QUIZ-III-ECO-3203-W2002-solaa

C the second theorem of welfare economics d both b and

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Unformatted text preview: f welfare economics. c) the second theorem of welfare economics. d) both (b) and (c) above. Answer: (b) 17) A competitive equilibrium may fail to be Pareto optimum due to all of the following except a) inequality. b) externalities. c) distorting taxes. d) non-price-taking firms. 4 Answer: (a) 18) An externality is any activity for which an individual firm or consumer does not take into account all a) of the ramifications of its actions on others. b) associated costs. c) associated benefits. d) associated costs and benefits. Answer: (d) 19) The presence of a distorting tax on wage income can result in a) MPN < MRTl,C b) MRTl,C < MRSl,C c) MPN < w d) MRSl,C < MPN Answer: (d) 20) Relative to the social optimum, monopoly power directly leads to a) underproduction. b) overproduction. c) too much leisure. d) too little leisure. Answer: (a) 21) An increase in government spending shifts the PPF a) upward, but does not change its slope. b) upward, and also changes its slope. c) downward, but does not change its slope. d) downward, and also changes its slope. Answer: (c) 22) An increase in government spending a) increases consumption, increases hours worked, and increases the real wage. b) reduces consumption, increases hours worked, and increases the real wage. c) reduces consumption, increases hours worked and reduces the real wage. d) reduces consumption, reduces hours worked, and reduces the real wage. Answer: (c) 23) Changes in government spending are not likely causes of business cycles because government spending induced business cycles would, counterfactually predict a) countercyclical real wages. b) procyclical real wages. c) countercyclical employment. d) procyclical employment. Answer: (a) 5 24) Changes in government spending are not likely causes of business cycles because government spending induced business cycles would, counterfactually predict a) countercyclical consumption. b) procyclical consumption. c) countercyclical employment. d) procyclical employment. Answer: (a) 25) An increase in total factor productivity shifts the PPF a) upward, but does not change its slope. b) upward, and also changes its slope. c) downward, but does not change its slope. d) downward, and also changes its slope Answer: (b) 26) An increase in total factor productivity a) increases consumption, increases output, and increases the real wage. b) reduces consumption, increases output...
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This document was uploaded on 03/03/2014.

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