1. Whatis true at any point on the contract curve in an input (Edgeworth)box? Why do competitive markets generate (that is, result in) equilibria that are Pareto efficient in terms of inputs? (Hint: do all firms face the same price for inputs? Do profit-maximizingfirms want to minimize their costs? If so, what is true about the cost minimizing choice of inputs? Include a graph of the firm minimizing its cost given some output.)2. What is the relationship between the contract curve and the production possibility frontier? Where are the origins of the Edgeworth box on the ppf?3. What is the marginal rate of transformation (MRT)? What is the relationship between a point on the production possibility frontier (curve) and the MRT?4.Use a simple two good model to explain the difference between efficiency in production and economic efficiency. Would you agree with the statement that economic efficiency requires an efficient production, but many efficient allocations of inputs (efficiency in production) are not economically efficient?(Hint: does efficient production imply efficiency in distribution (consumption efficiency)?) Explain your reasoning with a graph.

You are the manager of the packaging department in a cookie factory. (obviously, the packaging employees cannot eat the cookies that are transferred in during the period.) after your employees insert cookies into colorful packages (step 1) for display on store shelves, the packages of cookies are then boxed using cardboard cartons (step 2) for shipment to stores. each unit of product is represented by a carton of packaged cookies. the packaging department began the period with 1,000 units of cookies. during the period, 5,000 units of cookies were transferred in from the baking department and 5,500 units of cookies were transferred out to the finished goods department. the number of units of cookies in the ending inventory of the packaging department equals:

Exercise 18-15 sheffield appliance center is an experienced home appliance dealer. sheffield appliance center also offers a number of services for the home appliances that it sells. assume that sheffield appliance center sells ovens on a standalone basis. sheffield appliance center also sells installation services and maintenance services for ovens. however, sheffield appliance center does not offer installation or maintenance services to customers who buy ovens from other vendors. pricing for ovens is as follows. oven only $790 oven with installation service 850 oven with maintenance services 970 oven with installation and maintenance services 990 in each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $180. additionally, the incremental amount charged by sheffield appliance center for installation approximates the amount charged by independent third parties. ovens are sold subject to a general right of return. if a customer purchases an oven with installation and/or maintenance services, in the event sheffield appliance center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $790. assume that a customer purchases an oven with both installation and maintenance services for $990. (b) indicate the amount of revenue that should be allocated to the oven, the installation, and to the maintenance contract.

Atrough in the business cycle occurs when