Multiple Choice Quiz

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1		The Welfare theorem formulates assumptions regarding
			A)	firms and consumers.
			B)	production functions and Pareto efficiency.
			C)	bargaining and the invisible hand.
			D)	consumers and Pareto efficiency.
2		If the assumptions of the Welfare theorem are satisfied, then
			A)	the contractual obligations still have to be met.
			B)	the assignment of property rights does not matter for efficiency.
			C)	there are no coordination and motivation problems.
			D)	the competition between firms is irrelevant.
3		The firm is conceptualized in the theory of general equilibrium as a
			A)	nexus of contracts.
			B)	collection of bureaus.
			C)	system of attributes.
			D)	production function.
4		The fundamental welfare theorem implies the law of one price. It means that
			A)	the quantity supplied is equal to the quantity demanded in all markets.
			B)	there is an observed price regularity in markets.
			C)	consumers have the legal right to pay the same price for identical products.
			D)	economic theory is in line with legal theory.
5		Demand is equated to supply in the fundamental welfare theorem by
			A)	price adjustments.
			B)	bargaining between firms and consumers.
			C)	the Walrasian auctioneer.
			D)	contracts.
6		What is the Walrasian auctioneer not doing in the general equilibrium model?
			A)	Collecting information.
			B)	Subsidizing exchange.
			C)	Reporting information.
			D)	Calculating market clearing prices.
7		The Walrasian auctioneer in the general equilibrium model
			A)	resolves all coordination problems.
			B)	equates demand and supply in every market.
			C)	resolves all motivation problems.
			D)	highlights the importance of asymmetric information.
8		The theory of general equilibrium addresses bargaining
			A)	mainly in an environment with asymmetric information.
			B)	not at all.
			C)	when there are Pareto improvements possible.
			D)	with the assumption of utility / profit maximizing players.
9		The type of contracts used in the theory of the general equilibrium are
			A)	complete.
			B)	incomplete.
			C)	complete contingent.
			D)	relational.
10		The importance of the theory of general equilibrium is that it
			A)	formulates guidelines for competition policy.
			B)	serves as a benchmark for the development of theory regarding organizations.
			C)	is objective.
			D)	extends the law of comparative advantages.