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Suppose goods X and Y are produced along a production possibilities frontier 4X^2 + Y^2 = 500 and they are perfect substitutes such that U = X + Y. The slope of the production possibilities frontier is -4X/(Sqrt 500X-4X^2) . How much Y should be produced?

20

The rate of product transformation refers to

how production of one good can be substituted for another while still using a fixed supply of inputs efficiently

Suppose two goods (X and Y ) are being produced efficiently and that the production of X is always more labor intensive than the production of Y. Production depends only on two factors (capital and labor); these may be smoothly substituted for each other. The total quantities of these inputs are fixed. An increase in the production of X and a decrease in the production of Y will

increase the capital-labor ratio in each firm.

Consider a two-good production economy in which both goods are produced with fixed proportions production functions. Then, some efficient allocations will exhibit unemployment of some factor providing

the firms use the inputs in different proportions.

In an economy consisting of only two goods, corn and cloth, the amount of extra cloth that can be produced efficiently if corn output is reduced by one unit is equal to

the marginal cost of producing corn divided by the marginal cost of producing cloth.

The slope of the production possibility frontier shows

the relative marginal costs of the two goods.

Suppose goods X and Y are produced along a production possibilities frontier 4X^2 + Y^2 = 500 and they are perfect substitutes such that U = X + Y. The slope of the production possibilities frontier is -4X/(Sqrt 500X-4X^2) . What is this slope at the utility-maximizing point?

-1

Suppose goods X and Y are produced along a production possibilities frontier 4X^2 + Y^2 = 500 and they are perfect substitutes such that U = X + Y. The slope of the production possibilities frontier is -X/(2Sqrt500-X^2). What is this slope at the utility-maximizing point?

-1

Suppose goods X and Y are produced along a production possibilities frontier 4X^2 + Y^2 = 500 and they are perfect substitutes such that U = X + Y. The slope of the production possibilities frontier is -4X/(Sqrt 500X-4X^2). How much Y should be produced?

5

Suppose goods X and Y are produced along a production possibilities frontier 4X^2 + Y^Y2 = 500 and they are perfect substitutes such that U = X + Y. The slope of the production possibilities frontier is -4X/(Sqrt 500X-4X^2) . How much X should be produced?

5

Consider three ways of allocating two goods in a two-person exchange economy. I. Both individuals take prices as given and equilibrium prices are established by an impartial auctioneer. II. One individual can act as a perfect price discriminator and force the other individual to pay a different price for each unit of a good that is traded. III. One individual is a monopolist and can charge the other individual a single, utility-maximizing price. Which of these situations is efficient?

I. Both individuals take prices as given and equilibrium prices are established by an impartial auctioneer. II. One individual can act as a perfect price discriminator and force the other individual to pay a different price for each unit of a good that is traded.

In free exchange among two individuals the position on the contract curve finally arrived at will, among other things, depend on: I. The bargaining strength of each individual. II. The initial endowments of the individuals. III. The individuals' preferences. Which of these correctly completes the statement?

I. The bargaining strength of each individual. II. The initial endowments of the individuals. III. The individuals' preferences.

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The reason externalities distort the allocation of resources is that

a firm's private costs do not reflect the social cost of production.

Suppose the Economics Department has a graduation party for its students but as a final test they must show they have learned something about trade. The men are given food when they walk in and the women are given drink. Suppose they have very different preferences where food and drink provide utility. For men U = FαDβ. For women U=min(F,D) The contract curve in the Edgeworth box using a representative man and woman would be

a line connecting the lower left corner with the upper right corner.

Suppose two coffee snobs who must have their coffee and cream in exact proportions (each cup is 10 coffee per 1 unit cream) are invited to a weekend long event (during which they can easily consume 8 cups of coffee). Suppose Snob A is given 8 units of cream and Snob B is given 80 units of coffee. The contract curve in the Edgeworth box would be

a line connecting the lower left corner with the upper right corner.

Suppose the Economics Department has a graduation party for its students but as a final test they must show they have learned something about trade. The men are given food when they walk in and the women are given drink. Suppose they have identical preferences where food and drink provide utility U = FαDβ. The contract curve in the Edgeworth box using a representative man and woman would be

a right angle connecting the upper left corner with the lower right corner.

Suppose two coffee snobs who must have their coffee and cream in exact proportions (each cup is 10 coffee per 1 unit cream) are invited to a weekend long event (during which they can easily consume 8 cups of coffee). Suppose Snob A is given 8 units of cream and Snob B is given 80 units of coffee. The post trading result (one in which any trade that makes both parties better off than their initial allocation) will guarantee each person

at least 1 cup of properly made coffee.

Suppose the Economics Department has a graduation party for its students but as a final test they must show they have learned something about trade. The men are given food when they walk in and the women are given drink. Suppose they have identical preferences where food and drink provide utility U = FαDβ. The exchange would be such that

both would be guaranteed to be at least as well off as when they entered.

Suppose country A has a production possibilities frontier such that 4x^2+4y^2=500 and country B has a production possibilities frontier such that x^2+4y^2=500 and consumers in each country view x and y as perfect substitutes. Country B will produce

both x (= 20) and y (= 5) and trade x to get y.

Each of the following factors might interfere with the efficiency of perfect competition except:

diminishing returns to scale.

Markets can fail to achieve efficiency when

there are buyers or sellers without adequate information about the quality of goods.

Markets can fail to achieve efficiency when

there are markets with imperfect competition

Markets can fail to achieve efficiency when

there are public goods.

Under a perfectly competitive price system

there is no reason to expect that voluntary trading will result in an equitable allocation of the available resources.