If the average cost of producing a good is increasing as a firm produces more of the good, then which of the following must be TRUE? A) AFC is falling. B) AVC is rising. C) MC > AVC. D) All of the above. ANSWER D
Date: September 9th, 2020
The First Theorem of Welfare Economics can be expressed as A) the competitive equilibrium results only when no transactions costs exist. B) the competitive equilibrium does not involve reallocation of endowments. C) any efficient allocations can be achieved by competition. D) the competitive equilibrium is efficient. ANSWER D
Date: September 9th, 2020
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.
Date: September 9th, 2020
If average cost is positive, A) marginal cost equals average cost. B) marginal cost exceeds average cost. C) marginal cost is less average cost. D) Not enough information is given. ANSWER D
Date: September 9th, 2020
Suppose each worker must use only one shovel to dig a trench, and shovels are useless by themselves. In the short run, an increase in the price of shovels will result in A) fewer shovels being purchased. B) more workers being hired. C) a decrease in the firm’s output. D) no change in the firm’s […]
Date: September 9th, 2020
If average cost is decreasing, A) marginal cost equals average cost. B) marginal cost exceeds average cost. C) marginal cost is less than average cost. D) Not enough information is given. ANSWER C
Date: September 9th, 2020
Suppose the total cost of producing T-shirts can be represented as TC = 50 + 2q. Which of the following statements is TRUE at all levels of production? A) MC = AVC B) MC = AC C) MC > AFC D) All of the above. ANSWER A
Date: September 9th, 2020
Gains from trade will be possible as long as A) levels of utility differ. B) utility functions differ. C) marginal rates of substitution differ. D) endowments differ. ANSWER C
Date: September 9th, 2020
Gains from trade can only occur when A) marginal rates of substitutions differ across people. B) marginal rates of substitution are equal across people. C) indifference curves are convex. D) people find themselves on the contract curve. ANSWER A
Date: September 9th, 2020
If only two people are trading their endowments and no production is possible, then the equilibrium they reach will 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 […]
Date: September 9th, 2020
