answer

A) how equilibrium is determined in a monopolistically competitive market. 
B) the determination of equilibrium in one factor market. 
C) the determination of equilibrium in a product market. 
D) how equilibrium is determined in all markets simultaneously. 
A) how equilibrium is determined in a monopolistically competitive market. 
B) the determination of equilibrium in one factor market. 
C) the determination of equilibrium in a product market. 
D) how equilibrium is determined in all markets simultaneously.

Question 10

Use the following figure to answer the question : Figure 19-1 : 
,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 11

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 12

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

Accepted Answer

A) the costs are being minimized. 
B) the output is being maximized. 
C) the economy is not operating on the production possibility frontier. 
D) the firms must be facing the same ratio of input prices. 
A) the costs are being minimized. 
B) the output is being maximized. 
C) the economy is not operating on the production possibility frontier. 
D) the firms must be facing the same ratio of input prices.

Question 13

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 14

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 15

The production possibility frontier [PPF] is derived by:

Accepted Answer

A) calculating the marginal rates of technical substitution from a contract curve. 
B) plotting output combinations from a contract curve. 
C) plotting input combinations from a contract curve. 
D) plotting input combinations from the Edgeworth box. 
A) calculating the marginal rates of technical substitution from a contract curve. 
B) plotting output combinations from a contract curve. 
C) plotting input combinations from a contract curve. 
D) plotting input combinations from the Edgeworth box.

Question 16

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:

Accepted Answer

A) any trade between Bill and Terry will be mutually beneficial. 
B) any trade between Bill and Terry will be beneficial for Bill but not for Terry. 
C) any trade between Bill and Terry will be beneficial for Terry but not for Bill. 
D) there can be no mutually beneficial trade between Terry and Bill. 
A) any trade between Bill and Terry will be mutually beneficial. 
B) any trade between Bill and Terry will be beneficial for Bill but not for Terry. 
C) any trade between Bill and Terry will be beneficial for Terry but not for Bill. 
D) there can be no mutually beneficial trade between Terry and Bill.

Question 17

Suppose an economy produces two goods,corn and wine.If the marginal rate of substitution between corn and wine for consumers is not equal to the marginal rate of transformation,it means that:

Accepted Answer

A) the quantity demanded does not equal the quantity supplied. 
B) the economy is operating on the production possibility frontier. 
C) both consumers could be made better off with a different distribution of the goods between them. 
D) the output mix is not efficient. 
A) the quantity demanded does not equal the quantity supplied. 
B) the economy is operating on the production possibility frontier. 
C) both consumers could be made better off with a different distribution of the goods between them. 
D) the output mix is not efficient.

Question 18

The PPF is concave to the origin because:

Accepted Answer

A) the marginal rate of transformation increases as we move down the PPF. 
B) the marginal rate of technical substitution increases as we move up the PPF. 
C) the marginal rate of technical substitution decreases as we move up the PPF. 
D) the opportunity cost of producing a commodity decreases with increase in its production. 
A) the marginal rate of transformation increases as we move down the PPF. 
B) the marginal rate of technical substitution increases as we move up the PPF. 
C) the marginal rate of technical substitution decreases as we move up the PPF. 
D) the opportunity cost of producing a commodity decreases with increase in its production.

Question 19

Which of the following can be considered as a feedback effect of an increase in the price of butter?

Accepted Answer

A) A decrease in the demand for margarine 
B) An increase in the demand for margarine 
C) An increase in the demand for butter 
D) A decrease in the price of margarine 
A) A decrease in the demand for margarine 
B) An increase in the demand for margarine 
C) An increase in the demand for butter 
D) A decrease in the price of margarine

Question 20

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.

Accepted Answer

@#IMG-DLM&_TB1826_00 
In the figure given above,PP

The three conditions for an efficient allocation of resources are fulfilled:

Which of the following is true of general equilibrium analysis?

If Good P and Good Q are perfect complements,explain with the help of suitable diagrams,the spillover and feedback effects of a per-unit tax on Good P.

The length and height of an Edgeworth production box for any two industries:

In the absence of trade between a small country and the rest of the world,product X costs 1/3 as much per-unit as does product Y in the small country.However,in the world market X and Y trade at equal prices.If trade were now made possible between the small country and the rest of the world:

If the marginal rates of technical substitution between two firms are not equal,then:

What is the difference between partial and general equilibrium analysis?

A general competitive equilibrium in input markets:

General equilibrium analysis is the study of:

Use the following figure to answer the question : Figure 19-1 : ,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:

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

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

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

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

The production possibility frontier [PPF] is derived by:

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:

Suppose an economy produces two goods,corn and wine.If the marginal rate of substitution between corn and wine for consumers is not equal to the marginal rate of transformation,it means that:

The PPF is concave to the origin because:

Which of the following can be considered as a feedback effect of an increase in the price of butter?

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.

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

Exam 19: General Equilibrium Analysis and Economic Efficiency

The three conditions for an efficient allocation of resources are fulfilled:

Which of the following is true of general equilibrium analysis?

If Good P and Good Q are perfect complements,explain with the help of suitable diagrams,the spillover and feedback effects of a per-unit tax on Good P.

The length and height of an Edgeworth production box for any two industries:

In the absence of trade between a small country and the rest of the world,product X costs 1/3 as much per-unit as does product Y in the small country.However,in the world market X and Y trade at equal prices.If trade were now made possible between the small country and the rest of the world:

If the marginal rates of technical substitution between two firms are not equal,then:

What is the difference between partial and general equilibrium analysis?

A general competitive equilibrium in input markets:

General equilibrium analysis is the study of:

Use the following figure to answer the question : Figure 19-1 : ,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:

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

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

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

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

The production possibility frontier [PPF] is derived by:

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:

Suppose an economy produces two goods,corn and wine.If the marginal rate of substitution between corn and wine for consumers is not equal to the marginal rate of transformation,it means that:

The PPF is concave to the origin because:

Which of the following can be considered as a feedback effect of an increase in the price of butter?

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.

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