Jan Moodle Quiz

Question 1

Coasian bargaining when producers have the right to produce

Answer 1

• fishermen have to pay THEM to reduce their production level, so profit is highest.

Question 2

Coasian bargaining when the fishermen have the right to clean water

Answer 2

Producers have to compensate them, so their profits fall

Question 3

Priti job: £10/hour, disutility £1/hour always
- if she loses, can get job with £8/hour after 36 weeks
- in interim, can claim UB for 20 weeks £175 weeks

Answer 3

• employment rent lost per hour during UB weeks = £4
• if she lost her job, employment rent per hour lost during weeks she would not receive UB but hasn’t found a job = £9
• total loss of employment rent over entire period
• employment rent lost in first 8 weeks.

Question 4

Is average effort per hour increasing/ decreasing in wages

Answer 4

Average effort per hour is slope of ray from the horizontal axis intercept to best response curve. For a concave curve, this is decreasing in wages

Question 5

The best response curve __ sloping and __-

Answer 5

Upward, concave

Question 6

Slope of isoprofit curve

Answer 6

P-mc/Q

Question 7

Fir a person who values the income of both the poor and the rich, the MRS at either point E or point F, which means neither allocation would be chosen

Answer 7

TRUE, indifference curves would have a negative slope and hence, statement is true. Such a person would not forgo the higher utility available on the feasible frontier to the SE, of F or to the NW of R.

Question 8

When MC curve in perfect comp

Answer 8

For profits/losses, compare MR/P point to the AC curve