Gains from trade can only occur when
A) marginal rates of substitutions differ across people.
B) marginal rates of substitution are equal across people.
C) indifference curves are convex.
D) people find themselves on the contract curve.
A
You might also like to view...
The definition of M1 includes:
A. cash and checking account balances. B. hard money and savings account balances. C. cash and savings account balances. D. cash, checking accounts, savings accounts, and other financial instruments where money is locked away for a specified period of time.
A public good is:
A. rival in consumption and excludable. B. not rival in consumption and not excludable. C. not rival in consumption, but excludable. D. rival in consumption, but not excludable.
Figure 5-2
?
In Figure 5-2, if the aggregate demand curve shifts outward over time, the economy will
A. experience inflation. B. see a sustained decrease in the price level. C. experience a significant decrease in unemployment. D. experience economic recession.
Curly and Moe are considering living alone or being roommates and splitting the rent for the next twelve months. If they live alone, they each rent a one bedroom, one bath apartment for $500 per month, while if they are roommates, they can split a two bedroom, one bath apartment for $800 per month. The one difficulty they have is that Moe snores very loudly. Curly estimates the cost of poor sleep due to Moe's snoring at $150 per month. Moe could obtain a snore-eliminating device for $50 per month. The least costly solution to the externality present in this situation is for:
A. Curly to endure Moe's snoring. B. Moe to pay Curly for his discomfort. C. both to live alone. D. Moe to eliminate his snoring.