Question 1

The MRTS_LK is 5 in the cell phone industry and 8 in the tablet industry. The cell phone industry should use _____ labor and _____ capital, and the tablet industry should use _____ labor and _____ capital.

Accepted Answer

The answer of The MRTS_LK is 5 in the cell...

Question 2

(Figure: Pancakes and Cereal I) Suppose the economy is achieving output efficiency at point I, where the marginal rate of transformation (MRT) is 1/4 and the marginal product of labor in the cereal industry is 12. Which of the following statements is TRUE?

Accepted Answer

The answer of (Figure: Pancakes and Cereal I) Suppose the...

Question 3

(Figure: Pancakes and Cereal I) Which of the following statements is (are) TRUE?  I. Points G, H, I, and J lie on the production contract curve.
II) Points H and J represent an inefficient input allocation.
III) At point G, allocating more labor and capital to the cereal industry will increase the output of cereal and pancakes.

Accepted Answer

The answer of (Figure: Pancakes and Cereal I) Which of...

Question 4

(Figure: Jets and Drones I) Which of the following statements is TRUE?

Accepted Answer

The answer of (Figure: Jets and Drones I) Which of...

Question 5

In a small economy that produces smart phones and laptops, the marginal cost of a smart phone is $60 and the marginal cost of a laptop is $150. Assuming the economy is achieving output efficiency, the marginal rate of substitution of smart phones to laptops is ____.

Accepted Answer

The marginal rate of substitution (MRS) of smart phones to laptops is calculated by dividing the marginal cost of a laptop by the marginal cost of a smart phone, which is $150/$60 = 2.5. This means that to maintain output efficiency, 2.5 smart phones must be given up for each additional laptop produced.

Question 6

(Figure: Clothing and Food I) Suppose the food industry is using 3 capital inputs and 5 labor inputs, while the clothing industry is using 2 capital inputs and 3 labor inputs. The economy's output of food is _____ units and the output of clothing is _____ units.

Accepted Answer

The answer of (Figure: Clothing and Food I) Suppose the...

Question 7

In the golf club industry, the marginal product of labor and capital are given as  and 
) In the tennis racket industry, the marginal product of labor and capital are given as 
And 
) The price of labor is W and of capital is R. An efficient allocation of labor and capital across the golf club and tennis racket industries requires the following condition:

Accepted Answer

The answer of In the golf club industry, the marginal...

Question 8

(Figure: Crumpets and Tea I) Which of the following allocations represents a Pareto improvement from point A?  I. Lucia consumes 3 cups of tea and 3 crumpets, and Mateo consumes 3 cups of tea and 4 crumpets.
II) Lucia consumes 3 cups of tea and 4 crumpets, and Mateo consumes 3 cups of tea and 3 crumpets.
III) Lucia consumes 2 cups of tea and 4 crumpets, and Mateo consumes 4 cups of tea and 3 crumpets.

Accepted Answer

The answer of (Figure: Crumpets and Tea I) Which of...

Question 9

The market for soybeans is characterized by = 21 - P_S and = 2P_S - P_C, where Q_S is the quantity of soybeans in millions of bushels, P_S is the price per bushel of soybeans, and P_C is the price per bushel of corn. The market for corn is characterized by = 21 - P_C and = 2P_C _- P_S, where Q_C is the quantity of corn in millions of bushels. In general equilibrium, the equilibrium price of corn is ____ and the equilibrium quantity of corn is ____million bushels.

Accepted Answer

The answer of The market for soybeans is characterized by...

Question 10

The market for coffee is characterized by and , where Q_C is the quantity of coffee in hundreds of pounds, P_C is the price per hundred pounds of coffee, and P_T is the price per hundred pounds of tea. The market for tea is characterized by And , where Q_T is the quantity of tea in hundreds of pounds. In general equilibrium, the equilibrium quantity of tea is ____ pounds.

Accepted Answer

The answer of The market for coffee is characterized by...

Question 11

In a small economy that produces smart phones and laptops, the marginal cost of a smart phone is $60 and the marginal cost of a laptop is $150. If the economy wanted to produce two more laptops, the production of smart phones would ____ by ____ units.

Accepted Answer

The answer of In a small economy that produces smart...

Question 12

Suppose that in Blue City each year, 50 rock concerts and 30 opera concerts take place. If the Blue City entertainment czar (someone having great power or authority) decides to schedule 49 rock concerts and 31 opera concerts next year, about 65% of the population will approve, 25% will disapprove, and 10% won't care. This indicates that:

Accepted Answer

A Pareto improvement means making at least one individual better off without making anyone worse off. Since 25% disapprove of the change, it is not a Pareto improvement.

