Question 1

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.If the endowment is at point a,and Al has no ability to bargain,the final allocation will be at point

Accepted Answer

A)  a.
B)  b.
C)  c.
D)  d.

Question 2

The general-equilibrium analysis of a minimum wage applied to only some sectors of the economy suggests that

Accepted Answer

A)  workers in all sectors will face increased wages.
B)  some workers in the covered sectors will lose their jobs and remain unemployed.
C)  some workers originally employed in the covered sectors will move to the uncovered sectors,driving down wages in the uncovered sectors.
D)  all workers will be worse off.

Question 3

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.They can each produce any linear combination as well.Measuring food on the horizontal axis,the joint production possibility frontier

Accepted Answer

A)  will kink away from the origin at 20 units of food.
B)  will kink toward the origin at 20 units of food.
C)  will kink toward the origin at 10 units of food.
D)  will kink away from the origin at 10 units of food.

Question 4

The fact that at the competitive equilibrium nobody can be made better off without making someone else worse off implies that

Accepted Answer

A)  the equilibrium is pareto efficient.
B)  the equilibrium is not pareto efficient.
C)  the prices need to adjust further.
D)  further gains from trade are possible.

Question 5

General-equilibrium analysis is the study of

Accepted Answer

A)  how an equilibrium is determined in all markets simultaneously.
B)  how an equilibrium is determined in all closely related markets.
C)  the effects of a change in a market,and all spillover effects in all related markets.
D)  All of the above.

Question 6

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.They can each produce any linear combination as well.Measuring food on the horizontal axis,the joint production possibility frontier

Accepted Answer

A)  will have a slope of -3/4 over the entire frontier.
B)  will have a slope of -2 when less than 20 units of food are produced.
C)  will have a slope of -1 when less than 20 units of food are produced.
D)  will have a slope of -1/2 when less than 20 units of food are produced.

Question 7

The ability to produce a good at a lower opportunity cost than someone else is called

Accepted Answer

A)  competitive production.
B)  comparative advantage.
C)  selective advantage.
D)  absolute advantage.

Question 8

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Considering only the labeled points,point c is a possible equilibrium

Accepted Answer

A)  only if it is the endowment.
B)  only if point a is the endowment.
C)  if either point a or b is the endowment.
D)  only if point d is the endowment.

Question 9

A competitive equilibrium is not Pareto efficient if some members of society are unable to afford a necessary good.

Accepted Answer

A) True 
 B)False

Question 10

No clearly defined socially preferred outcome may result when majority voting on outcomes because

Accepted Answer

A)  often voters don't understand the outcomes.
B)  voting may violate the independence of irrelevant alternatives.
C)  voting may lead to incomplete preferences.
D)  voting may lead to non-transitive preference.

Question 11

If only two people are trading their endowments and no production is possible,then the equilibrium they reach will

Accepted Answer

A)  be on their contract curve.
B)  result in unequal marginal rates of substitution for the two people.
C)  result in one person being worse off than with his or her endowment.
D)  All of the above.

Question 12

Suppose the government currently places tariffs and/or other import restrictions on good X.Will imposing a tariff and/or trade restriction on good Y necessarily reduce overall social welfare for the economy?

Accepted Answer

No,this follows from the contrapositive ...

Question 13

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.The U.S.has a comparative advantage in producing

Accepted Answer

A)  food.
B)  clothing.
C)  food and clothing.
D)  neither good.

Question 14

Andrew and Sarah are two traders in a pure exchange economy with two goods,Bikes and TVs.Suppose Andrew has preferences given by:
U(B,T)= BT
where B is the number of bikes and T is the number of TVs.Sarah only derives utility from TV,so her utility function can be given by:
V(B,T)= T
Describe the contract curve.

Accepted Answer

The contract curve will be points where ...

Question 15

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Points a and b

Accepted Answer

A)  are most likely to reflect the final endowments after trading.
B)  are least likely to reflect the final endowments after trading.
C)  are equally likely to reflect the final endowments after trading than other points on the contract curve.
D)  are definitely not the final endowments after trading.

Question 16

Consider a society consisting of just a farmer and a tailor.The farmer has 30 units of food but no clothing.The tailor has 60 units of clothing but no food.Suppose each has the utility function U = F1/3C2/3.If the price of clothing is always $1,and the food price is currently $1,then we can conclude

Accepted Answer

A)  the market is at a competitive equilibrium.
B)  the price of food will drop towards a competitive equilibrium.
C)  the price of food will increase towards a competitive equilibrium.
D)  None of the above.

Question 17

Explain the logic behind the First Theorem of Welfare Economics.

Accepted Answer

A competitive market allows all the volu...

Question 18

When two people trade their initial endowments to a point on the contract curve,only the level of the endowments will determine the new allocation.

