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Unformatted text preview: CHAPTER 16 General Equilibrium and Economic Efficiency MULTIPLE CHOICE Section 16.1 easy 1. Which of these is NOT an exercise in general equilibrium analysis? a. A discussion of factors within the wheat market that influence wheat prices. b. An analysis of the effects of changes in oil prices upon the natural gas market. c. An evaluation of relationships between the markets for tires and automobiles. d. None of the above. easy 2. General equilibrium analysis is different from partial equilibrium analysis in that general equilibrium analysis a. explicitly takes feedback effects into account and partial equilibrium analysis does not. b. does not take into consideration specific problems, but partial equilibrium analysis does. c. takes into consideration specific problems, but partial equilibrium analysis does not. d. allows one to arrive at a specific conclusion, but partial equilibrium analysis does not. easy 3. The United States and Brazil are competitors in the world soybean market. In the late 1960s and early 1970s, the Brazilian government developed regulations designed to encourage Brazilian soybean production and exports. An unanticipated effect of the Brazilian regulations was to stimulate U.S. soybean production and exports. The type of economic analysis that would explain and predict these effects is called a. closed economy macroeconomics. b. international economics. c. partial equilibrium analysis. d. full market analysis. e. general equilibrium analysis. easy 4. The markets for movie theater tickets and videocassette rentals are highly interdependent. Suppose that a tax is imposed on movie theater tickets. The type of analysis that examines the effects of this tax on the markets for movie theater tickets and videocassettes simultaneously is called a. macroeconomics. b. general equilibrium analysis. c. partial equilibrium analysis. d. full market analysis. e. psychoanalysis. moderate 5. Which of the following is true? Partial equilibrium analysis will a. overstate the impact of a tax for both substitutes and complements. b. understate the impact of a tax for both substitutes and complements. c. understate the impact of a tax for complements and overstate the impact for substitutes. d. understate the impact of a tax for substitutes and overstate the impact for complements. 53 CHAPTER 16 TEST BANK GENERAL EQUILIBRIUM AND ECONOMIC EFFICIENCY SIXTH EDITION Section 16.2 Scenario 1: Irrespective of the amount of cheese doodles and pretzels that Sam consumes, his marginal rate of substitution of cheese doodles for pretzels is 2. Also, irrespective of the amount of cheese doodles and pretzels that Sally consumes, her marginal rate of substitution of cheese doodles for pretzels is 3....
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- Spring '11