Question 13

Li's marginal rate of substitution of hamburger for steak is 1/4, and Zhang's marginal rate of substitution of hamburger for steak is 2. The allocation of hamburger and steak ____ Pareto-efficient between Li and Zhang because ____.

Accepted Answer

C) is correct because Li's marginal rate of substitution (MRS) of hamburger for steak is lower than Zhang's, indicating that Li values steak more relative to hamburgers than Zhang does. Therefore, if Li trades some hamburgers to Zhang in exchange for some steak, both can potentially be better off due to their differing valuations of the goods, making the initial allocation not Pareto-efficient.

Question 14

Barbecue sauce and chicken thighs are complement goods. Suppose that the government places a tax on chicken thighs to discourage the consumption of fatty meat. General equilibrium analysis predicts a ____ effect on the equilibrium price and a ____ effect on the quantity of barbecue sauce than partial equilibrium analysis.

Accepted Answer

In general equilibrium analysis, the interdependence between markets is considered. A tax on chicken thighs will increase their price, reducing their demand. As chicken thighs and barbecue sauce are complements, the demand for barbecue sauce will also decrease, leading to a larger effect on both the equilibrium price and quantity of barbecue sauce compared to partial equilibrium analysis, which only considers the market in isolation.

Question 15

On the basis of the Carmageddon study, which of the following statements is (are) TRUE about adding another traffic lane to a highway?
I. Partial equilibrium analysis predicts that traffic flow will increase, since drivers will have more usable road space.
II. General equilibrium analysis predicts that traffic flow will remain unchanged, as more businesses and people move to the area.
III. Partial and general equilibrium analysis reach the same conclusion-expanding roadways reduces traffic congestion.

Accepted Answer

I. Partial equilibrium analysis focuses on the immediate effects within a specific sector, predicting that an additional lane would increase traffic flow due to more road space. II. General equilibrium analysis considers broader economic impacts, suggesting that over time, the increased accessibility will attract more businesses and people, potentially negating the initial reduction in congestion. III is incorrect because partial and general equilibrium analyses often reach different conclusions regarding the impact of expanding roadways on traffic congestion.

Question 16

In a small economy that produces smart phones and laptops, the marginal cost of a smart phone is $60 and the marginal cost of a laptop is $150. The marginal rate of transformation from smart phones to laptops is ____.

Accepted Answer

The marginal rate of transformation (MRT) is calculated by dividing the marginal cost of one good by the marginal cost of another. Here, it's $150 (laptop) / $60 (smartphone) = 2.5.

Question 17

The supply of housing in New York City is less elastic than in York, Pennsylvania. As a result, the long-run labor supply curve in New York City is _____ than the long-run labor supply curve in York.

Accepted Answer

The supply of housing being less elastic in New York City means that housing cannot expand as easily in response to demand compared to York, Pennsylvania. This inelasticity in housing supply can make it harder for workers to move to or live in New York City, thus making the long-run labor supply more inelastic as well. Workers are less responsive to changes in wages due to the high and rigid cost of living.

Question 18

(Figure: Pancakes and Cereal I) Which of the following statements is (are) TRUE at point I?  I. The economy is achieving input efficiency.
II) The economy is achieving exchange efficiency.
III) The economy is achieving output efficiency because the marginal rate of substitution equals the marginal rate of transformation.

Accepted Answer

The answer of (Figure: Pancakes and Cereal I) Which of...

Question 19

(Figure: Pancakes and Cereal I) At point G, the marginal rate of transformation from pancakes to cereal is 3. What does this mean?
​

Accepted Answer

The answer of (Figure: Pancakes and Cereal I) At point...

Question 20

What type of government policy aimed at increasing efficiency would cause the SMALLEST efficiency losses?

Accepted Answer

Lump-sum transfers are considered to have the smallest efficiency losses because they do not distort economic decisions in the way taxes or subsidies do. They are simply transfers of money from the government to individuals without conditions, so they do not alter incentives or behavior in the market.

Quiz 15: General Equilibrium

The MRTS_LK is 5 in the cell phone industry and 8 in the tablet industry. The cell phone industry should use ___ labor and _ capital, and the tablet industry should use _ labor and ___ capital.

(Figure: Pancakes and Cereal I) Suppose the economy is achieving output efficiency at point I, where the marginal rate of transformation (MRT) is 1/4 and the marginal product of labor in the cereal industry is 12. Which of the following statements is TRUE?

