Microeconomics

Any competitive equilibrium is Pareto efficient because, with a compet

Any competitive equilibrium is Pareto efficient because, with a competitive equilibrium, A) the marginal rates of substitution are equal for all consumers. B) the price line is the contract curve. C) mutual gains from trade exist. D) the slope of the price line equals the ratio of the MRS for all consumers.   ANSWER A […]

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Date: September 9th, 2020

When two people trade their initial endowments to a point on the contr

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. Indicate whether the statement is true or false   ANSWER False. The respective bargaining abilities will also play a role in determining the final allocation.  

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Date: September 9th, 2020

Which of the following is (are) the typical assumption(s) used in the

Which of the following is (are) the typical assumption(s) used in the study of mutually beneficial trades? A) Each agent maximizes her utility. B) Agents have convex-shaped indifference curves. C) An agent’s utility is not interdependent of the other agents’ utilities. D) All of the above.   ANSWER D  

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Date: September 9th, 2020