At a given point in time, the Rawlsian welfare function gives equal weight to each individual’s utility. Indicate whether the statement is true or false ANSWER False. The Rawlsian welfare function gives a weight of 1 to the utility of the worst-off person and a weight of zero to the utilities of all others. […]
Date: September 9th, 2020
In the short run, the expansion path is A) horizontal. B) vertical. C) diagonal. D) indeterminate. ANSWER A
Date: September 9th, 2020
The Arrow impossibility theorem suggests A) democracies are doomed to fail in the long run. B) dictatorships are impossible in the long run. C) there is no universally applicable decision rule in a majority-rule democracy. D) there is no way to make democracy better than a dictatorship. ANSWER C
Date: September 9th, 2020
Which of the following statements best explains why long-run average cost is never greater than short-run average cost? A) In the long run, tangency of the isocost and isoquant is attainable. This is not necessarily true in the short run. B) In the long run, diseconomies of scale might not occur, but in the short […]
Date: September 9th, 2020
Equity and efficiency can be achieved simultaneously through competition. Indicate whether the statement is true or false ANSWER False. Equity involves value judgments and achieving it will usually result in lessened efficiency.
Date: September 9th, 2020
Suppose the production function is q = 12 L0.25K0.75. Determine the long-run capital-to-labor ratio (K/L) if the cost a unit of capital (r) is three times the cost of a unit of labor (w). What will be an ideal response? ANSWER The firm minimizes costs by setting MRTS = w/r. MRTS = MPL /MPLK […]
Date: September 9th, 2020
Most of the debates in the U.S. Congress center on A) efficiency concerns. B) equity concerns. C) both efficiency and equity equally. D) market inefficiency. ANSWER B
Date: September 9th, 2020
The end of slavery in the United States represented A) a large wealth transfer from the South to the North. B) a large wealth transfer from the future to the present. C) a large wealth transfer from Southern slave-holders to newly freed slaves. D) a nominal wealth transfer from Southern slave-holders to newly freed slaves. […]
Date: September 9th, 2020
Learning by doing will result in A) an upward sloping long-run average cost curve. B) a larger long-run marginal cost than long-run average cost. C) a rotation in the isocost curves. D) lower long-run costs than short-run costs. ANSWER D
Date: September 9th, 2020
Explain how a firm can have constant returns to scale in production and economies of scale in cost. What will be an ideal response? ANSWER A firm can have constant returns to scale in production at every output level. If the firm doubled all inputs the output would double. However, the firm may also […]
Date: September 9th, 2020
