Ebook Development Economics Theory Empirical Research and Policy Analysis 1St Edition Schaffner Test Bank Full Chapter PDF

Development Economics Theory
Empirical Research and Policy Analysis

1st Edition Schaffner Test Bank
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Test Bank, Chapter 8: Domestic Markets for Goods and Services
1. When buyers, sellers and intermediaries undertake costly efforts to locate trading partners,
reach agreements regarding transaction details and monitor partners’ compliance with
agreements, and when they suffer losses to partners who fail to fulfill agreements they are paying
____________. We use the term ______________ to encompass all the transport, storage,
financing and transaction costs associated with the transfer of goods from their producers to their
ultimate users through markets.
a. Transaction costs; transportation prices

b. Transaction costs; transfer costs
c. Transfer costs; transaction costs
d. Intermediary cost; transportation costs
Answer: b
Heading: 8.1A Market exchange and the costly transfer of goods
Level: Medium
2. The ________ of Jamaica, women who carry agricultural produce to town in baskets on their
heads
a. “Higglers”
b. “Wigglers”
c. “Smugglers”
d. “Carriers”
Answer: a
Heading: 8.2C Market intermediation and transfer costs
Level: Medium
3. Firms that specialize in marketing services are called __________ and often benefit from
specialization just as producers of tradition goods and services.
a. Wholesalers
b. Transportation specialists
c. Middle-men
d. Market intermediaries
Answer: d
Level: Medium
4. The difference between the selling price and the buying price is called the ___________.
a. Profit
b. Consumer surplus
c. Marketing margin
d. Producer surplus
Answer: c
Level: Medium
5. When middlemen lack competition it is possible that they may command significant
____________, or excess profits derived by exploiting their privileged positions.
a. Marketing rents
b. Consumer surplus
c. Marketing margin
d. Producer surplus
Answer: a
Level: Medium
6. Private producers will only choose to sell their output when the benefit outweighs the cost.
Which of the following could prevent a market from developing?
a. High transportation costs

b. High transfer costs
c. Poor legal system
d. All of the above could prevent a market from developing.
Answer: d
Heading: 8.2D Transfer and market limitations
Level: Medium
Figure 8.1
Market for Traditional Beans in Small Village
Price of beans
(Pesos per kg.)
LS
LIP
EP
AP a
LEP
LD
Beans (kg.)
7. According to Figure 8.1 the local demand schedule (LD) slopes downward
because_____________.
a. As the bean price falls, some buyers choose to purchase fewer beans, and some choose to
leave the local bean market altogether
b. As the bean price rises, some sellers choose to sell more beans, and some choose to enter
the local bean market
c. As the bean price falls, some sellers choose to sell fewer beans, and some choose to leave
the local bean market altogether
d. As the bean price rises, some buyers choose to purchase fewer beans, and some choose to
Answer: d
Heading: 8.3B Competitive equilibrium in a single market
Level: Medium
8. According to Figure 8.1 the local supply schedule (LD) slopes upward
because_____________.
a. As the bean price falls, some buyers choose to purchase fewer beans, and some choose to
b. As the bean price rises, some sellers choose to sell more beans, and some choose to enter
the local bean market
c. As the bean price rises, some sellers choose to sell fewer beans, and some choose to leave
the local bean market altogether
d. As the bean price rises, some buyers choose to purchase fewer beans, and some choose to
Answer: b
Level: Medium
9. According to Figure 8.1, if we define LIP as the local import price, EP as the external market
price, LEP as the local export price, and AP as the autarky price, which distance represents the
transfer costs of purchasing beans from the big city?
a. LIP minus LEP

