Factor pricing and general equilibrium analysis. - One Line Questions

1. The Stolper-Samuelson theorem predicts that, in a Heckscher-Ohlin model, an increase in the relative price of a good will lead to: — An increase in the real return to the factor used intensively in its production
2. A situation where the consumption of one individual affects the utility of another individual without compensation is known as: — An externality
3. The Walrasian Tatonnement process describes: — A tâtonnement process is a trial-and-error adjustment process that an auctioneer might use to find the equilibrium prices. In this process, the auctioneer calls out prices, and consumers and producers respond. If there is a shortage of a good, the auctioneer raises the price; if there is a surplus, the auctioneer lowers the price. This process continues until equilibrium prices are found.
4. The concept of 'general equilibrium' was first formally developed by: — Leon Walras
5. The 'contract curve' in an Edgeworth box represents: — All Pareto efficient allocations of goods between two individuals
6. The Rybczynski theorem states that, at constant prices, an increase in the endowment of one factor will lead to: — An increase in the output of the good that uses the increased factor intensively, and a decrease in the output of the other good
7. The second fundamental theorem of welfare economics states that: — Any Pareto efficient allocation can be achieved as a competitive equilibrium by appropriate redistribution of initial endowments
8. The concept of 'general equilibrium' implies that all prices and quantities are: — Mutually interdependent
9. In general equilibrium, the 'law of one price' implies: — The same price for the same good in different markets, assuming no transaction costs or barriers
10. The Marginal Factor Cost (MFC) for a monopsonist is typically: — Greater than the factor price
11. A firm operating under monopsony in the labor market will pay a wage: — Lower than the marginal revenue product of labor
12. In general equilibrium, the efficiency of markets is often evaluated using the criterion of: — Pareto optimality
13. A situation where the production of one good requires the use of factors that are also demanded for the production of another good is an example of: — Interdependence of markets
14. A situation where the cost of production for one firm affects the cost of production for another firm is an example of: — External economy
15. Which of the following is NOT a reason for market failure? — Perfect information
16. In a general equilibrium model, if the demand for a good increases, what is a likely consequence for factor prices? — Factor prices may increase if the increased demand for the good leads to increased demand for the factors used to produce it
17. Which of the following best describes the relationship between factor pricing and general equilibrium analysis? — General equilibrium analysis helps understand how factor prices are determined within the broader context of the entire economy
18. The 'Edgeworth box' is a graphical tool used to analyze: — General equilibrium in a two-person, two-good exchange economy
19. If a factor of production is specific to an industry, its supply in the short run is likely to be: — Perfectly inelastic
20. Which of the following is a key assumption of the marginal productivity theory of distribution? — Factors are homogenous and perfectly divisible
21. The demand curve for a factor of production in a perfectly competitive output market is: — Its Marginal Revenue Product curve
22. According to the marginal productivity theory of distribution, the reward for a factor of production is determined by: — Its marginal product
23. The Heckscher-Ohlin theorem relates trade patterns to differences in: — Factor endowments
24. Which theory explains the determination of wages in the labor market? — Marginal productivity theory
25. The Marginal Revenue Product (MRP) of a factor is calculated as: — Marginal Product (MP) multiplied by the marginal revenue of the output
26. The 'rate of profit' is primarily a concern of which theory of distribution? — Classical economics (e.g., Marx, Ricardo)
27. Which condition must hold for Pareto efficiency in a general equilibrium context? — Marginal rate of substitution equals marginal rate of transformation in all markets
28. In a perfectly competitive market, a firm will hire a factor of production up to the point where: — Marginal Revenue Product (MRP) equals Marginal Cost (MC)
29. In the case of a monopsonist buyer of a factor of production, the firm hires the factor up to the point where: — Marginal Revenue Product (MRP) equals Marginal Factor Cost (MFC)
30. A market failure occurs when: — Markets do not achieve Pareto efficiency
31. The core idea of general equilibrium analysis is to move beyond: — Partial equilibrium analysis
32. The 'invisible hand' concept, as described by Adam Smith, is most closely related to: — General equilibrium under perfect competition
33. In the Edgeworth box, a point is Pareto efficient if: — No further mutually beneficial trade is possible
34. In a general equilibrium model, a change in one market is assumed to affect: — All other markets in the economy
35. A factor of production that is in fixed supply, like a unique piece of land, will earn: — Only economic rent
36. The Arrow-Debreu model is a formalization of: — General equilibrium theory
37. In the context of factor pricing, the 'short run' supply of land is typically considered: — Perfectly inelastic
38. The concept of 'general equilibrium' is most relevant for understanding: — The interconnectedness of different markets in an economy
39. Which theorem establishes the existence of a general equilibrium under certain conditions? — The Arrow-Debreu Theorem
40. General equilibrium analysis examines: —
41. In a two-factor, two-good Heckscher-Ohlin model, if Country A is capital-abundant and Country B is labor-abundant, then Country A will tend to export: — The capital-intensive good
42. The wage rate determined by the intersection of labor supply and labor demand curves in a perfectly competitive market is: — The marginal revenue product of labor
43. The theory of 'rent' as developed by David Ricardo focuses on: — The payment to land, based on its fertility and scarcity
44. In the context of factor pricing, 'transfer earnings' refers to: — The minimum payment required to keep a factor in its current use
45. The 'core' of a game in cooperative game theory, which has connections to general equilibrium, refers to: — The set of outcomes that are not blocked by any coalition
46. Under perfect competition, the demand for a factor is determined by: — The marginal revenue product of the factor
47. The concept of 'factor intensity' in general equilibrium refers to: — The relative proportion of factors used in the production of a good
48. The concept of 'economic rent' refers to: — The payment made to a factor above its opportunity cost
49. Which of the following is a key factor influencing the demand for labor? — The wage rate and the marginal product of labor
50. The first fundamental theorem of welfare economics states that: — Under certain conditions, competitive markets lead to Pareto efficient outcomes
All One Line Questions
E-Book Factor pricing and general equilibrium analysis. Online Test Factor pricing and general equilibrium analysis. Question Bank Factor pricing and general equilibrium analysis.