Question 1

Allowing prices to ration goods among consumers results in an:

Accepted Answer

A) inefficient distribution of goods because the wealthy get the highest quantity. 
B) efficient distribution of goods because goods go to those who value them the most. 
C) inefficient distribution of goods because goods go to those who value them the most. 
D) efficient distribution of goods because the wealthy consumers are unable to buy the quantity they wish. 
A) inefficient distribution of goods because the wealthy get the highest quantity. 
B) efficient distribution of goods because goods go to those who value them the most. 
C) inefficient distribution of goods because goods go to those who value them the most. 
D) efficient distribution of goods because the wealthy consumers are unable to buy the quantity they wish.

Question 2

From the information in Table 6.1,you can conclude that MRSPC is:

Accepted Answer

A) constant for Jane but not for Bill 
B) constant for both Jane and Bill 
C) constant for Bill but not for Jane 
D) not constant for both Jane and Bill 
A) constant for Jane but not for Bill 
B) constant for both Jane and Bill 
C) constant for Bill but not for Jane 
D) not constant for both Jane and Bill

Question 3

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 Ashley selling ______ to Carol and Bill selling ______ to Ashley.

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 4

Figure 6-1 shows the distribution of steak and wine between Monica and Hank.
Figure 6-1
ref SHAPE \* MERGEFORMAT  
-Regarding the distribution of steak and wine in Figure 6-1,it is correct to say that:

Accepted Answer

A) at A,the marginal rates of substitution [MRSs] between steak and wine differ for Hank and Monica. 
B) at A,Hank and Monica will engage in further trade which will eventually make one of them worse off. 
C) at H,Monica is better off at Hank's expense. 
D) trade between Monica and Hank will eventually lead them to the unique efficient outcome K. 
A) at A,the marginal rates of substitution [MRSs] between steak and wine differ for Hank and Monica. 
B) at A,Hank and Monica will engage in further trade which will eventually make one of them worse off. 
C) at H,Monica is better off at Hank's expense. 
D) trade between Monica and Hank will eventually lead them to the unique efficient outcome K.

Question 5

The market equilibrium in a many-person setting is an:

Accepted Answer

A) efficient allocation even though the terms of exchange are indeterminate. 
B) efficient allocation because all traders face the same prices. 
C) inefficient allocation.Although each pair of traders may arrive at the contract curve,the marginal rates of substitution for different trading pairs may not be equal. 
D) inefficient allocation because not everyone likes the prices the market sets. 
A) efficient allocation even though the terms of exchange are indeterminate. 
B) efficient allocation because all traders face the same prices. 
C) inefficient allocation.Although each pair of traders may arrive at the contract curve,the marginal rates of substitution for different trading pairs may not be equal. 
D) inefficient allocation because not everyone likes the prices the market sets.

Question 6

A competitive equilibrium:

Accepted Answer

A) results in an efficient and equitable allocation. 
B) is characterized by equal marginal rates of substitution. 
C) occurs when resources are equally allocated between different producers. 
D) is not necessarily utility-maximizing. 
A) results in an efficient and equitable allocation. 
B) is characterized by equal marginal rates of substitution. 
C) occurs when resources are equally allocated between different producers. 
D) is not necessarily utility-maximizing.

Question 7

Qualifications to the tenet that voluntary exchange is mutually beneficial include the criterion that _____.

Accepted Answer

A) the individual's preferences will not change during the transaction 
B) the outcome of the exchange must be equitable as well as efficient 
C) one individual is made better off at the expense of the other 
D) benefit is evaluated after the transaction 
A) the individual's preferences will not change during the transaction 
B) the outcome of the exchange must be equitable as well as efficient 
C) one individual is made better off at the expense of the other 
D) benefit is evaluated after the transaction

Question 8

Two consumers Jim and Pam both have opera tickets and movie tickets.They wish to exchange tickets with each other.Given their utility functions $$U ^ { I } \left( O _ { J } , M _ { J } \right)$$ and $$U ^ { P } \left( O _ { P } , M _ { P } \right)$$ ,show that their marginal rates of substitution need to be equal for any given distribution of tickets to be efficient.

