ESFM2-L12 Score:
1.    A situation is Pareto-efficient if there is no way how to make everyone worse off
without making anyone better off.
A True
B False
2.    Net demand is
A the difference between gross demand and initial endowment.
B gross demand net of depreciation (amortization).
C quantity that is demanded by the consumer at a given price.
D gross demand if the allocation is Pareto efficient.
3.    The aggregate excess demand in an equilibrium always equals 0.
A True
B False
4.    A Pareto-efficient allocation does not have to be on the contract curve in the
Edgeworth box diagram.
A True
B False
5.    It follows from the Walras law that there are _______ independent equations in
the model of general equilibrium with k goods.
A 0
B k
C k - 1
D k + 1
6.    Let's assume a general equilibrium of an economy with two goods X and Y and
two consumers. If the equilibrium prices are P
x
= 2 and P
y
= 1, then P
x
= 1 and P
y
=
0.5 are also equilibrium prices.
A True
B False
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7.    According to the first welfare theorem
A a competitive equilibrium always exists.
B every competitive equilibrium is Pareto-efficient.
C every competitive equilibrium is fair.
D all consumers must have the same wealth in Pareto optimum.
8.    The second welfare theorem states that if the preferences of consumers are
convex then any Pareto-efficient allocation can be reached by a competitive market
from a specific initial allocation.
A True
B False
9.    Adam and Eva consume only bread and wine. They do not produce anything and
trade only with each other. They both have strictly convex preferences. Let's
suppose that Adam's and Eva's initial endowments are identical, then the ratio
between price of bread and wine must be 1.
A True
B False
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