Intermediate Microeconomic Analysis (Econ 173) Signature:
Drake University, Fall 2006
William M. Boal Printed name:
MIDTERM EXAMINATION #4 VERSION C
“General Equilibrium and Market Power”
December 5, 2006
INSTRUCTIONS: This exam is closed-book, closed-notes. Simple calculators are permitted, but not
graphing calculators or calculators with alphabetical keyboards. Point values for each question are
noted in brackets.
I. MULTIPLE CHOICE: Circle the one best answer to each question. Feel free to use margins for
scratch work. [2 pts each—52 pts total]
The next three questions refer to the following
Edgeworth box diagram. The solid curves are
Joshua's indifference curves. The dashed
curves are Kelly's indifference curves.
(1) From allocation A, both people can be
made better off if
a. Joshua gives Kelly some food, and Kelly
gives Joshua some clothing.
b. Joshua gives Kelly some clothing, and
Kelly gives Joshua some food.
c. Either (a) or (b).
d. No trade can make both people better off.
(2) From allocation C, both people can be
made better off if
a. Joshua gives Kelly some food, and Kelly
gives Joshua some clothing.
b. Joshua gives Kelly some clothing, and
Kelly gives Joshua some food.
c. Either (a) or (b).
d. No trade can make both people better off.
(3) Joshua and Kelly have identical marginal
rates of substitution in consumption at
a. allocation A only.
b. allocation C only.
c. both allocations A and C.
d. neither allocations A nor C.
(4) The contract curve for this Edgeworth box
diagram would not pass through
a. Allocation A.
b. Allocation B.
c. Allocation C.
d. The contract curve passes through all three
allocations.
e. The contract curve does not pass through
any of these three allocations.
Joshua
Kelly
Clothing
Food
A
B
C