b. LIP minus AP
c. LIP minus EP
d. LIP minus 0
Answer: c
Level: Medium
price, LEP as the local export price, and AP as the autarky price, which distance represents the
transfer costs of selling beans to the big city?
a. EP minus LEP
b. EP minus AP
c. LIP minus EP
d. LIP minus LEP
Answer: a
Level: Medium
price, LEP as the local export price, and AP as the autarky price, and if trade with big city were
possible, at what price would the local market eventually settle on?
a. EP
b. AP
c. LIP
d. LEP
Answer: b
Level: Medium
Figure 8.2
Exporting, Importing and Autarky Equilibrium in the Small Village Bean Market
Panel (a) Panel (b) Panel (c)
Price of Beans Price of Beans Price of Beans
(Pesos per kg.) (Pesos per kg.) (Pesos per kg.)
LS LS LS
LIP
LIP
LEP
AP AP AP
LIP LEP
LEP
LD LD LD
D S Beans (Kg.) S D Beans (Kg.) S=D Beans (Kg.)
possible, which panel describes a situation where buyers and sellers will chose not trade at all
with big city?
a. Panel a
b. Panel b
c. Panel c
d. That situation is not described by any of the panels
Answer: c
Level: Medium
possible, which panel describes a situation where sellers are exporting beans to big city?
a. Panel a
b. Panel b
c. Panel c
Answer: a
Level: Medium
possible, which panel describes a situation where buyers are importing beans from big city?
a. Panel a
b. Panel b
c. Panel c
Answer: b
Level: Medium
15. Which of the following changes would shift the supply schedule to the right?
a. Increase in the price of inputs

b. Increase in the price of the output
c. Decrease in the price of an alternative product produced with similar resources
d. Improvements in technology
Answer: d
Level: Medium
16. If a market is in importing equilibrium, an increase in demand will:
a. Increase consumption but leave the local price unchanged

b. Increase consumption and the local price
c. Decrease consumption and the local price
d. Increase consumption and decrease the local price
Answer: a
Level: Hard
17. If a market is in exporting equilibrium, an increase in supply will:
a. Increase local production but leave the local price unchanged

b. Increase local production and the local price
c. Decrease local production and the local price
d. Increase local consumption and decrease the local price
Answer: a
Level: Difficult
18. If a market is in autarky equilibrium, an increase in supply will:
a. Increase local production but leave the local price unchanged

b. Increase local production and the local price
c. Decrease local production and the local price
d. Increase local production and decrease the local price
Answer: d
Level: Difficult
19. Why should governments and NGOs consider switching from food transfers to cash
transfers?
a. Corruption
b. Distributing food discourages development by driving down local food prices and
discouraging local agricultural production
c. Distributing food discourages development by driving up local food prices and
discouraging local agricultural production
d. Governments should never switch from food to cash transfer programs
Answer: b
Heading: 8.3D Policy analysis applications
Level: Medium
20. If local food supply is highly _________, cash distributions raise local food prices only a
little while encouraging significant _______ in local food production.
a. Elastic; decreases
b. Elastic; increases
c. Inelastic; decreases
d. Inelastic; increases
Answer: b
Level: Difficult
21. If local food supply is highly _________, food distributions encourage significant _______
in local food production.
a. Elastic; decreases
b. Elastic; increases
c. Inelastic; decreases
d. Inelastic; increases
Answer: a
Level: Difficult
22. The logic of ____________ indicates that new opportunities for exchange between people
with diverse production capabilities increase productivity and expand consumption opportunities
by allowing people to specialize in the types of production they do relatively well.
a. Proportionate advantage
b. Relative advantage
c. Comparative advantage
d. Absolute advantage
Answer: c
Heading: 8.4A Market expansion and growth: the big picture
Level: Easy
23. If production is characterized by __________, then expansion of trade that allows individual
producers to serve consumers spread out over larger areas may also increase productivity.
a. Economies of scale
b. Economies of scope
d. Agglomeration economies
Answer: a
Level: Medium
24. Which type of industry renders a firm more productive when located near each other than
when separated from each other geographically?
a. Economies of scale
b. Economies of scope
d. Agglomeration economies
Answer: d
Level: Medium
25. A person has a comparative advantage in producing a good if that person:

