Test Questions without Answers
Chapter 22. Equilibrium Theory.
General Equilibrium. Welfare Economics. The Invisible Hand
Chapter 22–Question 1
Draw the equilibrium graph with constant rather than diminishing returns and explain all implications.
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Chapter 22–Question 2
Define allocative efficiency.
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Chapter 22–Question 3
Define productive efficiency.
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Chapter 22–Question 4
If an industry is inefficient, what is the relationship between its supply curve and its marginal cost curve?
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Chapter 22–Question 5
A situation is Pareto optimal if
- all benefits exceed all costs
- marginal costs are falling
- any change helping some people will harm others
- there are no positive externalities
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Chapter 22–Question 6
An economy is efficient when
- it produces the goods in which it has an absolute advantage
- it produces the goods in which it has a comparative advantage
- it produces the goods with the lowest opportunity costs
- it produces the maximum quantity that is attainable with its resources
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Chapter 22–Question 7
The compensation principle suggests that situation A is superior to situation B
A. if total output in A is higher
B. if total consumer surplus in A is higher
C. if the total gains equal the total losses
D. if the total gains exceed the total losses
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