Sample Quiz 1
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Sample Quiz 1

Course Number: ECON 202, Spring 2008

College/University: Winona

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Sample Quiz 1 Please note: The material you're responsible for on the quiz may differ slightly from the material in this sample. This is last year's version. You're responsible for everything up through and including p. 69 in the Mankiw text. I won't ask about supply or equilibrium. I also recommend you review your D2L quiz. Answers to this quiz are at the bottom. Multiple Choice Identify the letter of the choice...

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Quiz Sample 1 Please note: The material you're responsible for on the quiz may differ slightly from the material in this sample. This is last year's version. You're responsible for everything up through and including p. 69 in the Mankiw text. I won't ask about supply or equilibrium. I also recommend you review your D2L quiz. Answers to this quiz are at the bottom. Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. For society, a good is not scarce if a. at least one individual in society can obtain all he or she wants of the good. b. firms are producing the good at full capacity. c. all members of society can have all they want of the good. d. those who have enough income can buy all they want of the good. 2. What you give up to obtain an item is called your a. opportunity cost. b. explicit cost. c. true cost. d. direct cost. 3. For which of the following individuals would the opportunity cost of going to college be highest? a. a promising young mathematician who will command a high salary once she earns her college degree b. a student with average grades who has never held a job c. a famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree d. a student who is the best player on his college basketball team, but who lacks the skills necessary to play professional basketball 4. A rational decisionmaker takes an action if and only if a. the marginal benefit of the action exceeds the marginal cost of the action. b. the marginal cost of the action exceeds the marginal benefit of the action. c. the marginal cost of the action is zero. d. the opportunity cost of the action is zero. 5. A direct or positive relationship exists between a country's a. productivity and its standard of living. b. amount of government spending and its productivity. c. total population and its average citizen's income. d. rate of population growth and the extent of its trade with other countries. 6. To increase living standards, public policy should a. ensure that workers are well educated and have the necessary tools and technology. b. make unemployment benefits more generous. c. move workers into jobs directly from high school. d. ensure a greater degree of equity, taking all income-earners into account. Table 3-1 Labor Hours Needed to Make 1 Pound of: Meat Potatoes 8 2 Pounds produced in 40 hours: Meat Potatoes 5 20 ____ ____ ____ ____ ____ Farmer Rancher ____ 4 5 10 8 ____ 7. Refer to Table 3-1. The opportunity cost of 1 pound of meat for the farmer is a. 1/4 hour of labor. b. 4 hours of labor. c. 4 pounds of potatoes. d. 1/4 pound of potatoes. 8. Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours or he can trim a tree in two hours. a. Travis has an absolute advantage over Ricardo in trimming trees. b. Travis has a comparative advantage over Ricardo in mowing lawns. c. Ricardo has a comparative advantage over Travis in trimming trees. d. All of the above are correct. These figures illustrate the production possibilities available to Barney and Betty with 8 hours of labor in their bakery. Figure 3-4 ____ 9. Refer to Figure 3-4. Barney has a comparative advantage in a. both goods and Betty has a comparative advantage in neither good. b. loaves of bread and Betty has a comparative advantage in pies. c. neither good and Betty has a comparative advantage in both goods. d. pies and Betty has a comparative advantage in loaves of bread. Table 3-5 Hours needed to make one: Car Airplane 30 150 50 200 Amount produced in 2400 hours: Cars Airplanes 80 16 48 12 Japan U.S. ____ 10. Refer to Table 3-5. The opportunity cost of 1 car for Japan is a. 5 airplanes. b. 4 airplanes. c. 1/4 airplane. d. 1/5 airplane. ____ 11. Refer to Table 3-5. If the United States and Japan trade based on the principle of comparative advantage, the United States will a. export cars (but not airplanes) to Japan. b. export airplanes (but not cars) to Japan. c. export cars and airplanes to Japan. d. import cars and airplanes from Japan. ____ 12. When we move along a given demand curve, a. only price is held constant. b. income and the price of the good are held constant. c. all nonprice determinants of demand are held constant. d. all