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2030 ECON EXAM ONE 1 If an economy produces on its production possibility curve, it is using its resources: B: efficiently 2 Suppose you are earning $15 an hour at a bookstore. At that wage you have decided to work 30 hours a week. If your wage were to increase $16 an hour, using the economic decision rule you will most likely choose to work: D: more hours because the opportunity cost of leisure has risen. 3 If the government poses an excise tax on cars equal to $5000 per automobile, the supply of automobiles will shift to the: B: left and the price of automobiles will increase by an unknown amount. 4 This production possibility table shows marginal opportunity costs that are: Bolts Nuts 100 0 80 10 60 20 40 30 20 40 0 50 B: constant 5 Rent control makes apartments: D: hard to find 6 Suppose the equilibrium price of oranges is $0.79, but government takes steps to prevent the price from exceeding $0.60. The likely result will be a: D; shortage of oranges as the price ceiling keeps the market from reaching equilibrium 7 Suppose the sunk cost of obtaining your college degree is $50,000, the marginal cost is $175,000, and the marginal benefit is $200,000. Marginal analysis implies that you: D: should complete your degree 8 The rate of currency exchange is 125 yen per dollar. If computer monitors imported from Japan cost 10,000 yen, the cost of the monitor in dollars is: D: $80 9 The marginal benefit from consuming another unit of good: C: is the additional benefit above what you have already derived. 10 The opportunity of cost obtaining more of a good is: D: always greater than zero. 11 Supply is said to be inelastic when the: C: percentage change in quantity supplied is less than the percentage change in price 12 Which of the following questions cannot be answered using a production possibility table? D: What combination of outputs is best? 13 A sporting goods store observes that as they reduce the price of squash balls from $5 to $4, their quantity demanded rises from 200 to 220. The correctly compute the elasticity of demand of squash balls to be: A: 0.4 14 A student who has paid non-refundable tuition of about $45 a lecture estimates the marginal benefit of each lecture to be $60. She should attend the class if: D: the opportunity cost of attending class is $50 15 In making any decision, sunk costs should be: B: ignored 16 John and Susan are discussing how to divide up household chores of cleaning and cooking. John can do the cleaning in 2 hours or do the cooking in 2 hours. Susan can also do the cleaning in 2 hours. If Susan has a comparative advantage in cooking, can we say anything about how long it takes Susan to cook? C: Yes. It must be less than 2 hours. 17 D: lost revenue is represented by areas C and E while gained revenue is represented by area A. 18 B: A, B, and D only. 19 C: 2 articles 20 A: D 21 D: C 22 D: B 23 C: B 24 B: D 25 D: A 26 D: CD 27 A: none of the curves 28 B: C 29 B: neither excess supply nor excess demand, since it is not binding 30 D: a surplus of 2000 dozen eggs per week ... View Full Document

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