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Intermediate Microeconomics and Its Application 11Th Edition Nicholson Test Bank Full Chapter PDF
Intermediate Microeconomics and Its Application 11Th Edition Nicholson Test Bank Full Chapter PDF
1. Consider a two-good production economy in which both goods are produced with fixed
proportions production functions. Then, some efficient allocations will exhibit unemployment
of some factor providing
a. the firms use the inputs in different proportions.
b. the firms exhibit diminishing returns to scale.
c. the firms exhibit increasing returns to scale.
d. production can never be efficient if there are unemployed inputs.
ANS: a
2. Suppose two goods (X and Y ) are being produced efficiently and that the production of X is
always more labor intensive than the production of Y. Production depends only on two factors
(capital and labor); these may be smoothly substituted for each other. The total quantities of
these inputs are fixed. An increase in the production of X and a decrease in the production of
Y will
a. increase the capital-labor ratio in each firm.
b. decrease the capital-labor ratio in each firm.
c. leave the capital-labor ratio for each firm unchanged.
d. increase the capital-labor ratio in Y production and decrease the capital -labor ratio in X
production.
ANS: a
1
2 Chapter 10: General Equilibrium and Welfare
6. In an economy consisting of only two goods, corn and cloth, the amount of extra cloth that
can be produced efficiently if corn output is reduced by one unit is equal to
a. the rate of technical substitution for corn divided by the rate of technical substitution for
cloth.
b. the rate of technical substitution for cloth divided by the rate of technical substitution for
corn.
c. the marginal cost of producing cloth divided by the marginal cost of producing corn.
d. the marginal cost of producing corn divided by the marginal cost of producing cloth.
ANS: d
7. Each of the following factors might interfere with the efficiency of perfect competition
except:
a. increasing returns to scale.
b. imperfect price information.
c. externalities.
d. diminishing returns to scale.
ANS: d
10. Consider three ways of allocating two goods in a two-person exchange economy.
I. Both individuals take prices as given and equilibrium prices are established by
an impartial auctioneer.
II. One individual can act as a perfect price discriminator and force the other
individual to pay a different price for each unit of a good that is traded.
III. One individual is a monopolist and can charge the other individual a single,
utility-maximizing price.
Which of these situations is efficient?
a. None of them.
b. Only I.
c. I and II, but not III.
d. I and III, but not II.
ANS: c
Chapter 10: General Equilibrium and Welfare 3
11. In free exchange among two individuals the position on the contract curve finally arrived at
will, among other things, depend on:
I. The bargaining strength of each individual.
II. The initial endowments of the individuals.
III. The individuals’ preferences.
Which of these correctly completes the statement?
a. II and III, but not I.
b. Only II. e.
c. I and III, but not II.
d. I, II, and III.
ANS: d
15. Suppose the Economics Department has a graduation party for its students but as a final test
they must show they have learned something about trade. The men are given food when they
walk in and the women are given drink. Suppose they have identical preferences where food
and drink provide utility . The contract curve in the Edgeworth box using a
representative man and woman would be
a. a right angle connecting the lower left corner with the upper right corner.
b. a curve (not necessarily a line) connecting the lower left corner with the upper right
corner.
c. a line connecting the lower left corner with the upper right corner.
d. a right angle connecting the upper left corner with the lower right corner.
ANS: b
4 Chapter 10: General Equilibrium and Welfare
16. Suppose the Economics Department has a graduation party for its students but as a final test
they must show they have learned something about trade. The men are given food when they
walk in and the women are given drink. Suppose they have identical preferences where food
and drink provide utility . The exchange would be such that
a. both would be guaranteed to be better off than when they entered.
b. both would be guaranteed to be at least as well off as when they entered.
c. the men would end up with more.
d. the women would end up with more.
ANS: b
17. Suppose the Economics Department has a graduation party for its students but as a final test
they must show they have learned something about trade. The men are given food when they
walk in and the women are given drink. Suppose they have very different preferences where
food and drink provide utility. For men . For women U=min(F,D) The contract
curve in the Edgeworth box using a representative man and woman would be
a. a right angle connecting the lower left corner with the upper right corner.
b. a curve (not necessarily a line) connecting the lower left corner with the upper right
corner.
c. a line connecting the lower left corner with the upper right corner.
d. a right angle connecting the upper left corner with the lower right corner.
