Question 1

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) mutually beneficial trades are not possible. 
B) Diane will accept 4 books from Dave. 
C) Diane will accept 2 books from Dave. 
D) Dave will accept 2 Frisbees from Diane. 
A) mutually beneficial trades are not possible. 
B) Diane will accept 4 books from Dave. 
C) Diane will accept 2 books from Dave. 
D) Dave will accept 2 Frisbees from Diane. D

Question 2

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. B

Question 3

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. B

Question 4

Figure 6-2 shows an Edgeworth box with the preferences of Kathy and Tom toward bread and candy.
Figure 6-2  
-In Figure 6-2,a movement from D to A will:

Accepted Answer

A) benefit Tim but not affect Kathy. 
B) harm Tim but benefit Kathy. 
C) benefit Tim but harm Kathy. 
D) not affect Tim but benefit Kathy. 
A) benefit Tim but not affect Kathy. 
B) harm Tim but benefit Kathy. 
C) benefit Tim but harm Kathy. 
D) not affect Tim but benefit Kathy.

Question 5

In an Edgeworth exchange box diagram,if the two consumers' indifference curves intersect at point A,then:

Accepted Answer

A) point A is on the contract curve. 
B) the consumers' MRSs' differ. 
C) voluntary exchange will not change the distribution of goods between consumers. 
D) the contract curve is convex to the origin. 
A) point A is on the contract curve. 
B) the consumers' MRSs' differ. 
C) voluntary exchange will not change the distribution of goods between consumers. 
D) the contract curve is convex to the origin.

Question 6

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 7

Two goods are allocated efficiently between consumers when _____.

Accepted Answer

A) the quantities of goods they consume are equal 
B) the marginal rates of substitution between the two goods are the same for both consumers 
C) there can be further exchanges that will make both consumers better off 
D) redistribution makes one consumer better off at the expense of the other 
A) the quantities of goods they consume are equal 
B) the marginal rates of substitution between the two goods are the same for both consumers 
C) there can be further exchanges that will make both consumers better off 
D) redistribution makes one consumer better off at the expense of the other

Question 8

In Table 6.1,if initially Jane has basket D and Bill has basket A,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 9

Which of the following is true of an efficient distribution of two goods among two individuals?

Accepted Answer

A) The efficient distribution of goods is represented by a point off the contract curve. 
B) The individuals' marginal rates of substitution are not equal at an efficient distribution of goods. 
C) If the distribution of two goods is efficient,one person can be made better off without harming the other. 
D) The point of tangency between two indifference curves shows an efficient distribution of goods. 
A) The efficient distribution of goods is represented by a point off the contract curve. 
B) The individuals' marginal rates of substitution are not equal at an efficient distribution of goods. 
C) If the distribution of two goods is efficient,one person can be made better off without harming the other. 
D) The point of tangency between two indifference curves shows an efficient distribution of goods.

Question 10

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 11

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 12

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) trade can benefit Bill but not affect Terry. 
C) there can be no mutually beneficial trades. 
D) the potential to trade would depend on Bill's and Terry's bargaining skills. 
A) any trade between Bill and Terry will be mutually beneficial. 
B) trade can benefit Bill but not affect Terry. 
C) there can be no mutually beneficial trades. 
D) the potential to trade would depend on Bill's and Terry's bargaining skills.

Question 13

Are non-price allocation mechanisms efficient? Explain.

Accepted Answer

Distributing goods according to rules ot

Question 14

Let the total quantities of two goods,apples and oranges,be 100 and 200 respectively.Jill has an initial allocation of 50 apples and 100 oranges and considers the two goods perfect 1-for-1 substitutes.Jack considers apples and oranges perfect 1-for-1 complements.Using an Edgeworth box,describe the set of allocations which improve economic efficiency.

Accepted Answer

@#IMG-DLM& The initial allocation is at the center

Question 15

Which of the following is true of price taking firms?

Accepted Answer

A) They cannot affect price by haggling 
B) They face an inelastic demand curve 
C) They are also price takers in the input market 
D) They can not affect the market supply of a good 
A) They cannot affect price by haggling 
B) They face an inelastic demand curve 
C) They are also price takers in the input market 
D) They can not affect the market supply of a good

Question 16

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/1C;Bill's MRSCM = 8M/8C;and Carol's MRSCM = 5M/10C.Given this information we know that a mutually beneficial trade would involve Carol selling _____ to Bill and Ashley selling _____ to Bill.

Accepted Answer

A) milk;cookies 
B) milk;milk 
C) cookies;milk 
D) cookies;cookies 
A) milk;cookies 
B) milk;milk 
C) cookies;milk 
D) cookies;cookies

Question 17

Hurricane Ike led to landfall in Galveston,Texas in September 2008.One effect of Ike was to disrupt gasoline supplies,especially to stations in the southeast United States,many of which were unable to raise the price of their gasoline due to legislated anti-price gouging laws.Consequently,people waited for up to four hours for gasoline,provided they were able to find a station that had gasoline to sell.The effect of these anti-price gouging statutes is:

Accepted Answer

A) to make consumers better off since there is no cost to spend time waiting in line. 
B) to ensure that the marginal utility of gasoline across all consumers in a region is equal. 
C) to allocate gasoline so that those who value it most are able to get some. 
D) to allocate gasoline to those who value it less at the expense of those who value it more. 
A) to make consumers better off since there is no cost to spend time waiting in line. 
B) to ensure that the marginal utility of gasoline across all consumers in a region is equal. 
C) to allocate gasoline so that those who value it most are able to get some. 
D) to allocate gasoline to those who value it less at the expense of those who value it more.

Question 18

What are the dimensions of the Edgeworth box if Frank's endowment is 15 hamburgers and 20 soft drinks per month and Linda's endowment is 12 hamburgers and 25 soft drinks?

Accepted Answer

A) 27 hamburgers and 45 soft drinks 
B) 15 hamburgers and 20 soft drinks 
C) 15 hamburgers and 25 soft drinks 
D) 35 hamburgers and 37 soft drinks 
A) 27 hamburgers and 45 soft drinks 
B) 15 hamburgers and 20 soft drinks 
C) 15 hamburgers and 25 soft drinks 
D) 35 hamburgers and 37 soft drinks

Question 19

The vertical and horizontal dimensions of an Edgeworth box diagram are determined by:

Accepted Answer

A) the division of commodities between two consumers. 
B) the total quantities of the two commodities in question. 
C) the initial endowments of two commodities among two individuals. 
D) the willingness of consumers to exchange. 
A) the division of commodities between two consumers. 
B) the total quantities of the two commodities in question. 
C) the initial endowments of two commodities among two individuals. 
D) the willingness of consumers to exchange.

Question 20

Economic efficiency is sometimes referred to as _____.

Accepted Answer

A) social welfare 
B) Pareto optimality 
C) equity 
D) relative efficiency 
A) social welfare 
B) Pareto optimality 
C) equity 
D) relative efficiency

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:

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

When the marginal rates of substitution for two consumers differ:

Figure 6-2 shows an Edgeworth box with the preferences of Kathy and Tom toward bread and candy. Figure 6-2 -In Figure 6-2,a movement from D to A will:

In an Edgeworth exchange box diagram,if the two consumers' indifference curves intersect at point A,then:

In choosing between points along the contract curve:

Two goods are allocated efficiently between consumers when _____.

In Table 6.1,if initially Jane has basket D and Bill has basket A,then we can conclude that a mutually beneficial trade _____.

Which of the following is true of an efficient distribution of two goods among two individuals?

An endowment refers to _____.

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:

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:

Are non-price allocation mechanisms efficient? Explain.

Which of the following is true of price taking firms?

What are the dimensions of the Edgeworth box if Frank's endowment is 15 hamburgers and 20 soft drinks per month and Linda's endowment is 12 hamburgers and 25 soft drinks?

The vertical and horizontal dimensions of an Edgeworth box diagram are determined by:

Economic efficiency is sometimes referred to as _____.

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

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:

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

When the marginal rates of substitution for two consumers differ:

Figure 6-2 shows an Edgeworth box with the preferences of Kathy and Tom toward bread and candy. Figure 6-2 -In Figure 6-2,a movement from D to A will:

In an Edgeworth exchange box diagram,if the two consumers' indifference curves intersect at point A,then:

In choosing between points along the contract curve:

Two goods are allocated efficiently between consumers when _____.

In Table 6.1,if initially Jane has basket D and Bill has basket A,then we can conclude that a mutually beneficial trade _____.

Which of the following is true of an efficient distribution of two goods among two individuals?

An endowment refers to _____.

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:

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:

Are non-price allocation mechanisms efficient? Explain.

Which of the following is true of price taking firms?

What are the dimensions of the Edgeworth box if Frank's endowment is 15 hamburgers and 20 soft drinks per month and Linda's endowment is 12 hamburgers and 25 soft drinks?

The vertical and horizontal dimensions of an Edgeworth box diagram are determined by:

Economic efficiency is sometimes referred to as _____.

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: