Equilibrium: Problem Set on Supply, Demand, and Price
Test Version A
SEMESTER I EXAMINATIONS Mid-Term Assessment
ECON 30110
Microeconomics II
Time Allowed: 50 minutes
Instructions for Candidates
This exam counts for 30% of the Module Grade.
All questions carry equal marks.
Note there is NO negative marking
Correct answer is worth 1 mark.
No answer or more than one answer, will both receive a 0 mark.
Incorrect answer will receive a 0 mark.
Attempt all 20 questions.
Shade in the box in the appropriate space with a HB pencil on the RESPONSE SHEET.
Write the test version at the top of the RESPONSE SHEET
You may use the paper provided to make notes or calculations to help you.
Instructions for Invigilators
Foreign language/English dictionaries are permitted.
Non-Programmable Calculators are permitted
NO MOBILE PHONES ALLOWED 1.
If two people in a pure exchange economy have identical utility functions, then they:
a) may want to trade if their marginal rates of substitution are different b) will want to trade if they are on the contract curve c) will not want to trade if their consumption bundles are not Pareto-efficient d) will only want to trade if they are not at their endowment e) may want to trade if the price ratio is not equal to one
answer a
If MRSA is not equal to MRSB, the two consumers will be able to arrange a mutually beneficial trade. Mutually beneficial trade will not occur only when the allocation of resources among A and B is already efficient. In the case of our two-consumer economy, MRSA=MRSB indicates an efficient allocation of goods (on contract curve).
2. Suppose in a two-good (X and Y) two-person (Ann and Bob) exchange economy, the MRS for person A is YA/XA and the MRS for B is YB/XB. The total amount of X is 40 and the total amount of Y is 40. Ann has an initial endowment of 10 units of X and 30 of Y, while Bob has the remainder. This implies:
a) No trade will take place. b) Ann will give some of Y to
SEMESTER I EXAMINATIONS Mid-Term Assessment
ECON 30110
Microeconomics II
Time Allowed: 50 minutes
Instructions for Candidates
This exam counts for 30% of the Module Grade.
All questions carry equal marks.
Note there is NO negative marking
Correct answer is worth 1 mark.
No answer or more than one answer, will both receive a 0 mark.
Incorrect answer will receive a 0 mark.
Attempt all 20 questions.
Shade in the box in the appropriate space with a HB pencil on the RESPONSE SHEET.
Write the test version at the top of the RESPONSE SHEET
You may use the paper provided to make notes or calculations to help you.
Instructions for Invigilators
Foreign language/English dictionaries are permitted.
Non-Programmable Calculators are permitted
NO MOBILE PHONES ALLOWED 1.
If two people in a pure exchange economy have identical utility functions, then they:
a) may want to trade if their marginal rates of substitution are different b) will want to trade if they are on the contract curve c) will not want to trade if their consumption bundles are not Pareto-efficient d) will only want to trade if they are not at their endowment e) may want to trade if the price ratio is not equal to one
answer a
If MRSA is not equal to MRSB, the two consumers will be able to arrange a mutually beneficial trade. Mutually beneficial trade will not occur only when the allocation of resources among A and B is already efficient. In the case of our two-consumer economy, MRSA=MRSB indicates an efficient allocation of goods (on contract curve).
2. Suppose in a two-good (X and Y) two-person (Ann and Bob) exchange economy, the MRS for person A is YA/XA and the MRS for B is YB/XB. The total amount of X is 40 and the total amount of Y is 40. Ann has an initial endowment of 10 units of X and 30 of Y, while Bob has the remainder. This implies:
a) No trade will take place. b) Ann will give some of Y to