A firm produces output according to the production function, q = L4/3K1/2 and faces input prices equal to w = $20 and r = $80. What is the minimum cost of producing 1140 units of output? A) Cost = $780 B) Cost = $694 C) Cost = $2,071 D) Not enough information is given to […]
Date: September 9th, 2020
Suppose the U.S. can produce 10 units of food and 5 units of clothing (or any such linear combination) and Canada can produce 6 units of food and 4 units of clothing (or any such linear combination). If trade occurs between these two countries, which should produce more food and which more clothing? What will […]
Date: September 9th, 2020
If everyone’s utility is given equal weight and a change in resource allocation results in one person’s gain exceeding another person’s loss, we can say that the new allocation A) is Pareto superior to the original one. B) increases social welfare. C) decreases social welfare. D) is efficient. ANSWER B
Date: September 9th, 2020
If society were to maximize the utility of its worst-off member, the final allocation would most likely be A) relatively egalitarian. B) on the contract curve. C) Pareto efficient. D) one in which one person gets everything. ANSWER A
Date: September 9th, 2020
Suppose in a democratic society, all voters prefer choice G over choice B; however, when the two choices are presented along with a third choice, R, B wins the election. This violates the assumption of A) transitivity. B) non-dictatorship. C) independence of irrelevant alternatives. D) completeness. ANSWER C
Date: September 9th, 2020
Suppose an economy with two goods (candy and desk) and two identical agents that is in a competitive equilibrium. The marginal cost of a piece of candy is given by MCc = 4Qc and the marginal cost of a desk is MCd = 2 + Qd. The current production level of candy (Qc) is 4 […]
Date: September 9th, 2020
Suppose that productivity-enhancing technological progress affected more the production of chairs than the production of tables. This can be depicted using a production possibilities frontier in which A) only the chair axis intercept increases. B) only the table axis intercept decreases. C) both intercepts increase; however, the chair intercept increases by more. D) both intercepts […]
Date: September 9th, 2020
Suppose a society’s PPF for food (F) and clothing (C) can be written as 25 = F2 + C2. If all consumers have the same endowment and the same utility function Ui = Fi Ci, what is the efficient product mix of food and clothing? What will be an ideal response? ANSWER The […]
Date: September 9th, 2020
Assuming that w and r are both positive, if the long-run expansion path is horizontal, then A) MPK = 0. B) MRTS is a function of capital only. C) w = r. D) All of the above. ANSWER B
Date: September 9th, 2020
The long-run average cost curve may initially slope downward due to A) decreasing average fixed costs. B) increasing marginal returns. C) economies of scale. D) All of the above. ANSWER C
Date: September 9th, 2020
