ECON 203 Quiz: study questions for quiz 4

362 views8 pages

erinturtle274

11 Apr 2016

School

Department

Course

Professor

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

This is a direct result of a lack of certain economically ideal factors, which prevents equilibrium. 4. 2 in a two person, two good consumption edgeworth box diagram, consider a distribution that does not lie on the contract curve. If the two individuals are initially placed at that distribution, explain why they will begin to trade with each other and continue to trade until they reach a distribution on the contract curve. They are willing to trade because both will be better off and experience gains from trade, however they would not trade if a point fell outside the indifference curves, trading will continue until you get to contract curve. 4. 3 what are the equations that characterize: pareto optimality in consumption? (explain why the equation characterizes the concept, mcx(x) / mcy(y) = mux1(x1,y1)/muy1(x1,y1) = 4. 4 explain how the production possibility of transformation curve is obtained from the contract curve in the production edge worth box.

Related Questions

Question 16

Points outside the production possibility frontier are

		producible.
		unattainable.
		endowment points.
		consumer equilibrium points.

5 points

Question 17

Pareto points in the Edgeworth Box are

		found when utility curves are tangent
		found when MRS are equal.
		found when one person cannot be made better off without making another person worse off.
		all of the above.

5 points

Question 18

The marginal rate of substitution is

		The absolute value of the slope of the indifference curve.
		the slope of the contract curve.
		the slope of the utility possibilities curve.
		none of the above.

5 points

Question 19

The absolute value of the slope of the production possibilities curve is the

		marginal rate of substitution
		contract curve.
		marginal rate of transformation.
		Engel curve.

5 points

Question 20

The First Fundamental Theorem of Welfare Economics requires

		producers and consumers to be price takers.
		that there be a market for every commodity.
		that the economy operate at some point on the utility possibility curve.
		all of the above.

bronzetermite465

I just need to make sure these are right. if they r wrong please tell me why thank you.

1. if demand shifts left and supply shifts right, then we know that

price decreases and quantity bought and sold also decreases

2.demand will be more elastic if

better substitute goods exist

3. a demand curve for beans will shift right if

consumer income falls and beans are a normal good

4. because it is difficult for economists to use experiments to generate data, they generally must

use real-world data what was not generated by an experiment, and which does not "hold all else constant"

5. all points on the production possibility frontier

have both full and efficient employment of all resources, including labor

6.along a unit elastic demand curve, if the market price increases then

total revenue will increase

7.a good economic model should

accurately explain or predict some aspect of the real world

8. the principle that "people respond to incentives implies all of the following except

people care only about themselves and not other people

9. a unit elastic supply curve must

be a straight line out of the origin

10. for a straight line demand curve, price elasticity of demand near the "choke price" where quantity demanded approaches 0 approaches

infinity

11.

Question 1

An externality

		enhances market efficiency.
		is a private cost or benefit that results from the production or consumption of a good or service that is external to a market.
		is a benefit or cost that affects someone who is not directly involved in the production or consumption of a good or service.
		refers to production or consumption that occurs outdoors.

5 points

Question 2

Externalities can be produced by:

		the high price of goods and services
		individuals; firms
		market prices; market incomes
		oceans; streams

5 points

Question 3

When an external cost exists that is NOT taken into account in the production of a product,

		the level of output is too high, and the supply curve should shift to the left to account for the externality.
		the price of the product is too high, and production should be expanded to lower the price.
		the level of output is optimal, and there should be no change in the supply curve.
		the level of output is too low, and the supply curve should shift to the right to account for the externality.

5 points

Question 4

Which of the following is correct?

		MSC = MPC - MD
		MPC = MSC + MD
		MSC = MPC + MD
		MD = MSC + MPC

5 points

Question 5

If external costs (costs of cleaning up) are included and added to a firm's private costs, then

		the demand curve will shift to the left.
		the supply curve will shift to the right.
		the demand curve will shift to the right
		the supply curve will shift to the left.

5 points

Question 6

The Coase Theorem states that

		government intervention is always needed if externalities are present.
		assigning property rights is the only thing the government should do in a market economy.
		if transaction costs are low, private bargaining will result in an efficient solution to the problem of externalities.
		a free-market equilibrium is the best solution to address externalities.

5 points

Question 7

Buffalo in the United States almost became extinct while cattle, an animal that provides similar products, never have been close to extinction. The difference is due to

		the use of private property rights on cattle and common property rights on buffalo.
		the greater marginal value of a head of cattle relative to buffalo, leading to over-hunting of buffalo.
		cattle existing in Europe also while buffalo were specific to North America.
		the greater marginal value of a buffalo relative to a steer, leading to the overharvesting of buffalo.

5 points

Question 8

In theory, the Emissions Fee would

		cause firms to generate less pollution than their allowed limits.
		raise the production costs of all firms.
		cause firms to generate more pollution than their allowed limits.
		lower the production costs of all firms.

5 points

Question 9

A cap-and-trade policy

		has a set number of permits.
		allows polluters to trade permits.
		caps the total level of pollution allowed.
		all of the above.

Question 10

A Pigouvian tax corrects for

		market congestion.
		market losses.
		inefficient sales.
		low market prices.

harlequingoldfish8

ECON 203 Quiz: study questions for quiz 4

Document Summary

Get access

Related Documents

ECON 203 Lecture Notes - Lecture 19: Pareto Efficiency, Production Function, Marginal Product

ECON 230D1 Chapter Notes - Chapter 10: Pareto Efficiency, Comparative Advantage, Contract Curve

ECON 1100 Study Guide - Final Guide: Oligopoly, Old Age, Price System

Related Questions