ANS: c
18. Suppose goods X and Y are produced along a production possibilities frontier 4X2 + Y2 = 500
and they are perfect substitutes such that U = X + Y. The slope of the production possibilities
frontier is . How much X should be produced?
a. 0
b. 5
c. 10
d. 20
ANS: b
19. Suppose goods X and Y are produced along a production possibilities frontier 4X2 + Y2 = 500
and they are perfect substitutes such that U = X + Y. The slope of the production possibilities
frontier is . How much Y should be produced?
a. 0
b. 5
c. 10
d. 20
ANS: d
Chapter 10: General Equilibrium and Welfare 5
20. Suppose goods X and Y are produced along a production possibilities frontier 4X2 + Y2 = 500
and they are perfect substitutes such that U = X + Y. The slope of the production possibilities
frontier is . What is the MRS at the optimal point?
a. 0
b. -1
c. -4
d. -5
ANS: b
21. Suppose goods X and Y are produced along a production possibilities frontier X2 + 4Y2 = 500
and they are perfect substitutes such that U = X + Y. The slope of the production possibilities
frontier is . How much Y should be produced?
a. 0
b. 5
c. 10
d. 20
ANS: b
22. Suppose goods X and Y are produced along a production possibilities frontier X2 + 4Y2 = 500
and they are perfect substitutes such that U = X + Y. The slope of the production possibilities
frontier is . What is the MRS at the optimal point?
a. 0
b. -1
c. -4
d. -5
ANS: b
23. Suppose goods X and Y are produced along a production possibilities frontier X2 + 4Y2 = 500
and they are perfect substitutes such that U = X + Y. The slope of the production possibilities
frontier is . What is the MRTS at the optimal point?
a. 0
b. -1
c. -4
d. -5
ANS: b
6 Chapter 10: General Equilibrium and Welfare
24. Suppose two coffee snobs who must have their coffee and cream in exact proportions (each
cup is 10 coffee per 1 unit cream) are invited to a weekend long event (during which they can
easily consume 8 cups of coffee). Suppose Snob A is given 8 units of cream and Snob B is
given 80 units of coffee. The contract curve in the Edgeworth box would be
a. a right angle connecting the lower left corner with the upper right corner.
b. a curve (not a line) connecting the lower left corner with the upper right corner.
c. a line connecting the lower left corner with the upper right corner.
d. a right angle connecting the upper left corner with the lower right corner.
ANS: c
25. Suppose two coffee snobs who must have their coffee and cream in exact proportions (each
cup is 10 coffee per 1 unit cream) are invited to a weekend long event (during which they can
easily consume 8 cups of coffee). Suppose Snob A is given 8 units of cream and Snob B is
given 80 units of coffee. The post trading result (one in which any trade that makes both
parties better off than their initial allocation) will guarantee each person
a. nothing
b. at least 1 cup of properly made coffee.
c. at least 2 cups of properly made coffee.
d. exactly 4 cups of properly made coffee.
ANS: b
26. Suppose country A has a production possibilities frontier such that and
country B has a production possibilities frontier such that and consumers in
each country view x and y as perfect substitutes. Country B will produce
a. only x (= ) and trade for y.
b. only y (= ) and trade for x.
c. both x (= 20) and y (= 5) and trade x to get y.
d. both x (= 20) and y (= 5) and trade y to get x.
ANS: c
27. Suppose country A has a production possibilities frontier such that and
country B has a production possibilities frontier such that and consumers in
both countries view x and y as perfect substitutes. Country B will produce
a. only x (= ) and trade for y.
b. only y (= ) and trade for x.
c. both x (= 40) and y (= 20) and trade x to get y.
d. both x (= 40) and y (= 20) and trade y to get x.
ANS: c
Chapter 10: General Equilibrium and Welfare 7
28. Suppose a man and a woman are in love and care for the other’s happiness as well as their
own consumption.
Suppose they have 100 units of consumption to distribute, they will maximize the joint
happiness ( ) where
a. ;
b. ;
c. ;
d. ;
ANS: d
29. Suppose a man and a woman are in love and care for the other’s happiness as well as their
own consumption. Suppose the man is more selfish than the woman
UM = CM2/3 UW1/3
UW = CW1/2 UM1/2
They will maximize the joint happiness ( ) where
a. ;
b. ;
c. 50 < < 100; 0 < < 50
d. 50 < < 100; 0 < < 50
ANS: c
30. Suppose a man and a woman are in love and care for the other’s happiness as well as their
own consumption. Suppose the woman is more selfish than the woman
UM = CM1/2 UW1/2
UW = CW2/3 UM1/3
They will maximize the joint happiness ( ) where
a. ;
b. ;
c. 50 < < 100; 0 < < 50
d. 50 < < 100; 0 < < 50
ANS: d
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DAMSON JELLY.
