Microeconomics

If only two people are trading their endowments and no production is p

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 […]

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Date: September 9th, 2020

Employing a general equilibrium approach, describe the effect of a new

Employing a general equilibrium approach, describe the effect of a new law that prohibits steel imports. What will be an ideal response?   ANSWER The initial effect is that the supply curve for steel shifts leftward. This raises the price of steel. The largest users of steel are the automobile industry, the construction industry, and […]

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Date: September 9th, 2020

If two or more markets are closely related, A) a partial equilibrium

If two or more markets are closely related, A) a partial equilibrium analysis will tend to overstate the price impact of a supply shock. B) a partial equilibrium analysis will tend to accurately predict the price impact of a supply shock. C) a partial equilibrium analysis will tend to understate the price impact of a […]

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Date: September 9th, 2020

When comparing partial equilibrium effects to general equilibrium effe

When comparing partial equilibrium effects to general equilibrium effects one can conclude that A) general equilibrium effects are always larger. B) partial equilibrium effects are always larger. C) the effects are of equal size. D) one cannot determine before the fact which effect is greater.   ANSWER D  

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Date: September 9th, 2020