# Microeconomics Study Set 46

## Quiz 15 :General Equilibrium

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Which of the following statements is (are) TRUE? I. The Rawlsian social welfare function computes society's welfare by calculating the difference in utility between the top 10% and bottom 10% of income earners. II. Economists strictly use the Rawlsian social welfare function to evaluate market performance. III. The Rawlsian utility function only considers the utility of the least well-off person.
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(Figure: Cereal and Pancakes III) Which of the following statements is (are) TRUE? I. Pareto efficiency occurs when Elaina consumes 4 pancakes and 3 bowls of cereal and Jose consumes 4 pancakes and 7 bowls of cereal. II) Pareto efficiency occurs when Elaina consumes 3 pancakes and 3 bowls of cereal and Jose consumes 5 pancakes and 3 bowls of cereal. III) Pareto efficiency occurs when Elaina consumes 3 pancakes and 3 bowls of cereal and Jose consumes 5 pancakes and 7 bowls of cereal.
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Sven, Art, and Isabel reside on a tiny island in the Pacific. All three of them have a utility function given by U = Y0.5, where Y is income per day. Suppose that Sven earns $7 per day, Art earns$25 per day, and Isabel earns $36 per day. What happens to the value of the utilitarian social welfare function If the government takes$9 of Art's income and gives it to Sven?
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The market for soybeans is characterized by = 16 - Ps + Pc and = Ps, where Qs is the quantity of soybeans in millions of bushels, Ps is the price per bushel of soybeans, and Pc is the price per bushel of corn. The market for corn is characterized by = 40 - Pc + Ps and = Pc, where Qc is the quantity of corn in millions of bushels. In general equilibrium, what is the equilibrium quantity of soybeans?
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The market for coffee is characterized by and , where QC is the quantity of coffee in hundreds of pounds, PC is the price per hundred pounds of coffee, and PT is the price per hundred pounds of tea. The market for tea is characterized by And , where QT is the quantity of tea in hundreds of pounds. Suppose a new medical study touts the benefits of drinking coffee, leading to an increase of 30 pounds of coffee at every price. The new equilibrium price of tea is ____.
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If the initial allocation of goods is not efficient, consumers will:
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Maximilian rules over a three-person society. The three people are Andre, Bojan, and Soumendra. Andre has a utility level of 60, Bojan's utility level is 80, and Soumendra's utility level is 10. In this society, assuming resources and utility can be transferred among the people, the highest value that the Rawlsian social welfare function can obtain is ____.
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Which of the following is an example of partial equilibrium analysis?
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Farmers can use their land to grow corn or cotton. Because of the increased demand for moisture-wicking sportswear, the demand for cotton has decreased. What are the general equilibrium effects in the markets for corn and for cotton?
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The New Democratic Party in Canada is concerned that the Canadian oil boom has increased the exchange rate, thereby harming the manufacturing sector by making it less competitive in international markets. This concern highlights the notion of _____ and can best be studied by using _____ analysis.
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(Figure: Pancakes and Cereal I) At point G, the marginal cost of a pancake is 50 cents and the marginal cost of a bowl of cereal is also fifty cents. At this point, consumers are willing to trade 2 bowls of cereal for an additional pancake. Which of the following statements is TRUE?
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Two legendary rock bands, The Who and Kiss, are scheduling concerts in Detroit this summer. The supply of tickets for The Who concert is fixed at 40,000 and the supply of tickets for the Kiss concert is fixed at 40,000. The demand for tickets for The Who and Kiss are given by the following equations: Who: = 100,000 - 1,000PW + 250PK Kiss: = 100,000 - 1,000PK + 250PW Where PW is the price of a ticket for The Who and PK is the price of a ticket for Kiss. In general equilibrium, the price of a ticket for The Who is ____.
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Goods X and Y are substitute goods. If the demand for good X increases, the price of good X will _____ and cause a(n) _____ in the demand for good Y. The _____ price for good Y will further _____ the demand for good X, while the _____ price for good X will further _____ the demand for good Y.
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Almonds and walnuts are substitutes. Suppose the world demand for walnuts increases. General equilibrium analysis predicts a ____ effect on the equilibrium price and a ____ effect on the quantity of almonds than partial equilibrium analysis.
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(Figure: Cereal and Pancakes IV) What is the name of curve A, and what is its significance?
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change their tastes and preferences via their utility function to match the market's marginal rate of substitution. -(Figure: Roses and Guns I) Which of the following output combinations does NOT fall on the production contract curve? I. guns, 20; roses, 2,000 II) guns, 15; roses, 2,800 III) guns, 90; roses, 750
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Your economics professor decides to cancel one of three scheduled tests because a large number of snow days led to cancellation of classes. Of the 30 students in the class, 29 of them are in favor of this idea and 1 is not in favor. The new number of exams ____ a Pareto improvement because ____.
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Two legendary rock bands, The Who and Kiss, are scheduling concerts in Detroit this summer. The supply of tickets for The Who concert is fixed at 40,000 and the supply of tickets for the Kiss concert is fixed at 40,000. The demand for tickets for The Who and Kiss are given by the following equations: The Who: = 100,000 - 1,000PW + 250PK Kiss: = 100,000 - 1,000PK + 250PW Where PW is the price of a ticket for The Who and PK is the price of a ticket for Kiss. In general equilibrium, the price of a Kiss ticket is ____.
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