Which of the following is not a limitation of the Pareto criteria?
a. Almost any policy change will make at least one person worse off.
b. The status quo is lent legitimacy from being the starting point for evaluating social welfare.
c. The criteria cannot tell us if a particular policy change will make all participants better off.
d. The criteria do not allow for the ranking of all possible states of the world.
c
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Which of the following would not be considered a "leisure" activity by economists?
A. Making dinner B. Going skiing C. Cleaning the bathroom floor D. Making a work call.
Total revenue equals
a. marginal revenue - marginal cost. b. price/quantity. c. price x quantity. d. output - input.
Bundle L contains 10 units of good X and 20 units of good Y. Bundle M contains 8 units of good X and 21 units of good Y. The consumer is indifferent between bundle L and bundle M. Assume that the consumer's preferences satisfy the four properties of indifference curves. Which of the following correctly expresses the marginal rate of substitution of good X for good Y between these two points?
a. The consumer will give up 1 unit of good X to gain 2 units of good Y. b. The consumer will give up 2 units of good X to gain 1 unit of good Y. c. The price of good X is twice as large as the price of good Y. d. The price of good X is half as large as the price of good Y.
Answer the following statement(s) true (T) or false (F)
1. A sandwich is an example of a club good. 2. Asymmetric information means both parties in a transaction share the same knowledge. 3. Used car sellers are at an advantage over buyers. 4. In adverse selection, one party takes advantage of knowing more than the other. 5. When one party in a sale is dishonest with the other, it is called moral hazard.