ECON 218 Midterm, Spring 2015

a io of j~wo individua: ont SY). general ¢ is (A and B ind two commodities (OX and Y . ay a. rv one MRS. for A and 8B, (6) MRS,, = P,/P,, © when (2) ” ‘Quilibr) all of the above. A ™Rrs_ = “ag va general ‘equilibrium points of exc! © i wo-individual, two-com: f hange in at indi tract curve, (6) the production contract curve (c) y economy con! . th is elfare (@) the transformation curve. iti Land K), eneral ee commodities (X and Y) and two factors (. eg ral equilit, is Ss when (@) MRTSix = P./Px, (6) MRTS,x« = MRS,,, (c) MRT,, = MRS. ay» ). = (MRTS.«x),- transformation curve is derived from (a) the consumption curve, (b) the utility-possibitity curve, (¢) social welfare function, or @ the production contract curve. The slope of the transformation curve is given by (a) MRT,,, (6) MRS,,, (c) MRES.. or (d) all of the above. individuals (A and B) and two commodities (X and Y), general equilibrium of an ec ies occms when (a) MRT,, = P,/P,, (b) MRS,, for A and B = Ie. wy (MRS,,), = (MRS,,)s, or (d) MRT., = (MRS,,), = (MRS,,)». ‘A £ if the elasticity of substitution for inputs in production is 2, as the price of labor increases, r labor’s factor share will ; aan © remain the same : Sicacarc (d) not be affected in any predictable way because elasticity must always be less than one (6) the individuals are on their consumption contract curve, (c) the individuals are on their utility-possibility curve, or (ad) all of the above. ee & Pareto optimality in production and consumption is given by (9) the social welfare functic (6) the utility-possibility curve, (c) the transformation curve, or (2) the grand utility-possibility curve In'a two-commodity (X and Y) and two-individua! (A and B) economy, the maximum social welfare eached at (a) any point on the grand utilit “Possibility curve, (b) any point on the social welf unction, (c) the point where the MRT,, = MRS,, for A and B, or the point of tangency of tand utility-possibility curve with a social welfare function.