a. Has higher productivity in producing it than anyone else has
b. Can produce it at a lower opportunity cost than anyone else can
c. Has less desire to consume that good than anyone else has
d. Has more human capital related to that good than anyone else has
Answer: b
Level: Medium
26. It is sometimes thought that the mere existence of marketing margins implies exploitation of
small farmers and businessmen, who are cheated out of receiving the full retail price for their
produce by middlemen. Can there be a benefit from marketing margins?
Answer: Middlemen perform services that are costly to produce. Even when marketers are
perfectly competitive, and thus charge marketing margins equal to their costs of producing
marketing services, marketing margins may remain high because the costs of transfer activities
are high. In fact, the existence of specialized market intermediaries probably reduces marketing
costs in many cases. If intermediaries benefit from specialization or larger scale, their costs of
producing marketing services may be much lower than the costs producers would incur if they
marketed produce on their own. If intermediaries charge competitive fees for their services,
therefore, their existence reduces marketing costs.
27. Governments and humanitarian aid organizations have a long history of distributing free food
to needy people. Why are some humanitarian organizations increasingly experimenting, with
distributing cash rather than food?
Answer: One frequently-voiced motivation for the shift from food to cash distributions is the
belief that distributing food discourages development by driving down local food prices and
discouraging local agricultural production, while distributing cash encourages development by
raising local food prices and encouraging local agricultural production
28. Why might private actors fail to undertake critical transfer cost-reducing investments despite
the wide-ranging benefits that might emerge from transfer cost reductions?
Answer: Private actors may lack the incentive or the means to undertake critical transfer
cost-reducing investments, as a result of public goods problems, institutional failures,
financial market failures and other problems.
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in chorea,
448
Loss of, in nervous diseases,
35-37
Sensorial affections of hysteria,
246
of special senses, in nervous diseases,
39
Sensory disturbances in cerebral anæmia,
783
epilepsy,
483
,
486
symptoms of nervous diseases,
31
Sequelæ of thermic fever,
399
Serous apoplexy,
783
Sex, influence on causation of acute spinal meningitis,
450
of catalepsy,
318
of cerebral anæmia,
778
hyperemia,
765
of chorea,
441
of chronic lead-poisoning,
680
686
688
of disseminated (cerebro-spinal) sclerosis,
883
of ecstasy,
342
of epilepsy,
470
of family form of tabes dorsalis,
871
of general paralysis of the insane,
177
of hæmatoma of the dura mater,
707
of hysteria,
215
of hystero-epilepsy,
291
of intracranial hemorrhage and apoplexy,
929
of migraine,
406
1231
of myxœdema,
1271
of neuralgia,
1217
of paralysis agitans,
437
of progressive unilateral facial atrophy,
694
of simple acute meningitis,
716
of tabes dorsalis,
852
of tetanus,
544
of the choral habit,
661
of the opium habit,
650
of tubercular meningitis,
725
of tumors of the brain,
1029
spinal cord,
1090
of writers' cramp,
512
Sexual disorders, of chronic alcoholism,
614
of hyperæmia of the brain,
778
of neurasthenia,
357
of the opium habit,
656
,
658
of tumors of the spinal cord,
1096
excess, as a cause of spastic spinal paralysis,
864
of spinal hyperæmia,
802
of tabes dorsalis,
851
852
of vertigo,
420
excitement, as a cause of ecstasy,

342
function, in general paralysis of the insane,
195
in tabes dorsalis,
834
instincts, perverted, in insane temperament,
146
148
161
irritation, as a cause of hysteria,
221
of reflex paralysis,
807
perversions, in general paralysis of the insane,
179
180
Shaking palsy,
433
Sick headache,
406
1216
1230
Silver, use of, in hemiplegia,

978
in labio-glosso-laryngeal paralysis,
1175
in spastic spinal paralysis,
901
Simulation of sleep,
775
Simulations of hysterical patients,
230
233-235
Skin, atrophy of, changes in, in injuries to peripheral nerves,

1183
1185
1186
1187
Condition of, in neuralgia,
1212
1213
Disorders of, in chronic alcoholism,
615
in hysteria,
234
in myxœdema,
1272
in neuritis,
1192
in progressive unilateral facial atrophy,
695
in tabes dorsalis,
837
in the chloral habit,
663
in the opium habit,
654
658
in vaso-motor neuroses,
1252-1254
LEEP
AND ITS
ISORDERS
363
Apparent death, test of,
385
Circulation of blood in,
774
775
Brain, state of, during sleep,
367
Coma,
382
Disorders of, in cerebral anæmia,
782
783
Hyperæmia,
769
Syphilis,
1000
Dreams, physiology of,
368
,
369
Effect of, on choreic movements,
445
Hypotheses concerning nature of sleep,
364-366
Insomnia,
379
in the opium habit,
655
Febrile form of,
380
from active cerebral congestion,
382
from exhaustion,
380-382
Lithæmic form of,
379
Treatment,
380
381
382
Lethargy,
384
Lucid,
386
Night-terrors,
370
Sleeping dropsy,
383
Somnambulism,
371
Treatment,
378
Sleeping dropsy,
383
Smell, disorders of, in alcoholism,
623
in hemiplegia,
955
in neuralgia,
1213
in tumors of the brain,
1030
1043
and taste, perversion of, in hysteria,
250
Social condition, influence on causation of chorea,
441
of hysteria,
218
of insanity,
117
118
Sodium bromide, use, in epilepsy,
500
Softening of the brain,
917
949
989
Red and yellow, in abscess of the brain,
793

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Development Economics Theory

Empirical Research and Policy Analysis

a. Transaction costs; transportation prices

a. High transportation costs

a. LIP minus LEP

D S Beans (Kg.) S D Beans (Kg.) S=D Beans (Kg.)

a. Increase in the price of inputs

16. If a market is in importing equilibrium, an increase in demand will:

a. Increase consumption but leave the local price unchanged

17. If a market is in exporting equilibrium, an increase in supply will:

a. Increase local production but leave the local price unchanged

18. If a market is in autarky equilibrium, an increase in supply will:

a. Increase local production but leave the local price unchanged

25. A person has a comparative advantage in producing a good if that person:

Loss of, in nervous diseases,

Sensorial affections of hysteria,

of special senses, in nervous diseases,

Sensory disturbances in cerebral anæmia,

symptoms of nervous diseases,

Sequelæ of thermic fever,

Sex, influence on causation of acute spinal meningitis,

of disseminated (cerebro-spinal) sclerosis,

of family form of tabes dorsalis,

of general paralysis of the insane,

of hæmatoma of the dura mater,

of progressive unilateral facial atrophy,

of the choral habit,

of the opium habit,

of tumors of the brain,

Sexual disorders, of chronic alcoholism,

of hyperæmia of the brain,

of the opium habit,

of tumors of the spinal cord,

excess, as a cause of spastic spinal paralysis,

excitement, as a cause of ecstasy,

function, in general paralysis of the insane,

instincts, perverted, in insane temperament,

irritation, as a cause of hysteria,

Silver, use of, in hemiplegia,

in spastic spinal paralysis,

Simulations of hysterical patients,

Skin, atrophy of, changes in, in injuries to peripheral nerves,

Condition of, in neuralgia,

Disorders of, in chronic alcoholism,

in progressive unilateral facial atrophy,

in the chloral habit,

in the opium habit,

Apparent death, test of,

Circulation of blood in,

Disorders of, in cerebral anæmia,

Dreams, physiology of,

Effect of, on choreic movements,

Hypotheses concerning nature of sleep,

in the opium habit,

Febrile form of,

from active cerebral congestion,

Lithæmic form of,