Question 1

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 2

Two consumers Jim and Pam both have opera tickets and movie tickets.They wish to exchange tickets with each other.Jim's utility function can be expressed as  And Pam's as  
If you take maximizing Pam's utility as the objective function there are how many constraints to be accounted for?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 3

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 4

Use the follwoing figure to answer the questions : Figure 6-1: shows the distribution of steak and wine between Monica and Hank. 
 
-At point A in Figure 6-1,Monica's endowment of steak and wine is _____,respectively.

Accepted Answer

A) OHZ and OMS 
B) FG and ZV 
C) OMS and OMV 
D) OHF and ZV 
A) OHZ and OMS 
B) FG and ZV 
C) OMS and OMV 
D) OHF and ZV

Question 5

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 6

Which of the following is true of the contract curve?

Accepted Answer

A) All points on the contract curve are potential points of equilibrium but not all are efficient. 
B) All points on the contract curve are potential points of equilibrium and are efficient. 
C) A movement from one point on the contract curve to another reduces total welfare. 
D) The midpoint of the contract curve is the most efficient point because it is the most equitable. 
A) All points on the contract curve are potential points of equilibrium but not all are efficient. 
B) All points on the contract curve are potential points of equilibrium and are efficient. 
C) A movement from one point on the contract curve to another reduces total welfare. 
D) The midpoint of the contract curve is the most efficient point because it is the most equitable.

Question 7

Two consumers Jim and Pam both have opera tickets and movie tickets.They wish to exchange tickets with each other.Given their utility functions   and   
,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 8

Exchange is mutually beneficial when it is _____.

Accepted Answer

A) between poor economies 
B) voluntary 
C) controlled by the government 
D) ethical 
A) between poor economies 
B) voluntary 
C) controlled by the government 
D) ethical

Question 9

When the marginal rates of substitution for two consumers differ:

Accepted Answer

A) the indifference curves of the consumers are tangent. 
B) mutually beneficial trade cannot take place. 
C) consumers' bargaining skills will determine their position on the contract curve. 
D) trade will benefit one of the consumers and harm the other consumer. 
A) the indifference curves of the consumers are tangent. 
B) mutually beneficial trade cannot take place. 
C) consumers' bargaining skills will determine their position on the contract curve. 
D) trade will benefit one of the consumers and harm the other consumer.

Question 10

Two consumers Jim and Pam both have opera tickets and movie tickets.They wish to exchange tickets with each other.Jim's utility function can be expressed as  And Pam's as  
An efficient distribution of the fixed quantities of opera and movie tickets between Jim and Pam can be described as:

Accepted Answer

A) one that maximizes their combined level of utility 
B) one that maximizes the utility of Pam subject to the constraint that Jim's utility is held fixed at some level 
C) one that minimizes the utility of Jim subject to the constraint that Pam's utility is help fixed at some level 
D) simultaneously maximizes their individual levels of utility 
A) one that maximizes their combined level of utility 
B) one that maximizes the utility of Pam subject to the constraint that Jim's utility is held fixed at some level 
C) one that minimizes the utility of Jim subject to the constraint that Pam's utility is help fixed at some level 
D) simultaneously maximizes their individual levels of utility

Question 11

In an Edgeworth Box diagram,showing the distribution of two goods among two individuals:

Accepted Answer

A) there is one unique efficient point. 
B) there are many possible efficient points. 
C) if trade occurs among points along the contract curve it will leave both individuals better off. 
D) every point of intersection between the two individuals' indifference curves is efficient. 
A) there is one unique efficient point. 
B) there are many possible efficient points. 
C) if trade occurs among points along the contract curve it will leave both individuals better off. 
D) every point of intersection between the two individuals' indifference curves is efficient.

Question 12

What did the moral philosopher Adam Smith mean by his invisible hand theorem?

Accepted Answer

Each buyer and seller in a market behave

Question 13

Suppose Jen and Mike have initial distributions of movie theater passes and gallons of gas such that Jen's marginal utility of movie passes and gasoline are both 5,while Mike's marginal utility of movie passes and gasoline are 8 and 1 respectively.If movie theater passes are $9 each and gasoline is $3 per gallon,which of the following should occur?

Accepted Answer

A) Jen should trade gasoline for movie passes until her marginal utilities for both are 3 and 1 respectively. 
B) Mike should trade movie passes for gallons of gasoline until his marginal utilities for each is 2 and 3 respectively. 
C) Mike should trade gasoline to Jen for movie passes until the marginal utilities of both goods are the same between the two of them,and their marginal rates of substitution of movie passes for gasoline are both equal to 3. 
D) Mike should trade gasoline to Jen for movie passes until the marginal utility of gasoline for each is three times the marginal utility of movie passes for each. 
A) Jen should trade gasoline for movie passes until her marginal utilities for both are 3 and 1 respectively. 
B) Mike should trade movie passes for gallons of gasoline until his marginal utilities for each is 2 and 3 respectively. 
C) Mike should trade gasoline to Jen for movie passes until the marginal utilities of both goods are the same between the two of them,and their marginal rates of substitution of movie passes for gasoline are both equal to 3. 
D) Mike should trade gasoline to Jen for movie passes until the marginal utility of gasoline for each is three times the marginal utility of movie passes for each.