Accepted Answer

For a distribution to be efficient,it ha

Question 9

At their present allocation of hot chocolate and marshmallows,Tom's marginal utility from hot chocolate is 10 and for marshmallows it's 2,while Cara's marginal utility is 4 and 12,respectively.How can Tom and Cara make each other better off?

Accepted Answer

A) Tom can consume six more marshmallows so that his marginal utility equals that of Cara. 
B) Cara can provide Tom some of both hot chocolate and marshmallows in order to equalize their marginal values for both goods. 
C) Tom can trade some hot chocolate with Cara in exchange for some marshmallows. 
D) Tom can trade marshmallows with Cara for some hot chocolate. 
A) Tom can consume six more marshmallows so that his marginal utility equals that of Cara. 
B) Cara can provide Tom some of both hot chocolate and marshmallows in order to equalize their marginal values for both goods. 
C) Tom can trade some hot chocolate with Cara in exchange for some marshmallows. 
D) Tom can trade marshmallows with Cara for some hot chocolate.

Question 10

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) Diane will accept 3 books from Dave for 1 Frisbee. 
B) Diane will accept 2 books from Dave for 1 Frisbee. 
C) mutually beneficial trades are not possible. 
D) Dave will offer 7 books for 1 Frisbee from Diane. 
A) Diane will accept 3 books from Dave for 1 Frisbee. 
B) Diane will accept 2 books from Dave for 1 Frisbee. 
C) mutually beneficial trades are not possible. 
D) Dave will offer 7 books for 1 Frisbee from Diane.

Question 11

Assume that Jeff and Jane both consume only two goods,burgers and soft drinks.Jeff is 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:

Accepted Answer

A) Jeff should trade soft drinks for burgers. 
B) Jeff would be willing to trade,but Jane would not. 
C) Jeff should trade burgers for soft drinks. 
D) Jane would be willing to trade,but Jeff would not. 
A) Jeff should trade soft drinks for burgers. 
B) Jeff would be willing to trade,but Jane would not. 
C) Jeff should trade burgers for soft drinks. 
D) Jane would be willing to trade,but Jeff would not.

Question 12

Figure 6-2 shows an Edgeworth box with the preferences of Kathy and Tom toward bread and candy.
Figure 6-2  
-Refer to the Edgeworth box in Figure 6-2.Which of the following statements is true?

Accepted Answer

A) Point A is more efficient than point E. 
B) Point E is more efficient than point C. 
C) Point C is more efficient than point B. 
D) Point B is more efficient than point A. 
A) Point A is more efficient than point E. 
B) Point E is more efficient than point C. 
C) Point C is more efficient than point B. 
D) Point B is more efficient than point A.

Question 13

Along the contract curve _____.

Accepted Answer

A) every point is equitable 
B) two individuals have equal marginal rates of substitution 
C) any trade that benefits one person will necessarily benefit the other 
D) indifference curves of consumers are intersecting 
A) every point is equitable 
B) two individuals have equal marginal rates of substitution 
C) any trade that benefits one person will necessarily benefit the other 
D) indifference curves of consumers are intersecting

Question 14

Two goods are said to be allocated efficiently between consumers when _____.

Accepted Answer

A) both goods give the consumers the same total utility 
B) there are no trades that will make one of the consumers strictly worse off 
C) one consumer is as well off as possible,given the utility of the other consumer 
D) both the consumers are maximizing utility 
A) both goods give the consumers the same total utility 
B) there are no trades that will make one of the consumers strictly worse off 
C) one consumer is as well off as possible,given the utility of the other consumer 
D) both the consumers are maximizing utility

Question 15

A secondary market for the resale of baseball tickets,known as scalping:

Accepted Answer

A) prevents mutually beneficial exchanges. 
B) is likely to increase revenues for the team owner since season ticket holders can resell their tickets instead of not attending a game. 
C) is likely to increase season-ticket sales since some people who wouldn't have otherwise seen the game,will buy tickets. 
D) lowers the ability of the season ticket holders to attend a baseball game with their families. 
A) prevents mutually beneficial exchanges. 
B) is likely to increase revenues for the team owner since season ticket holders can resell their tickets instead of not attending a game. 
C) is likely to increase season-ticket sales since some people who wouldn't have otherwise seen the game,will buy tickets. 
D) lowers the ability of the season ticket holders to attend a baseball game with their families.

