Exam 21: The Problem of Exchange

Why would one agent of one identical pair form a coalition with two agents of another identical pair? Each agent

The requirement of trade where two parties must be interested in obtaining each other's goods is the double coincidence of wants.

A core curve is a curve in the Edgeworth box that traces out all the efficient trades.

Any point in an Edgeworth box defines a(n)

The set of efficient (Pareto-optimal) allocations that cannot be improved upon by any agent acting alone (in an individually rational manner) or by any group of agents acting together is called the

What is the implication of assuming that the agents in an economy are selfish and nonsatiated?

A graphical device that permits us to analyze the process of trade between two parties is called a(n)

You quarry granite. You go to the market to trade for limestone. But merchants are offering only sandstone. Society could solve this inefficiency of barter through the use of

A competitive equilibrium is a price vector stating ____________ for each good in the economy.

Prices that equate the supply and demand for each good are called

A curve in the Edgeworth box, which traces out all the efficient trades is called a(n)

To block is to prevent a trade from occurring by forming a coalition and offering each person in the coalition less than they receive from the current proposed trade.

An allocation of goods across people such that there are no other feasible allocations that could make all agents better off-or all agents equally well off and at least one strictly better off-than the proposed allocation is called an Edgeworth-optimal (efficient) allocation.

Does the contract curve define the set of equilibrium trades?

What are the characteristics implied by the existence of a competitive equilibrium?

In order for an efficient allocation in an Edgeworth box to exist, the indifference curves of the agents at the point of that allocation must

Replication is the process of

As we increase the size of an economy by adding more and more agents of each of our two types, the core will

Money is a medium that is widely acceptable in exchange for all goods and services and for the settlement of debts.

An individually rational trade offers a trader a higher level of utility than he or she could receive by not trading.