Question 14

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 15

Which of the following is true of the contract curve?

Accepted Answer

A) The contract curve is an enforceable agreement between parties to an exchange. 
B) The contract curve designates the potential trade possibilities along an indifference curve. 
C) The contract curve delineates all Pareto efficient allocations in an Edgeworth box. 
D) The contract curve defines the equitable exchanges anywhere in an Edgeworth box. 
A) The contract curve is an enforceable agreement between parties to an exchange. 
B) The contract curve designates the potential trade possibilities along an indifference curve. 
C) The contract curve delineates all Pareto efficient allocations in an Edgeworth box. 
D) The contract curve defines the equitable exchanges anywhere in an Edgeworth box.

Question 16

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 17

Compared to rationing by prices,non-price rationing by queuing:

Accepted Answer

A) is more efficient in that those who value the good or service most are more likely to get some. 
B) is less efficient in that waiting in line imposes a cost on those waiting in line,with no offsetting benefit to the seller. 
C) is less efficient in that in order to sell more of the good or service,suppliers will have to increase the quality of their product beyond what the consumer desires. 
D) is more efficient in that in order to sell more of the good or service,suppliers will have to increase the quality of their product beyond what the consumer desires. 
A) is more efficient in that those who value the good or service most are more likely to get some. 
B) is less efficient in that waiting in line imposes a cost on those waiting in line,with no offsetting benefit to the seller. 
C) is less efficient in that in order to sell more of the good or service,suppliers will have to increase the quality of their product beyond what the consumer desires. 
D) is more efficient in that in order to sell more of the good or service,suppliers will have to increase the quality of their product beyond what the consumer desires.

Question 18

Which of the following is most likely to be the most efficient method of allocation of a scarce resource?

Accepted Answer

A) A first-come,first-served policy 
B) Doling out coupons with the right to purchase a good 
C) Conducting a lottery for the right to purchase a good 
D) A competitive exchange 
A) A first-come,first-served policy 
B) Doling out coupons with the right to purchase a good 
C) Conducting a lottery for the right to purchase a good 
D) A competitive exchange

Question 19

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 20

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.

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

Two consumers Jim and Pam both have opera tickets and movie tickets.They wish to exchange tickets with each other.Jim's utility function can be expressed as And Pam's as If you take maximizing Pam's utility as the objective function there are how many constraints to be accounted for?

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

Use the follwoing figure to answer the questions : Figure 6-1: shows the distribution of steak and wine between Monica and Hank. -At point A in Figure 6-1,Monica's endowment of steak and wine is _____,respectively.

Which of the following is true of the contract curve?

Two consumers Jim and Pam both have opera tickets and movie tickets.They wish to exchange tickets with each other.Given their utility functions and ,show that their marginal rates of substitution need to be equal for any given distribution of tickets to be efficient.

Exchange is mutually beneficial when it is _____.

When the marginal rates of substitution for two consumers differ:

Two consumers Jim and Pam both have opera tickets and movie tickets.They wish to exchange tickets with each other.Jim's utility function can be expressed as And Pam's as An efficient distribution of the fixed quantities of opera and movie tickets between Jim and Pam can be described as:

In an Edgeworth Box diagram,showing the distribution of two goods among two individuals:

What did the moral philosopher Adam Smith mean by his invisible hand theorem?

Allowing prices to ration goods among consumers results in an:

Which of the following is true of the contract curve?

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?

Compared to rationing by prices,non-price rationing by queuing:

Which of the following is most likely to be the most efficient method of allocation of a scarce resource?

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:

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

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

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

Two consumers Jim and Pam both have opera tickets and movie tickets.They wish to exchange tickets with each other.Jim's utility function can be expressed as And Pam's as If you take maximizing Pam's utility as the objective function there are how many constraints to be accounted for?

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

Use the follwoing figure to answer the questions : Figure 6-1: shows the distribution of steak and wine between Monica and Hank. -At point A in Figure 6-1,Monica's endowment of steak and wine is _____,respectively.

Which of the following is true of the contract curve?

Two consumers Jim and Pam both have opera tickets and movie tickets.They wish to exchange tickets with each other.Given their utility functions and ,show that their marginal rates of substitution need to be equal for any given distribution of tickets to be efficient.

Exchange is mutually beneficial when it is _____.

When the marginal rates of substitution for two consumers differ:

Two consumers Jim and Pam both have opera tickets and movie tickets.They wish to exchange tickets with each other.Jim's utility function can be expressed as And Pam's as An efficient distribution of the fixed quantities of opera and movie tickets between Jim and Pam can be described as:

In an Edgeworth Box diagram,showing the distribution of two goods among two individuals:

What did the moral philosopher Adam Smith mean by his invisible hand theorem?

Allowing prices to ration goods among consumers results in an:

Which of the following is true of the contract curve?

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?

Compared to rationing by prices,non-price rationing by queuing:

Which of the following is most likely to be the most efficient method of allocation of a scarce resource?

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:

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

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