In the Edgeworth box diagram, if the initial allocation of consumer goods is off the contract curve, then we can be sure that
A. the MRS of each consumer is the same.
B. both parties can be made better off.
C. trade will occur if allowed and transactions costs are high.
D. the initial allocation is unfair.
Answer: B
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The federal government of the United States was established as a federation of the governments of the original thirteen states
a. True b. False
Scarcity can be eliminated if:
a. people satisfy needs rather than wants. b. sufficient new resources were discovered. c. output of goods and services were increased. d. none of these.
A profit-maximizing monopolist
A. is just as socially efficient as a perfectly competitive firm in allocating resources to production since he or she, too, seeks the largest return on his or her investment. B. produces an output level at which marginal utility exceeds marginal cost. C. produces more output than a perfectly competitive industry. D. always produces in the inelastic region of his or her demand curve.
Equilibrium quantity must decrease when demand
a. increases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease. b. increases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. c. decreases and supply does not change, when demand does not change and supply increases, and when both demand and supply decrease. d. decreases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease.