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
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
Employers in a city must pay a specific tax of $t per hour worked by their employees while employers in the suburbs of the city do not have an employment tax. What does a general equilibrium approach predict regarding the wages and employment of both the city and suburban workers if the city decides to […]
Date: September 9th, 2020
Assume Congress holds a hearing on the impact of gasoline prices on the price of corn. Most likely, this hearing will be A) a partial equilibrium analysis. B) a general equilibrium analysis. C) about consumer rather than producer surplus. D) an analysis of efficiency. ANSWER A
Date: September 9th, 2020
Your company makes copper pipes. Over the years, you have collected a large inventory of raw copper. The production process involves melting the copper and shaping it into pipes. You also have a large stockpile of pennies. Suppose the price of copper rises so much that the copper in the penny becomes worth more than […]
Date: September 9th, 2020
