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
When two people are on the contract curve, the allocation of goods A) cannot be improved. B) is Pareto efficient. C) is such that neither individual can be made better off without making the other worse off. D) All of the above. ANSWER D
Date: September 9th, 2020
Joe and Rita each have some cookies and milk. Joe is willing to trade 2 cookies for an additional ounce of milk. Rita is willing to trade 4 cookies for an additional ounce of milk. If trading is possible, which of the following is most likely to occur? A) Joe will give some milk to […]
Date: September 9th, 2020
There are two closely related crops, X and Y, with the following demand functions QX = 180 – 2PX + PY and QY = 150 + PX – PY where QX is the quantity of X, PX is the price of X, QY is the quantity of Y, and PY is the price of Y. […]
Date: September 9th, 2020
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 […]
Date: September 9th, 2020
If firms are producing efficiently, but consumers can reallocate goods amongst themselves, A) the equilibrium is not efficient. B) the equilibrium is efficient. C) the consumers are behaving irrationally. D) the firms are too greedy. ANSWER A
Date: September 9th, 2020
