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?
a. None of them.
b. Only I.
c. I and II, but not III.
d. I and III, but not II.
c
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Congestion taxes tend to cause an increase in traffic volume during rush hours
Indicate whether the statement is true or false
If the CPI is used as a cost of living index, incomes that are adjusted to reflect the changes in the CPI will
A) increase by more than the actual change in the cost of living. B) decrease by more than the actual change in the cost of living. C) increase by more than the actual change in quantities. D) decrease by more than the actual change in quantities. E) generally rise by about 2 percent a year because the standard of living generally rises by about 2 percent a year.
An improvement in the quality of capital would: a. rotate the per-worker production function upward
b. make the per-worker production function flatter. c. shift the per-worker production function downward. d. rotate the per-worker production function downward. e. have no effect on the per-worker production function.
Given freedom of movement for both goods and resources, if Florida producers specialize in oranges and Georgia producers specialize in peaches, then it would be reasonable to conclude that
a. the opportunity cost of growing oranges is higher in Florida than in Georgia. b. Georgia has a comparative advantage in producing peaches. c. Florida has a comparative advantage in producing peaches. d. total output will be expanded when Georgia allocates more resources to producing oranges and Florida allocates more resources to producing peaches.