Question 1

The slope of the PPF is equal to the:

Accepted Answer

A) marginal rate of technical substitution. 
B) marginal rate of substitution. 
C) marginal rate of transformation. 
D) marginal propensity to consume. 
A) marginal rate of technical substitution. 
B) marginal rate of substitution. 
C) marginal rate of transformation. 
D) marginal propensity to consume.

Question 2

A comparison between the resource allocation at different points on the welfare frontier is difficult because:

Accepted Answer

A) the shape of the welfare frontier is nonlinear. 
B) some of the allocations on the frontier are inefficient,and some are efficient. 
C) all the points on the welfare frontier are efficient. 
D) interpersonal utility comparisons cannot be made objectively. 
A) the shape of the welfare frontier is nonlinear. 
B) some of the allocations on the frontier are inefficient,and some are efficient. 
C) all the points on the welfare frontier are efficient. 
D) interpersonal utility comparisons cannot be made objectively.

Question 3

Suppose wine production is capital intensive and corn production is labor intensive.An increase in the demand for wine will cause:

Accepted Answer

A) an increase in the marginal cost of corn relative to the marginal cost of wine. 
B) an increase in the price of labor relative to the price of capital. 
C) a decrease in the marginal cost of capital. 
D) an increase in the price of capital relative to the price of labor. 
A) an increase in the marginal cost of corn relative to the marginal cost of wine. 
B) an increase in the price of labor relative to the price of capital. 
C) a decrease in the marginal cost of capital. 
D) an increase in the price of capital relative to the price of labor.

Question 4

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:

Accepted Answer

A) the price of good X is equal to the price of good Y. 
B) the marginal cost of producing good X is equal to the price of good X. 
C) the marginal rate of substitution between X and Y is equal to the marginal rate of transformation. 
D) the ratio of the marginal costs of the inputs is equal to the input price ratio. 
A) the price of good X is equal to the price of good Y. 
B) the marginal cost of producing good X is equal to the price of good X. 
C) the marginal rate of substitution between X and Y is equal to the marginal rate of transformation. 
D) the ratio of the marginal costs of the inputs is equal to the input price ratio.

Question 5

An exchange of goods between two individuals,Frank and Linda,will be mutually beneficial:

Accepted Answer

A) when their marginal rates of substitution differ. 
B) until they consume the same amount of each good. 
C) as long as each one thinks he or she can benefit at the other's expense. 
D) as long as they are on the contract curve. 
A) when their marginal rates of substitution differ. 
B) until they consume the same amount of each good. 
C) as long as each one thinks he or she can benefit at the other's expense. 
D) as long as they are on the contract curve.

Question 6

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 7

Any two goods are said to be efficiently distributed among the consumers if:

Accepted Answer

A) the ratio of the marginal utilities derived by each consumer from a certain amount of the two goods is equal to the ratio of their prices. 
B) the real income of the consumers are equal. 
C) every consumer consumes the same amount of the two goods. 
D) the marginal rate of substitution between any two goods is equal across consumers. 
A) the ratio of the marginal utilities derived by each consumer from a certain amount of the two goods is equal to the ratio of their prices. 
B) the real income of the consumers are equal. 
C) every consumer consumes the same amount of the two goods. 
D) the marginal rate of substitution between any two goods is equal across consumers.

Question 8

Which of the following is not a necessary condition for economic efficiency in competitive markets?

Accepted Answer

A) The marginal rates of substitution of all goods across all consumers are equal. 
B) The prices of productive inputs are the same across all productive uses. 
C) The marginal rates of technical substitution are the same across all firms and industries. 
D) The marginal rates of substitution of two goods across all consumers will equal the marginal rates of transformation of the two goods. 
A) The marginal rates of substitution of all goods across all consumers are equal. 
B) The prices of productive inputs are the same across all productive uses. 
C) The marginal rates of technical substitution are the same across all firms and industries. 
D) The marginal rates of substitution of two goods across all consumers will equal the marginal rates of transformation of the two goods.

Question 9

Perfect competition in product and factor markets results in:

Accepted Answer

A) maximum utility from the consumption of goods for all consumers. 
B) efficient production,distribution,and output level. 
C) efficient decision-making by policymakers. 
D) minimal voluntary exchange. 
A) maximum utility from the consumption of goods for all consumers. 
B) efficient production,distribution,and output level. 
C) efficient decision-making by policymakers. 
D) minimal voluntary exchange.

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,point C:

Accepted Answer

A) represents the resource allocation where total welfare is minimized. 
B) indicates an inefficient allocation of resources. 
C) is Pareto optimal. 
D) represents an efficient but undesirable allocation of resources. 
A) represents the resource allocation where total welfare is minimized. 
B) indicates an inefficient allocation of resources. 
C) is Pareto optimal. 
D) represents an efficient but undesirable allocation of resources.

Question 11

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

Accepted Answer

A) an efficient distribution of the output among consumers. 
B) efficient input allocations across the firms. 
C) all the points where competitive input markets could be in equilibrium. 
D) all the points where the marginal rates of substitution between consumers are equal. 
A) an efficient distribution of the output among consumers. 
B) efficient input allocations across the firms. 
C) all the points where competitive input markets could be in equilibrium. 
D) all the points where the marginal rates of substitution between consumers are equal.

Question 12

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 13

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:

Accepted Answer

A) land is being substituted for labor in production of both the commodities. 
B) the production possibility frontier is a 45-degree line from the origin. 
C) both industries are increasing cost industries. 
D) the proportion of land to labor used in producing the two goods is the same. 
A) land is being substituted for labor in production of both the commodities. 
B) the production possibility frontier is a 45-degree line from the origin. 
C) both industries are increasing cost industries. 
D) the proportion of land to labor used in producing the two goods is the same.

The slope of the PPF is equal to the:

A comparison between the resource allocation at different points on the welfare frontier is difficult because:

Suppose wine production is capital intensive and corn production is labor intensive.An increase in the demand for wine will cause:

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:

An exchange of goods between two individuals,Frank and Linda,will be mutually beneficial:

Partial equilibrium analysis is the study of:

Any two goods are said to be efficiently distributed among the consumers if:

Which of the following is not a necessary condition for economic efficiency in competitive markets?

Perfect competition in product and factor markets results in:

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,point C:

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

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:

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:

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 slope of the PPF is equal to the:

A comparison between the resource allocation at different points on the welfare frontier is difficult because:

Suppose wine production is capital intensive and corn production is labor intensive.An increase in the demand for wine will cause:

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:

An exchange of goods between two individuals,Frank and Linda,will be mutually beneficial:

Partial equilibrium analysis is the study of:

Any two goods are said to be efficiently distributed among the consumers if:

Which of the following is not a necessary condition for economic efficiency in competitive markets?

Perfect competition in product and factor markets results in:

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,point C:

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

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:

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:

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