Which of the following are reasons to consider the protective role of the state in an economic framework? a. The protection of rights is necessary for a functioning economy. b. The protection of rights comprises a large portion of the government spending. c. The protection of rights is necessary for international trade. d. Both a […]
Pareto optimality and Pareto superiority _____. a. concern only monetary gains and losses b. compare utility gains with utility losses c. do not require interpersonal utility comparisons d. are equivalent to the concept of economic efficiency ANSWER c
If the utility function (U) between food (F) and clothing (C) can be represented as U = , the marginal rate of substitution of clothing for food equals A) -C/F. B) -F/C. C) – . D) – . ANSWER A
Market exchange assumes that _____. a. there are no monopolies b. prisoner dilemmas are nonexistent c. parties to the exchange have well-defined property rights d. the public sector is failing its job ANSWER c
Employing utilitarianism as a measure of the public interest _____. a. is inconsistent with the concept of a social welfare function b. attempts to minimize the problems associated with market failure c. attempts to maximize total utility in a society d. avoids comparing individual’s utilities ANSWER c
Which of the following is not a drawback of utilitarianism? a. There exists no valid way to make interpersonal utility comparisons. b. Is incompatible with the Pareto criteria. c. It is not directly compatible with economic efficiency. d. It implies social arrangements that most people would find objectionable. ANSWER b
Utilitarianism is inconsistent with _____. a. the social welfare function b. cost-benefit analysis c. the Pareto criteria d. slavery ANSWER c
The key difference between the Pareto optimality and Pareto superiority is that ______. a. Pareto optimality is incompatible with utilitarianism, while Pareto superiority is compatible b. Pareto superiority is superior to Pareto optimality c. Pareto optimality requires interpersonal utility calculations, while Pareto superiority does not d. Pareto optimality refers to a state of the world […]
If government did not individual rights, the efficiency of a market economy_____. a. would decline b. would be about the same c. would increase d. could possibly decline or possibly increase ANSWER a
Government institutions that protect the rights of individuals are ______. a. the executive, legislative, and judicial branches of government b. federal, state, and local governments c. federal agencies such as OSHA, FEC, and the FCC d. police, military branches, and the court system ANSWER d
