Question 1

If MRS's are equal across all consumers,then the efficient product mix has been achieved.

Accepted Answer

Consumption efficiency has been achieved for the given product mix,but the given product mix is efficient only if MRT equals the MRS for all pairs of goods.

Question 2

If society were to maximize the utility of its worst-off member,the final allocation would most likely be

Accepted Answer

Maximizing the utility of the worst-off member of society would involve ensuring that the basic needs of all members are met before distributing any additional resources. This would likely result in a relatively egalitarian distribution of resources, as opposed to allowing one person to get everything. Additionally, the final allocation could still be Pareto efficient while prioritizing the needs of the worst-off member.

Question 3

At the competitive equilibrium quantity supplied equals quantity demanded in all markets.

Accepted Answer

When the MRS = MRT = ratio of prices,the optimal product mix is produced efficiently and firms sell at marginal cost.

Question 4

-The above figure shows a production possibility frontier for a society with two members,Al and Bruce.If point "a" is the efficient product mix,draw a possible Edgeworth box and indifference curves.

Accepted Answer

The answer of 
-The above figure shows a production possibility...

Question 5

No clearly defined socially preferred outcome may result when majority voting on outcomes because

Accepted Answer

The answer of No clearly defined socially preferred outcome may...

Question 6

Can consumption efficiency be achieved even if the efficient product mix is not achieved?

Accepted Answer

The answer of Can consumption efficiency be achieved even if...

Question 7

If a society only cares about efficiency and not equity,then

Accepted Answer

The contract curve represents allocations of resources that are Pareto efficient, meaning that no one can be made better off without making someone else worse off. If a society only cares about efficiency and not equity, any point on the contract curve would be considered equally desirable as they all represent efficient outcomes, regardless of how resources are distributed among individuals.

Question 8

A dictator is most likely to

Accepted Answer

A dictator typically has few constraints on their decision-making power and can therefore prioritize their own utility over the welfare of others.

Question 9

Any policy change that results in a Pareto-superior allocation

Accepted Answer

A Pareto-superior allocation means that at least one individual's welfare is improved without making anyone else worse off, which inherently increases overall welfare.

Question 10

Suppose a society's PPF for food (F)and clothing (C)can be written as 25 = F²+ C².If all consumers have the same endowment and the same utility function U_i = F_i ∗ C_i,what is the efficient product mix of food and clothing?

Accepted Answer

The answer of Suppose a society's PPF for food (F)and...

Question 11

Explain how it is possible for one of two people in a two-good economy to have an absolute advantage in producing both goods,but trade can still benefit both people.

Accepted Answer

The answer of Explain how it is possible for one...

Question 12

If price support policy increases producer surplus more than reducing consumer surplus,then

Accepted Answer

A price support policy that increases producer surplus more than it reduces consumer surplus does not necessarily lead to a Pareto-superior allocation, an increase in social welfare, or an improvement in the efficiency of society. It may cause market distortions, inefficiencies, and potential welfare losses elsewhere in the economy.

Question 13

A cake is to be shared by two people.Both desire the largest piece possible.One of the two will cut the cake.Under which of the following situations will the cutter adopt a Rawlsian social welfare function?

Accepted Answer

When the person not cutting the cake chooses the first piece, the cutter is incentivized to divide the cake as equally as possible to ensure they also get a fair share, aligning with the Rawlsian principle of fairness.

Question 14

How does competition ensure that the efficient product mix is attained?

Accepted Answer

The answer of How does competition ensure that the efficient...

Question 15

If a society relies on competitive markets to allocate goods,then

Accepted Answer

In a competitive market, the equilibrium reached is considered Pareto efficient or Pareto superior, meaning that any reallocation of resources would make at least one individual worse off without making anyone better off. This does not guarantee an equitable distribution, but it does ensure that resources are allocated in a way that no further gains can be made without harming someone.

Question 16

Suppose in a democratic society,all voters prefer choice G over choice B;however,when the two choices are presented along with a third choice,R,B wins the election.This violates the assumption of

Accepted Answer

This violates the assumption of independence of irrelevant alternatives, as the addition of a third option should not affect the relative preference between the original two options. However, in this scenario, the addition of the third option leads to a different outcome despite the fact that all voters still prefer G over B.

Question 17

Suppose the U.S.can produce 10 units of food and five units of clothing (or any linear combination)and Canada can produce six units of food and three units of clothing (or any linear combination).What type of trade will occur between these two countries? Explain.

Accepted Answer

The answer of Suppose the U.S.can produce 10 units of...

Question 18

By saying that MRS = MRT,an economist means that

Accepted Answer

MRS (Marginal Rate of Substitution) = MRT (Marginal Rate of Transformation) implies that the value society places on the last unit produced (MRS) equals the cost of making that unit (MRT), indicating an efficient allocation of resources.

Question 19

Suppose the U.S.can produce 10 units of food and five units of clothing (or any such linear combination)and Canada can produce six units of food and four units of clothing (or any such linear combination).If trade occurs between these two countries,which should produce more food and which more clothing?

Accepted Answer