Accepted Answer

A) True 
 B)False

Question 19

As opposed to general-equilibrium analysis,partial equilibrium analysis looks

Accepted Answer

A)  at an equilibrium and changes to it in a single,isolated market.
B)  at how changes in one market effect other markets.
C)  at how equilibrium is determined in all markets simultaneously.
D)  at either price or quantity movements.

Question 20

Moving away from the contract curve will

Accepted Answer

A)  harm both parties.
B)  harm only one of the parties.
C)  harm at least one of the parties.
D)  harm neither of the parties.

Exam 10: General Equilibrium and Economic Welfare

The general-equilibrium analysis of a minimum wage applied to only some sectors of the economy suggests that

Correct Answer
verified

Correct Answer
verified

Suppose the government currently places tariffs and/or other import restrictions on good X.Will imposing a tariff and/or trade restriction on good Y necessarily reduce overall social welfare for the economy?

Correct Answer
verified
No,this follows from the contrapositive ...
View Answer

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.The U.S.has a comparative advantage in producing

Correct Answer
verified

Moving away from the contract curve will

Correct Answer
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No clearly defined socially preferred outcome may result when majority voting on outcomes because

Correct Answer
verified

Explain the logic behind the First Theorem of Welfare Economics.

Correct Answer
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A competitive market allows all the volu...
View Answer

The fact that at the competitive equilibrium nobody can be made better off without making someone else worse off implies that

Correct Answer
verified

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Points a and b

Correct Answer
verified

Correct Answer
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The contract curve will be points where ...
View Answer

A competitive equilibrium is not Pareto efficient if some members of society are unable to afford a necessary good.

Correct Answer
verified

If only two people are trading their endowments and no production is possible,then the equilibrium they reach will

Correct Answer
verified

When two people trade their initial endowments to a point on the contract curve,only the level of the endowments will determine the new allocation.

Correct Answer
verified

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Considering only the labeled points,point c is a possible equilibrium

Correct Answer
verified

As opposed to general-equilibrium analysis,partial equilibrium analysis looks

Correct Answer
verified

The ability to produce a good at a lower opportunity cost than someone else is called

Correct Answer
verified

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.They can each produce any linear combination as well.Measuring food on the horizontal axis,the joint production possibility frontier

Correct Answer
verified

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.If the endowment is at point a,and Al has no ability to bargain,the final allocation will be at point

Correct Answer
verified

General-equilibrium analysis is the study of

Correct Answer
verified

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.They can each produce any linear combination as well.Measuring food on the horizontal axis,the joint production possibility frontier

Correct Answer
verified

Exam 10: General Equilibrium and Economic Welfare

The general-equilibrium analysis of a minimum wage applied to only some sectors of the economy suggests that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose the government currently places tariffs and/or other import restrictions on good X.Will imposing a tariff and/or trade restriction on good Y necessarily reduce overall social welfare for the economy?

Correct AnswerverifiedNo,this follows from the contrapositive ...View AnswerShow Answer

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.The U.S.has a comparative advantage in producing

Correct AnswerverifiedShow Answer

Moving away from the contract curve will

Correct AnswerverifiedShow Answer

No clearly defined socially preferred outcome may result when majority voting on outcomes because

Correct AnswerverifiedShow Answer

Explain the logic behind the First Theorem of Welfare Economics.

Correct AnswerverifiedA competitive market allows all the volu...View AnswerShow Answer

The fact that at the competitive equilibrium nobody can be made better off without making someone else worse off implies that

Correct AnswerverifiedShow Answer

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Points a and b

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe contract curve will be points where ...View AnswerShow Answer

A competitive equilibrium is not Pareto efficient if some members of society are unable to afford a necessary good.

Correct AnswerverifiedShow Answer

If only two people are trading their endowments and no production is possible,then the equilibrium they reach will

Correct AnswerverifiedShow Answer

When two people trade their initial endowments to a point on the contract curve,only the level of the endowments will determine the new allocation.

Correct AnswerverifiedShow Answer

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.Considering only the labeled points,point c is a possible equilibrium

Correct AnswerverifiedShow Answer

As opposed to general-equilibrium analysis,partial equilibrium analysis looks

Correct AnswerverifiedShow Answer

The ability to produce a good at a lower opportunity cost than someone else is called

Correct AnswerverifiedShow Answer

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.They can each produce any linear combination as well.Measuring food on the horizontal axis,the joint production possibility frontier

Correct AnswerverifiedShow Answer

-The above figure depicts the Edgeworth box for two individuals,Al and Bruce.If the endowment is at point a,and Al has no ability to bargain,the final allocation will be at point

Correct AnswerverifiedShow Answer

General-equilibrium analysis is the study of

Correct AnswerverifiedShow Answer

-Suppose the production possibilities for two countries,producing either food or clothing,are shown in the above figure.They can each produce any linear combination as well.Measuring food on the horizontal axis,the joint production possibility frontier

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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No,this follows from the contrapositive ...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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A competitive market allows all the volu...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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The contract curve will be points where ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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