Question 1

Why might asymmetric information contribute to the problem of a market failure?

Accepted Answer

The answer of Why might asymmetric information contribute to the...

Question 2

A utility possibilities frontier need not incorporate the utility of every individual.

Accepted Answer

A) True 
 B)False

Question 3

General equilibrium refers to

Accepted Answer

A) examining markets without specific information. 
B) finding equilibrium from general information. 
C) pricing goods at their shadow price. 
D) all of the above. 
E) none of the above.

Question 4

The Second Fundamental Theorem of Welfare Economics requires

Accepted Answer

A) that indifference curves be convex to the origin. 
B) that isoquants be concave to the origin. 
C) that there are no set prices for Pareto efficient allocations. 
D) that production be twice as large as consumption. 
E) all of the above.

Question 5

Merit goods

Accepted Answer

A) are provided for those who behave themselves and play nice. 
B) should be provided even if there is no demand for them. 
C) increase in costs along with demand. 
D) do none of the above.

Question 6

In equilibrium,the MRT should not equal the MRS of all individuals.

Accepted Answer

A) True 
 B)False

Question 7

The contract curve is the collection of points where utility curves are tangent in the Edgeworth box.

Accepted Answer

A) True 
 B)False

Question 8

A social welfare function

Accepted Answer

A) is a function made by the Department of Welfare. 
B) is a function that shows that the utilities of society are incorporated into society's well?being. 
C) can never be derived numerically. 
D) is all of the above.

Question 9

Points on the utility possibility frontier are

Accepted Answer

A) inefficient. 
B) points of incomplete preferences. 
C) not producible. 
D) Pareto.

Question 10

Points outside the production possibility frontier are

Accepted Answer

A) producible. 
B) endowment points. 
C) consumer equilibrium points. 
D) unattainable.

Question 11

If James has a utility curve characterized by the function of U = 2X³Y²,what is his marginal rate of substitution between goods X and Y?

Accepted Answer

The answer of If James has a utility curve characterized...

Question 12

Imagine a simple economy with only two people,Leroy and Percy.If the Social Welfare Function is W = U_L + U_P,and the Utility Possibilities Frontier is UPF = U_L + 2U_P,what will be the societal optimum?

Accepted Answer

The answer of Imagine a simple economy with only two...

Exam 3: Tools of Normative Analysis

Why might asymmetric information contribute to the problem of a market failure?

A utility possibilities frontier need not incorporate the utility of every individual.

General equilibrium refers to

The Second Fundamental Theorem of Welfare Economics requires

Merit goods

In equilibrium,the MRT should not equal the MRS of all individuals.

The contract curve is the collection of points where utility curves are tangent in the Edgeworth box.

A social welfare function

Points on the utility possibility frontier are

Points outside the production possibility frontier are

If James has a utility curve characterized by the function of U = 2X3 Y2,what is his marginal rate of substitution between goods X and Y?

Imagine a simple economy with only two people,Leroy and Percy.If the Social Welfare Function is W = UL + UP,and the Utility Possibilities Frontier is UPF = UL + 2UP,what will be the societal optimum?

If James has a utility curve characterized by the function of U = 2X³Y²,what is his marginal rate of substitution between goods X and Y?

Imagine a simple economy with only two people,Leroy and Percy.If the Social Welfare Function is W = U_L + U_P,and the Utility Possibilities Frontier is UPF = U_L + 2U_P,what will be the societal optimum?