The term “born with a silver spoon in his mouth” mistakenly implies A) only monetary endowments allow one to trade with others. B) only the wealthy are strong negotiators in trade. C) endowments are physical. D) endowments differ. ANSWER C
Date: September 9th, 2020
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
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
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
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
Joe and Rita each have some milk and cookies (Milk on the horizontal axis). Joe’s MRS of cookies for milk is 2. Rita’s MRS of cookies for milk is 4. Which of the following statements is TRUE? A) No gains from trade are possible. B) Both Rita and Joe can be made better off if […]
Date: September 9th, 2020
When considering trade of two goods between two people, if one person has all the endowment of both goods, this allocation A) is never on a contract curve. B) will result in trade so each person has all of one good. C) will result in trade to a equal division of goods between the two […]
Date: September 9th, 2020
Variable costs are A) a production expense that does not vary with output. B) a production expense that changes with the quantity of output produced. C) equal to total cost divided by the units of output produced. D) the amount by which a firm’s cost changes if the firm produces one more unit of output. […]
Date: September 9th, 2020
Gains from trade will be possible as long as A) people have different endowments. B) people place different values on some goods. C) marginal rates of substitution are equal across individuals. D) excess supply equals excess demand. ANSWER B
Date: September 9th, 2020
