Exam 16: General Equilibrium Theory

Let the demand and supply for two linked products,say corn and soy,be the following: Q_c^d= 12 - 2p_c + p_s; Q_c^s = 4+p_c; Q_s^d = 6-4p_s + p_c; Q_s^s = 4 + p_s.The superscript refers to "demand" (d) or "supply" (s) and the subscript refers to corn (c) or soy (s).Now,suppose that the demand for corn shifts to Q_c^d = 18 - 2p_c + p_s.If the price of soy does not adjust in response to this shift,what is the new equilibrium price of corn?

Let the demand and supply for two linked products,say corn and soy,be the following: Q_c^d= 12 - 2p_c + p_s; Q_c^s = 4+p_c; Q_s^d = 6-4p_s + p_c; Q_s^s = 4 + p_s.The superscript refers to "demand" (d) or "supply" (s) and the subscript refers to corn (c) or soy (s).What are the equilibrium prices of corn and soy?

The input contract curve represents:

If we consider two spices,cumin and paprika,to be substitutes,a drop in the supply of paprika,will probably cause an increase in the price of

Exchange efficiency,input efficiency,and substitution efficiency are satisfied when ______________________.This result is known as ______________.

Two individuals,A and B,consume two goods, and .Together they have 4 units of and 8 units of .For Consumer A the and for Consumer B the .Which of the following allocations is an efficient allocation of goods and ?

The Production Possibilities Frontier represents

The significance of the Second Fundamental Theorem of Welfare Economics is that:

Two individuals,A and B,consume two goods, and Consumer A initially has 3 units of and 2 units of Consumer B initially has 5 units of and 6 units of .Also,for Consumer A the and for Consumer B the .Does this initial allocation of and represent an efficient allocation?

Identify the truthfulness of the following statements. I.If country A has a comparative advantage over country B in the production of good X,then the opportunity cost of producing good X in country A is lower than in country B. II.If country A has a comparative advantage over country B in the production of good X,then country A cannot gain from trade with country B.

Which of the following statements is incorrect?

Consider point A in the Edgeworth box.Does point A satisfy the condition of exchange efficiency?

Firm X produces output and Firm Y produces output using capital,K,and labor,L,as inputs.Firm X has marginal rate of technical substitution MRTS^x_K,L = K_x/L_x,while firm Y has marginal rate of technical substitution MRTS^y_K,L = 9K_y/L_y. Which of the following allocations satisfies input efficiency?

The marginal rate of transformation where goods X and Y are produced by an economy using capital and labor as inputs equals

If each of the two players represented in an Edgeworth box has Cobb-Douglas indifference curves,then the contract curve will be

Let the demand and supply for two linked products,say corn and soy,be the following: Q_c^d= 12 - 2p_c + p_s; Q_c^s = 4+p_c; Q_s^d = 6-4p_s + p_c; Q_s^s = 4 + p_s.The superscript refers to "demand" (d) or "supply" (s) and the subscript refers to corn (c) or soy (s).Now,suppose that the demand for corn shifts to Q_c^d = 18 - 2p_c + p_s.If we conduct a partial equilibrium analysis of the corn market,taking the price of soy as given,rather than a general equilibrium analysis,allowing the price of soy to change,we:

When a fixed stock of consumption goods cannot be reallocated among consumers in an economy without making at least some consumers worse off,the allocation satisfies

**Reference: Use the following table to answer the next three questions (42-44). -*Which of the following statements about the table above is correct?

When a fixed stock of inputs cannot be reallocated among firms in an economy without reducing the output of at least one of the goods that is produced in the economy,the allocation satisfies.

An allocation of goods and inputs in an economy is economically efficient if