Question 16

A Pareto optimal distribution of goods is _____.

Accepted Answer

A) always efficient and equitable 
B) efficient but not always equitable 
C) not always efficient but equitable 
D) neither efficient nor inequitable 
A) always efficient and equitable 
B) efficient but not always equitable 
C) not always efficient but equitable 
D) neither efficient nor inequitable

Question 17

Two goods are allocated inefficiently between consumers when _____.

Accepted Answer

A) both consumers will lose from any further trades 
B) it is impossible to make further trades and increase welfare 
C) further trade will make one consumer worse off and not affect the other 
D) welfare of both consumer can be increased with further trade 
A) both consumers will lose from any further trades 
B) it is impossible to make further trades and increase welfare 
C) further trade will make one consumer worse off and not affect the other 
D) welfare of both consumer can be increased with further trade

Question 18

(
A)What is meant by Pareto efficiency?

Accepted Answer

The Pareto criterion for efficiency stat

Question 19

In Table 6.1,if initially Jane has basket B and Bill has basket D,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 20

A ration scheme using coupons could lead to an efficient outcome if _____.

Accepted Answer

A) consumers could trade coupons with each other 
B) the government allocates coupons among consumers 
C) the coupons were replaced with money 
D) the number of coupons in circulation was limited 
A) consumers could trade coupons with each other 
B) the government allocates coupons among consumers 
C) the coupons were replaced with money 
D) the number of coupons in circulation was limited

Allowing prices to ration goods among consumers results in an:

From the information in Table 6.1,you can conclude that MRS_PC is:

The market equilibrium in a many-person setting is an:

A competitive equilibrium:

Qualifications to the tenet that voluntary exchange is mutually beneficial include the criterion that _____.

At their present allocation of hot chocolate and marshmallows,Tom's marginal utility from hot chocolate is 10 and for marshmallows it's 2,while Cara's marginal utility is 4 and 12,respectively.How can Tom and Cara make each other better off?

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:

Assume that Jeff and Jane both consume only two goods,burgers and soft drinks.Jeff is 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:

Figure 6-2 shows an Edgeworth box with the preferences of Kathy and Tom toward bread and candy. Figure 6-2 -Refer to the Edgeworth box in Figure 6-2.Which of the following statements is true?

Along the contract curve _____.

Two goods are said to be allocated efficiently between consumers when _____.

A secondary market for the resale of baseball tickets,known as scalping:

A Pareto optimal distribution of goods is _____.

Two goods are allocated inefficiently between consumers when _____.

( A)What is meant by Pareto efficiency?

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

A ration scheme using coupons could lead to an efficient outcome if _____.

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

Allowing prices to ration goods among consumers results in an:

From the information in Table 6.1,you can conclude that MRSPC is:

Figure 6-1 shows the distribution of steak and wine between Monica and Hank. Figure 6-1 ref SHAPE \* MERGEFORMAT -Regarding the distribution of steak and wine in Figure 6-1,it is correct to say that:

The market equilibrium in a many-person setting is an:

A competitive equilibrium:

Qualifications to the tenet that voluntary exchange is mutually beneficial include the criterion that _____.

At their present allocation of hot chocolate and marshmallows,Tom's marginal utility from hot chocolate is 10 and for marshmallows it's 2,while Cara's marginal utility is 4 and 12,respectively.How can Tom and Cara make each other better off?

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:

Assume that Jeff and Jane both consume only two goods,burgers and soft drinks.Jeff is 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:

Figure 6-2 shows an Edgeworth box with the preferences of Kathy and Tom toward bread and candy. Figure 6-2 -Refer to the Edgeworth box in Figure 6-2.Which of the following statements is true?

Along the contract curve _____.

Two goods are said to be allocated efficiently between consumers when _____.

A secondary market for the resale of baseball tickets,known as scalping:

A Pareto optimal distribution of goods is _____.

Two goods are allocated inefficiently between consumers when _____.

( A)What is meant by Pareto efficiency?

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

A ration scheme using coupons could lead to an efficient outcome if _____.

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

From the information in Table 6.1,you can conclude that MRS_PC is: