Can it be efficient for one trader to consume all units of the goods while the other trader consumes nothing? In other words, does this point lie on the contract curve?
What will be an ideal response?
Yes, it is a Pareto Optimal point (though perhaps socially undesirable for obvious reasons). In order to improve the utility of one consumer, we must reduce the consumption of the other, thereby making that other consumer worse off.
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The congestion tax implemented in London reduced traffic volume and cut travel time for cars and buses in half
Indicate whether the statement is true or false
If pretzels are a normal good, the income effect of a price change means that
a. as income increases, the quantity demanded increases along the demand curve for pretzels b. as income increases, the demand curve for pretzels shifts rightward c. as income increases, the demand curve for pretzels shifts leftward d. as the price of pretzels increases, the real income of individuals who demand pretzels decreases, so the quantity demanded of pretzels decreases e. as the price of pretzels increases, income increases
Implicit and explicit revenues minus implicit and explicit costs equals:
A. zero profit. B. accounting profit. C. implicit profit. D. economic profit.
If the economy is growing beyond potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in
A) the money supply and a decrease in interest rates. B) government purchases. C) oil prices. D) taxes.