Pour the juice from some damsons which have stood for a night in
a very cool oven, or been stewed in a jar placed in a pan of water;
weigh and put it into a preserving-pan with a pound and four ounces
of pearmains (or of any other fine boiling apples), pared, cored, and
quartered, to each pound of the juice; boil these together, keeping
them well stirred, from twenty-five to thirty minutes, then add the
sugar, and when it is nearly dissolved, continue the boiling for ten
minutes. This, if done with exactness, will give a perfectly smooth
and firm preserve, which may be moulded in small shapes, and
turned out for table. The juice of any good red plum may be used for
it instead of that of damsons.
To each pound clear damson-juice, 1-1/4 lb. pearmains (or other
good apples), pared and cored: 25 to 30 minutes. Sugar, 14 oz.: 10
minutes.
EXCELLENT DAMSON CHEESE.
Strip from their stalks some fine ripe black-cluster grapes, and stir
them with a wooden spoon over a gentle fire until all have burst, and
the juice flows freely from them; strain it off without pressure, and
pass it through a jelly-bag, or through a twice-folded muslin; weigh
and then boil it rapidly for twenty minutes; draw it from the fire, stir in
it until dissolved, fourteen ounces of good sugar, roughly powdered,
to each pound of juice, and boil the jelly quickly for fifteen minutes
longer, keeping it constantly stirred, and perfectly well skimmed. It
will be very clear, and of a beautiful pale rose-colour.
Juice of black-cluster grapes: 20 minutes. To each pound of juice,
14 oz. good sugar: 15 minutes.
Obs.—We have proved this jelly only with the kind of grape which
we have named, but there is little doubt that fine purple grapes of
any sort would answer for it well.
ENGLISH GUAVA.
Weigh six pounds of the fruit when it is quite ripe, but before the
frost has touched it; give each plum a cut as it is thrown into the
preserving-pan, and when all are done boil them from thirty-five to
forty minutes, taking out the stones as they rise to the surface, when
they are quite detached from the flesh of the fruit. Draw back the pan
from the fire, stir in two pounds of good sugar beaten to powder, and
boil the preserve quickly for fifteen minutes. The imperatrice plum is
of itself so sweet that this proportion of sugar makes with it a very
rich preserve.
Imperatrice plums (without the stalks) 6 lbs.: boiled 35 to 40
minutes. Sugar 2 lbs. (added after the stones are out): 15 minutes.
Obs.—Some slight trouble would be avoided by pressing the fruit
through a sieve after the first boiling; but we do not think the
marmalade would be improved by being freed from the skins of the
plums.
TO DRY IMPERATRICE PLUMS.
Gather the fruit in the middle of the day in very dry weather; strip
off the stalks, and have in readiness some perfectly clean and dry
wide-necked bottles; turn each of these the instant before it is filled,
with the neck downwards, and hold in it two or three lighted matches:
drop in the fruit before the vapour escapes, shake it gently down,
press in some new corks, dip the necks of the bottles into melted
resin, set them at night into an oven from which the bread has been
drawn six or seven hours at least, and let them remain until the
morning: if the heat be too great the bottles will burst. Currants,
cherries, damsons, greengages, and various other kinds of plums
will remain good for quite twelve months when bottled thus, if stored
in a dry place.
To steam the fruit, put the bottles into a copper or other vessel up
to their necks in cold water, with a little hay between and under them;
light the fire, let the water heat slowly, and keep it at the point of
gentle simmering until the fruit is sufficiently scalded. Some kinds will
of course require a much longer time than others. From half to three
quarters of an hour will be sufficient for gooseberries, currants, and
raspberries; but the appearance of all will best denote their being
done. When they have sunk almost half the depth of the bottles, and
the skins are shrivelled, extinguish the fire, but leave them in the
water until it is quite cold; then wipe and store the bottles in a dry
place. A bit of moistened bladder tied over corks is better than the
resin when the fruit is steamed.
APPLE JELLY.
Pare, quarter, core, and weigh some ripe but quite sound quinces,
as quickly as possible, and throw them as they are done into part of
the water in which they are to be boiled, as directed at page 456;
allow one pint of this to each pound of the fruit, and simmer it gently
until it is a little broken, but not so long as to redden the juice, which
ought to be very pale. Turn the whole into a jelly-bag, or strain the
liquid through a fine cloth, and let it drain very closely from it but
without the slightest pressure. Weigh the juice, put it into a delicately
clean preserving-pan, and boil it quickly for twenty minutes; take it
from the fire and stir in it, until it is entirely dissolved, twelve ounces
of sugar for each pound of juice, or fourteen ounces if the fruit should
be very acid, which it will be in the earlier part of the season; keep it
constantly stirred and thoroughly cleared from scum, from ten to
twenty minutes longer, or until it jellies strongly in falling from the
skimmer; then pour it directly into glasses or moulds. If properly
made, it will be sufficiently firm to turn out of the latter, and it will be
beautifully transparent, and rich in flavour. It may be made with an
equal weight of juice and sugar mixed together in the first instance,
and boiled from twenty to thirty minutes. It is difficult to state the time
precisely, because from different causes it will vary much. It should
be reduced rapidly to the proper point, as long boiling injures the
colour: this is always more perfectly preserved by boiling the juice
without the sugar first.
