Exam 6: Exchange, Efficiency, and Prices

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?

Consider a price-controlled good allocated to consumers on a first-come,first-served basis.Consumers end up waiting in line to purchase the good,and this:

use the following table to answer the questions : Table 6.1 lists five baskets of two goods,pizza and coke,for each of two consumers,Jane and Bill. -Jane and Bill are indifferent between all of these baskets.From the information in Table 6.1,you can conclude that MRS_PC is:

Along the contract curve _____.

Use the follwoing figure to answer the questions : Figure 6-1: shows the distribution of steak and wine between Monica and Hank. -Regarding the distribution of steak and wine in Figure 6-1,it is correct to say that:

What would you expect to see in the market for healthcare if the government decided that healthcare allocation would be done on the basis of altruism? Why?

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

Which of the following is the best example of a price taker market?

Suppose,given their initial endowments of milk [M] and cookies [C],you know that Ashley's marginal rate of substitution of cookies for milk [MRS_CM] = 3M/1C,Bill's MRS_CM = 8M/8C,and Carol's MRS_CM = 5M/10C.Given this information,a mutually beneficial trade:

use the following table to answer the questions : Table 6.1 lists five baskets of two goods,pizza and coke,for each of two consumers,Jane and Bill. -In Table 6.1,if initially Jane has basket D and Bill has basket A,then we can conclude that a mutually beneficial trade _____.

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:

Trade between two consumers will continue until it is no longer mutually beneficial.This does not imply that the final outcome will be a unique equilibrium because _____.

When the marginal rates of substitution [MRSs] for a given distribution of goods differ for two parties,which of the following is incorrect?

Nonprice rationing systems usually are:

Economic efficiency is sometimes referred to as _____.

Which of the following must be true for voluntary exchange to be mutually beneficial?

The initial endowment of goods:

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

Use the follwoing figure to answer the questions : Figure 6-1: shows the distribution of steak and wine between Monica and Hank. -In Figure 6-1,a movement from J to K:

Given an Edgeworth exchange box showing Homer's and Sandy's endowments of donuts and coffee: