The Second Fundamental Theorem of Welfare Economics requires
A. that indifference curves be convex to the origin.
B. that isoquants be concave to the origin.
C. that there are no set prices for Pareto efficient allocations.
D. that production be twice as large as consumption.
E. all of these answer options are correct.
A. that indifference curves be convex to the origin.
You might also like to view...
An interior solution to a consumer's utility maximization problem implies
A) consuming a positive amount of one good and a negative amount of the other good. B) consuming negative amounts of all goods. C) consuming less than optimal amounts of all goods. D) consuming more than an optimal amount of at least one good.
When the slope of the total revenue curve is equal to the slope of the total cost curve
A) profit is maximized. B) marginal revenue equals marginal cost. C) the marginal cost curve intersects the total average cost curve. D) the total cost curve is at its minimum. E) Both A and B
Which of the following is NOT true regarding monopoly?
A) Monopoly is the sole producer in the market. B) Monopoly price is determined from the demand curve. C) Monopolist can charge as high a price as it likes. D) Monopoly demand curve is downward sloping.
Fashion Buyers II A buyer for a department store must decide on which designs the stores will carry before he knows what the demand will be in the coming season. Choosing a poorly demanded design means lots of unsold merchandise and losses that are
$200,000 on average. Passing on a highly demanded design means lots of unsold merchandise and missing out on profits that are $300,000 on average. So long as he is more than 40% confident that the design will be successful, carrying the design will minimize expected decision error costs. Why might he opt to carry designs only if he is more than, say, 50% confident of success?