EC248 Final Exam |Questions Solved 100% Correct
A representation of society's preferences and attitudes towards the amount and distribution
of welfare in a society is called
a) A utility function
b) A social welfare function
c) The Grand Utility Frontier
d) The Edgeworth Box - ✔b) A social welfare function
Which statement about opportunity cost is NOT true:
a) Opportunity cost is the financial value of the forgone opportunity
b) Opportunity costs are important because resources are limited.
c) Opportunity cost is a fundamental economic concept.
d) Opportunity cost emphasizes the true social cost of a policy. - ✔a) Opportunity cost is
the financial value of the forgone opportunity
Which statement best describes technical efficiency?
a) Enables producers to identify the most up to date production technology.
b) Maximizes outputs for given inputs conditional on a production technology.
,c) Can only be identified when costs of alternative inputs are known.
d) Always leads to cost efficiency and allocative efficiency. - ✔b) Maximizes outputs for
given inputs conditional on a production technology.
a) it identifies the best possible allocation
b) is a strong economic tool used in policy analysis.
c) is successful if winners can compensate losers.
d) if strictly applied would lead to policy paralysis. - ✔d) if strictly applied would lead to
policy paralysis.
a) Allocative efficiency results from technical efficiency.
b) Allocative efficiency results from cost-effective efficiency.
c) Allocative efficiency relates to what society values.
d) Allocative efficiency relates to fairness. - ✔c) Allocative efficiency relates to what
society values.
,Which statement is NOT true?
a) Marginal analysis and average analysis lead to the similar outcomes.
b) Marginal analysis asks 'what happens if I do something a little more?
c) Marginal analysis is used to identify the optimal level of a good or activity.
d) Total benefit is maximized where marginal cost equals marginal benefit. - ✔a) Marginal
analysis and average analysis lead to the similar outcomes.
Subsidizing prescription medications for low-income families demonstrates
a) horizontal equity
b) vertical equity
c) procedural equity
d) distributional efficiency - ✔b) vertical equity
Providing free prescription medications for all patients who need them demonstrates
a) horizontal equity
b) vertical equity
c) procedural equity
d) distributional efficiency - ✔a) horizontal equity
, Market power implies
a) a well functioning market.
b) only market forces set prices.
c) an ability to influence market price.
d) perfect competition. - ✔c) an ability to influence market price.
Which statement is NOT true about barriers to entry in a market?
may occur naturally
may arise artificially
may be due to large fixed costs
will lead to a monopoly - ✔will lead to a monopoly
Perfect competition does not rule out
externalities
market power
A representation of society's preferences and attitudes towards the amount and distribution
of welfare in a society is called
a) A utility function
b) A social welfare function
c) The Grand Utility Frontier
d) The Edgeworth Box - ✔b) A social welfare function
Which statement about opportunity cost is NOT true:
a) Opportunity cost is the financial value of the forgone opportunity
b) Opportunity costs are important because resources are limited.
c) Opportunity cost is a fundamental economic concept.
d) Opportunity cost emphasizes the true social cost of a policy. - ✔a) Opportunity cost is
the financial value of the forgone opportunity
Which statement best describes technical efficiency?
a) Enables producers to identify the most up to date production technology.
b) Maximizes outputs for given inputs conditional on a production technology.
,c) Can only be identified when costs of alternative inputs are known.
d) Always leads to cost efficiency and allocative efficiency. - ✔b) Maximizes outputs for
given inputs conditional on a production technology.
a) it identifies the best possible allocation
b) is a strong economic tool used in policy analysis.
c) is successful if winners can compensate losers.
d) if strictly applied would lead to policy paralysis. - ✔d) if strictly applied would lead to
policy paralysis.
a) Allocative efficiency results from technical efficiency.
b) Allocative efficiency results from cost-effective efficiency.
c) Allocative efficiency relates to what society values.
d) Allocative efficiency relates to fairness. - ✔c) Allocative efficiency relates to what
society values.
,Which statement is NOT true?
a) Marginal analysis and average analysis lead to the similar outcomes.
b) Marginal analysis asks 'what happens if I do something a little more?
c) Marginal analysis is used to identify the optimal level of a good or activity.
d) Total benefit is maximized where marginal cost equals marginal benefit. - ✔a) Marginal
analysis and average analysis lead to the similar outcomes.
Subsidizing prescription medications for low-income families demonstrates
a) horizontal equity
b) vertical equity
c) procedural equity
d) distributional efficiency - ✔b) vertical equity
Providing free prescription medications for all patients who need them demonstrates
a) horizontal equity
b) vertical equity
c) procedural equity
d) distributional efficiency - ✔a) horizontal equity
, Market power implies
a) a well functioning market.
b) only market forces set prices.
c) an ability to influence market price.
d) perfect competition. - ✔c) an ability to influence market price.
Which statement is NOT true about barriers to entry in a market?
may occur naturally
may arise artificially
may be due to large fixed costs
will lead to a monopoly - ✔will lead to a monopoly
Perfect competition does not rule out
externalities
market power
