Econ 100b
Joe will give some milk to Rita in exchange for cookies.
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 four 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 Rita in exchange for cookies. B. No trade will take place since they both prefer to have more milk and fewer cookies. C. There is not enough information to make any predictions. D. Rita will give some milk to Joe in exchange for cookies.
P1=3 P2=4
The demand functions for Q1 and Q2 are: Q1=30−2p1+p2 Q2=50−2p2+p1, where Q1=28 and Q2=45. What is the general equilibrium? p1=$3 and p2=$4 (Enter a numeric response using real numbers rounded to two decimal places.)
A. fixed costs.
The difference between producer surplus and profit is always the associated A. fixed costs. B. variable costs. C. opportunity costs. D. total costs.
C
The figure depicts the Edgeworth box for two individuals, Al and Bruce. If the endowment is at point a, and Al has no ability to bargain, the final allocation will be at point A. a. B. b. C. c. D. d.
Al's MRS exceeds Bruce's MRS.
The figure depicts the Edgeworth box for two individuals, Al and Bruce. Point a is not Pareto efficient because A. Al's indifference curve is not far enough away from the origin. B. Al's MRS exceeds Bruce's MRS. C. the point is not near the center of the box. D. All of the above.
decrease by 750.
The figure shows the demand and supply curves in the market for milk. Currently the market is in equilibrium. If the government imposes a $2 per gallon tax to be collected from sellers, then the consumer surplus will A. stay the same. B. decrease by 500. C. decrease by 750.
500
The figure shows the demand and supply curves in the market for milk. Currently the market is in equilibrium. If the government imposes a $2 per gallon tax to be collected from sellers, then the deadweight loss is Part 2 A. 0 B. 500 C. 200 D. 250
All of the above.
General equilibrium analysis is the study of A. how an equilibrium is determined in all markets simultaneously. B. how an equilibrium is determined in all closely related markets. C. the effects of a change in a market, and all spillover effects in all related markets. D. All of the above.
the study of how equilibrium is determined in all markets simultaneously.
General equilibrium analysis is: A. the study of basic principles of market behavior ignoring specific unique aspects of particular markets. B. the study of how equilibrium is determined in all markets simultaneously. C. a macroeconomic approach to market behavior. D. the study of individual markets keeping activity in all other related markets constant.
All of the above.
If a city decides to restrict the number of pizza parlors Question content area bottom Part 1 A. pizza parlors will make higher profits. B. total welfare will decrease. C. the price of pizza will increase. D. All of the above.
B. social welfare is not maximized.
If a market produces a level of output below the competitive equilibrium, then A. consumer surplus might still be maximized. B. social welfare is not maximized. C. the actual price will be below the equilibrium price. D. social welfare might still be enhanced if a price ceiling keeps price below the competitive price.
marginal cost will exceed price.
If a market produces a level of output that exceeds the competitive equilibrium output, then A. marginal cost will exceed price. B. producer surplus will be higher. C. social welfare will be higher. D. All of the above.
social welfare is not maximized.
If in a market the last unit of output was sold at a price higher than marginal cost A. producer are better off producing more. B. consumers are better off if less of the product is sold. C. social welfare is not maximized. D. the unit increased total profit.
entrants are discouraged by the new requirements.
The government requires the steel industry to adopt new eco−friendly machines, which cannot be used in other industries. If the machines are very expensive and the capital market does not work efficiently, then A. entrants are discouraged by the new requirements. B. firms can easily leave the steel industry without loss. C. entrants are encouraged to enter the market and adopt the new machines. D. None of the above.
decrease
The services of real estate brokers are provided in a competitive market. If the state Board of Realtors enacts several requirements that limit the number of real estate brokers, then consumer surplus will most likely Question content area bottom Part 1 A. remain unchanged. B. decrease. C. increase. D. There is not enough information to answer.
decrease although producers are made better off.
The services of real estate brokers are provided in a competitive market. If the state Board of Realtors enacts several requirements that limit the number of real estate brokers, then social welfare will most likely A. decrease although consumers are made better off. B. not change but there will be a transfer from producer to consumer. C. not change but there will be a transfer from consumer to producer. D. decrease although producers are made better off.
price equals marginal cost of the last unit produced.
A competitive market maximizes social welfare because in a competitive market A. there is free entry and exit. B. price equals marginal cost of the last unit produced. C. price equals average cost of the last unit produced. D. profits are zero.
the salsa market.
A general−equilibrium analysis of a price change in the corn chip market would include an investigation of the impacts in A. the salsa market. B. the television market. C. the coffee market. D. All of the above.
the jelly market.
A general−equilibrium analysis of the impact of a tax on the peanut butter market would include an investigation of the impacts in A. the television market. B. the jelly market. C. the salsa market. D. the coffee market.
decrease consumer surplus in the market.
A new law applied to a competitive market that requires that laid off workers be paid a large severance payment will A. not generate a deadweight loss. B. increase consumer surplus in the market. C. increase total welfare. D. decrease consumer surplus in the market.
at an equilibrium and changes to it in a single, isolated market.
As opposed to general−equilibrium analysis, partial equilibrium analysis looks Part 1 A. at how equilibrium is determined in all markets simultaneously. B. at either price or quantity movements. C. at an equilibrium and changes to it in a single, isolated market. D. at how changes in one market effect other markets.
the price of food will increase towards a competitive equilibrium.
Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 40 units of clothing but no food. Suppose each has the utility function U = F1/2C1/2. If the price of clothing is always $1, and the food price is currently $3, then we can conclude A. the price of food will drop towards a competitive equilibrium. B. the price of food will increase towards a competitive equilibrium. C. the market is at a competitive equilibrium. D. None of the above.
the market is at a competitive equilibrium.
Consider a society consisting of just a farmer and a tailor. The farmer has 30 units of food but no clothing. The tailor has 60 units of clothing but no food. Suppose each has the utility function U = F^1/3C^2/3. If the price of clothing is always $1, and the food price is currently $1, then we can conclude A. the market is at a competitive equilibrium. B. the price of food will drop towards a competitive equilibrium. C. the price of food will increase towards a competitive equilibrium. D. None of the above.
E. profit plus fixed costs; therefore, if there are no fixed costs, then a firm's producer surplus and profit are equal.
Does a firm's producer surplus differ from its profit if it has no fixed cost? Producer surplus equals A. profit multiplied by the output produced. B. profit minus variable costs. C. profit minus consumer surplus. D. profit plus the cost of production. E. profit plus fixed costs; therefore, if there are no fixed costs, then a firm's producer surplus and profit are equal.
Both Rita and Joe can be made better off if Rita gives Joe some cookies in exchange for milk.
Joe and Rita each have some milk and cookies (Milk on the horizontal axis). Joe's MRS of cookies for milk is two. Rita's MRS of cookies for milk is four. Which of the following statements is TRUE? A. Both Rita and Joe can be made better off if Rita gives Joe some cookies in exchange for milk. B. No gains from trade are possible. C. Rita and Joe are on the contract curve. D. Both Rita and Joe can be made better off if Joe gives Rita some cookies in exchange for milk.
B. $5,000.
Mister Jones was selling his house. The asking price was $220,000, and Jones decided he would take no less than $200,000. After some negotiation, Mister Smith purchased the house for $205,000. Jones' producer surplus is A. $20,000. B. $5,000. C. $15,000. D. not able to be calculated from the information given.
harm at least one of the parties.
Moving away from the contract curve will A. harm both parties. B. harm at least one of the parties. C. harm only one of the parties. D. harm neither of the parties.
D. All of the above.
Producer surplus equals A. total revenue minus the sum of all marginal cost. B. profit plus fixed cost. C. total revenue minus total variable cost. D. All of the above.
A. the difference between price and marginal cost for all units sold.
Producer surplus is equal to A. the difference between price and marginal cost for all units sold. B. the difference between price and average cost for all units sold. C. the area under the supply curve. Your answer is not correct. D. the firm's profit when fixed costs exist.
B. 12.5.
Suppose the market supply curve is p = 5Q. If price increases from 10 to 15, the change in producer surplus is A. 20. B. 12.5. C. 25. D. 5.
B. 12.50.
Suppose the market supply curve is p = 5 + Q. At a price of 10, producer surplus equals A. 50. B. 12.50. C. 10. D. 25.
c − f.
The above figure shows supply and demand curves for apartment units in a large city. If the city government passes a law that establishes $350 per month as the legal maximum rent, the consumer's net gain in surplus equals A. b − f. B. c − f. C. d − f. D. The answer cannot be determined from the information given.
a deadweight loss is generated.
The above figure shows supply and demand curves for milk. If amount Q2 is produced in the market A. producer surplus is maximized. B. a deadweight loss is generated. C. consumer surplus is minimized. D. All of the above.
D. b−g.
The above figure shows supply and demand curves for milk. If the government passes a law that establishes $3 per month as the legal minimum per gallon price, change in producer surplus will be A. c+d+g. B. b−f−g. C. b+c+d. D. b−g.
D. f + g.
The above figure shows supply and demand curves for milk. If the government passes a $2 per gallon specific tax, the loss in social welfare will equal A. b + c + f + g. B. c + g. C. b + f. D. f + g.
$2 * Q1.
The above figure shows supply and demand curves for milk. If the government passes a $2 per gallon specific tax, the tax revenue is A. $2 * Q1. B. $2. C. $2 * (Q2 − Q1). D. $2 * Q2.
D. b + f.
The above figure shows supply and demand curves for milk. In an effort to help farmers, the government passes a law that establishes a $3 per gallon price support. As a result, consumer surplus falls by A. a. B. f + g. C. b + f − c. D. b + f.
may want to trade if their marginal rates of substitution are different.
The two people in a pure exchange economy have identical utility functions. Will they ever want to trade? Why or why not? If two people in a pure exchange economy have identical utility functions, then they A. may want to trade if their marginal rates of substitution are different. B. may want to trade if the price ratio is not equal to one. C. will only want to trade if they are not at their endowment. D. will want to trade if they are on the contract curve. E. will not want to trade if their consumption bundles are not Pareto-efficient.
D. Economic resources are not being allocated efficiently: either too much or not enough of the good is being produced.
Which of the following best describes the implications of a deadweight loss? A. Consumers are harmed because producers are charging a price higher than marginal cost. B. The welfare of society is placed second to corporate profits. C. Resources are being wasted on the production of goods that consumers do not value. D. Economic resources are not being allocated efficiently: either too much or not enough of the good is being produced.
The market supply curve shifts to the left.
Which of the following best describes the market reaction if a city restricts the number of firms that are allowed to operate in a market? A. Price decreases. B. Quantity supplied increases because price increases. C. The market supply curve shifts to the left. D. The market demand curve shifts to the left.