To each pound pared and cored quinces, 1 pint water: 3/4 to 1-1/2
hour. Juice, boiled 20 minutes. To each pound, 12 oz. sugar: 10 to
20 minutes. Or, juice and sugar equal weight: 20 to 30 minutes.
QUINCE MARMALADE.
Take the finest barberries without stones that can be procured, tie
them together in bunches of four or five sprigs, and for each half
pound of the fruit (which is extremely light), boil one pound of very
good sugar in a pint of water for twenty minutes, and clear it well
from scum; throw in the fruit, let it heat gently, and then boil from five
to seven minutes, when it will be perfectly transparent. So long as
any snapping noise is heard the fruit is not all done; it should be
pressed equally down into the syrup until the whole of the berries
have burst; and should then be turned into jars, which must be
covered with skin or two or three folds of thick paper, as soon as the
preserve is perfectly cold. The barberries thus prepared make a
beautiful garnish for sweet dishes, or for puddings.
Barberries, tied in bunches, 1-1/2 lb.; sugar 3 lbs.; water 1-1/2 pint:
20 minutes. Barberries boiled in syrup: 5 to 7 minutes.
BARBERRY JAM.
Strip the fruit from the stems, wash it in spring-water, drain, bruise
it slightly, and put it into a clean stone jar, with no more liquid than
the drops which hang about it. Place the jar in a pan of water, and
steam the fruit until it is quite tender: this will be in from thirty minutes
to an hour. Pour off the clear juice, strain, weigh, and boil it quickly
from five to seven minutes, with eighteen ounces of sugar to every
pound. For the marmalade, rub the barberries through a sieve with a
wooden spoon, and boil them quickly for the same time, and with the
same proportion of sugar as the jelly.
Barberries boiled in water-bath until tender; to each pound of juice,
1 lb. 2 oz. sugar: 5 minutes. Pulp of fruit to each pound, 18 oz.
sugar: 5 minutes.
Obs.—We have always had these preserves made with very ripe
fruit, and have found them extremely good; but more sugar may be
needed to sweeten them sufficiently when the barberries have hung
less time upon the trees.
ORANGE MARMALADE.
(A Portuguese Receipt.)
Rasp very slightly on a fine and delicately clean grater the rinds of
some sound Seville oranges; cut them into quarters, and separate
the flesh from the rinds; then with the small end of a tea, or egg-
spoon, clear it entirely from the pips, and from the loose inner skin
and film. Put the rinds into a large quantity of cold water, and change
it when they have boiled about twenty minutes. As soon as they are
perfectly tender lift them out, and drain them on a sieve; slice them
thin, and add eight ounces of them to each pound of the pulp and
juice, with a pound and a half of highly-refined sugar in fine powder;
boil the marmalade quickly for half an hour, skim it well, and turn it
into the jars. The preserve thus made will not have a very powerful
flavour of the orange rind. When more of this is liked, either leave a
portion of the fruit unrasped, or mix with the preserve some of the
zest which has been grated off, allowing for it its weight of sugar. Or
proceed thus: allow to a dozen Seville oranges two fine juicy lemons,
and the weight of the whole in sifted sugar, of excellent quality. With
a sharp knife cut through the rinds just deep enough to allow them to
be stripped off in quarters with the end of a spoon, and throw them
for a night into plenty of cold spring-water; on the following morning
boil them sufficiently tender to allow the head of a pin to pierce them
easily; then drain them well, let them cool, and scrape out the white
part of the rind, and cut the remainder into thin chips. In the mean
time have the pulp of the fruit quite cleared from the pips and film;
put it with the chips into a preserving-pan, heat them slowly, boil
them for ten minutes, draw the pan from the fire, and stir gradually
in, and dissolve the remainder of the sugar, and boil the preserve
more quickly for twenty minutes, or until it thickens and appears
ready to jelly. This mode, though it gives a little additional trouble, will
prevent the orange-chips from becoming hard, which they will
sometimes be if much sugar be added to them at first. The sugar first
broken into large lumps, is sometimes made into a very thick syrup,
with so much water only as will just dissolve it; the pulp and juice are