No clearly defined socially preferred outcome may result when majority voting on outcomes because 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. ANSWER D
Date: September 9th, 2020
A U.S. firm currently produces 200 units of output according to the production function q = L0.5K0.5 and faces input prices equal to wU.S. = rU.S = $11. Should the U.S. firm move their company abroad where they will face input prices equal to wabroad = $6.50 and rabroad = $15.00? A) Yes, because the […]
Date: September 9th, 2020
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
The production of cigarettes is highly automated; however, a worker is required to monitor each machine. Machines and workers do not interact with one another. Given this information, there are most likely A) economies of scale. B) economies of scope. C) constant returns to scale. D) increasing returns to scale. ANSWER C
Date: September 9th, 2020
Can consumption efficiency be achieved even if the efficient product mix is not achieved? What will be an ideal response? ANSWER Efficiency in consumption implies that all consumers have the same MRS. This can be achieved with any product mix. Thus, consumers can be as well off as possible for any given product mix. […]
Date: September 9th, 2020
If a production function is represented as q = LaKb, the long-run average cost curve will be horizontal as long as A) a + b = 0. B) a + b = 1. C) q > 0. D) L = K. ANSWER B
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