(Figure: Jets and Drones I) Which of the following statements is TRUE?

In a small economy that produces smart phones and laptops, the marginal cost of a smart phone is $60 and the marginal cost of a laptop is $150. Assuming the economy is achieving output efficiency, the marginal rate of substitution of smart phones to laptops is ____.

(Figure: Clothing and Food I) Suppose the food industry is using 3 capital inputs and 5 labor inputs, while the clothing industry is using 2 capital inputs and 3 labor inputs. The economy's output of food is _ units and the output of clothing is _ units.

In a small economy that produces smart phones and laptops, the marginal cost of a smart phone is $60 and the marginal cost of a laptop is $150. If the economy wanted to produce two more laptops, the production of smart phones would by units.

Li's marginal rate of substitution of hamburger for steak is 1/4, and Zhang's marginal rate of substitution of hamburger for steak is 2. The allocation of hamburger and steak Pareto-efficient between Li and Zhang because .

In a small economy that produces smart phones and laptops, the marginal cost of a smart phone is $60 and the marginal cost of a laptop is $150. The marginal rate of transformation from smart phones to laptops is ____.

The supply of housing in New York City is less elastic than in York, Pennsylvania. As a result, the long-run labor supply curve in New York City is _____ than the long-run labor supply curve in York.

(Figure: Pancakes and Cereal I) At point G, the marginal rate of transformation from pancakes to cereal is 3. What does this mean?

What type of government policy aimed at increasing efficiency would cause the SMALLEST efficiency losses?

Quiz 15: General Equilibrium

The MRTSLK is 5 in the cell phone industry and 8 in the tablet industry. The cell phone industry should use _____ labor and _____ capital, and the tablet industry should use _____ labor and _____ capital.

(Figure: Pancakes and Cereal I) Suppose the economy is achieving output efficiency at point I, where the marginal rate of transformation (MRT) is 1/4 and the marginal product of labor in the cereal industry is 12. Which of the following statements is TRUE?

(Figure: Jets and Drones I) Which of the following statements is TRUE?

In a small economy that produces smart phones and laptops, the marginal cost of a smart phone is $60 and the marginal cost of a laptop is $150. Assuming the economy is achieving output efficiency, the marginal rate of substitution of smart phones to laptops is ____.

(Figure: Clothing and Food I) Suppose the food industry is using 3 capital inputs and 5 labor inputs, while the clothing industry is using 2 capital inputs and 3 labor inputs. The economy's output of food is _____ units and the output of clothing is _____ units.

In a small economy that produces smart phones and laptops, the marginal cost of a smart phone is $60 and the marginal cost of a laptop is $150. If the economy wanted to produce two more laptops, the production of smart phones would ____ by ____ units.

Li's marginal rate of substitution of hamburger for steak is 1/4, and Zhang's marginal rate of substitution of hamburger for steak is 2. The allocation of hamburger and steak ____ Pareto-efficient between Li and Zhang because ____.

In a small economy that produces smart phones and laptops, the marginal cost of a smart phone is $60 and the marginal cost of a laptop is $150. The marginal rate of transformation from smart phones to laptops is ____.

The supply of housing in New York City is less elastic than in York, Pennsylvania. As a result, the long-run labor supply curve in New York City is _____ than the long-run labor supply curve in York.

(Figure: Pancakes and Cereal I) At point G, the marginal rate of transformation from pancakes to cereal is 3. What does this mean? ​

What type of government policy aimed at increasing efficiency would cause the SMALLEST efficiency losses?

The MRTS_LK is 5 in the cell phone industry and 8 in the tablet industry. The cell phone industry should use ___ labor and _ capital, and the tablet industry should use _ labor and ___ capital.

(Figure: Clothing and Food I) Suppose the food industry is using 3 capital inputs and 5 labor inputs, while the clothing industry is using 2 capital inputs and 3 labor inputs. The economy's output of food is _ units and the output of clothing is _ units.

In a small economy that produces smart phones and laptops, the marginal cost of a smart phone is $60 and the marginal cost of a laptop is $150. If the economy wanted to produce two more laptops, the production of smart phones would by units.

Li's marginal rate of substitution of hamburger for steak is 1/4, and Zhang's marginal rate of substitution of hamburger for steak is 2. The allocation of hamburger and steak Pareto-efficient between Li and Zhang because .

(Figure: Pancakes and Cereal I) At point G, the marginal rate of transformation from pancakes to cereal is 3. What does this mean?