determinants of quantity demanded are held constant. ____ 13. The downward slope of the typical demand curve reflects which of the following concepts? a. Price is positively related to quantity supplied. b. There is a negative relationship between price and quantity demanded. c. There is a direct relationship between price and quantity demanded. d. When the price falls, buyers are willing to buy more but they are able to buy less. ____ 14. The supply schedule is a table that shows the relationship between a. price and quantity supplied. b. input costs and quantity supplied. c. quantity demanded and quantity supplied. d. price and profit. ____ 15. A movement along the supply curve might be caused by a change in a. technology. b. input prices. c. expectations about future prices. d. the price of the good or service that is being supplied. ____ 16. A supply curve slopes upward because a. as more is produced, total cost of production falls. b. an increase in input prices increases supply. c. the quantity supplied of most goods and services increases over time. d. an increase in price gives producers an incentive to supply a larger quantity. ____ 17. Wheat is the main input in the production of flour. If the price of wheat decreases, all else equal, we would expect the a. demand for flour to increase. b. demand for flour to decrease. c. supply of flour to increase. d. supply of flour to decrease. ____ 18. If, at the current price, there is a shortage of a good, a. sellers are producing more than buyers wish to buy. b. the market must be in equilibrium. c. the price is below the equilibrium price. d. quantity demanded equals quantity supplied. Figure 4-7 ____ 19. Refer to Figure 4-7. Equilibrium price and quantity are, respectively, a. $35 and 200. b. $35 and 600. c. $25 and 400. d. $15 and 200. ____ 20. Refer to Figure 4-7. At a price of $27.50, a. there is an excess supply of 50 units of the good and the law of supply and demand predicts that the price will rise from $27.50 to a higher price. b. there is an excess supply of 100 units of the good and the law of supply and demand predicts that the price will fall from $27.50 to a lower price. c. there is an excess demand of 100 units of the good and the law of supply and demand predicts that the price will fall from $27.50 to a lower price. d. there is a surplus of 75 units of the good and the law of supply predicts that the price will fall from $27.50 to a lower price. ____ 21. When there is a shortage of 100 of units a particular good, a. the law of supply predicts upward pressure on the price of the good from its current level. b. the law of demand predicts downward pressure on the price of the good from its current level. c. we say that there is a scarcity of 100 units of the good. d. None of the above is correct. ____ 22. Suppose that demand decreases and supply decreases. What would you expect to occur in the market for the good? a. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. b. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. c. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. d. Both equilibrium price and equilibrium quantity would increase. ____ 23. Suppose that a decrease in the price of good X results in fewer units of good Y being sold. This implies that X and Y are a. complementary goods. b. normal goods. c. inferior goods. d. substitute goods. ____ 24. Which of the following quantities would increase in response to a decrease in the price of ironing boards? a. the quantity of irons demanded at each possible price of irons b. the equilibrium quantity of irons c. the equilibrium price of irons d. All of the above are correct. ____ 25. Pens are normal goods. What will happen to the equilibrium price of pens if the price of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to fall in the near future, the population increases, fewer firms manufacture pens, and the wages of penmakers decrease? a. Price will rise. b. Price will fall. c. Price will stay exactly the same. d. The price change will be ambiguous. True/False Indicate whether the sentence or statement is true or false. ____ 26. Tuition is the single-largest cost of attending college for most students. ____ 27. The cost of an action is measured in terms of foregone opportunities. ____ 28. A marginal change is a small incremental adjustment to an existing plan of action. ____ 29. When an increase in the price of one good lowers the demand for another good, the two goods are called complements. ____ 30. The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price. Short Answer 31. Gary and Diane must prepare a presentation for their marketing class. As part of their presentation, they must do a series of calculations and prepare 50 PowerPoint slides. It would take Gary 10 hours to do the required calculation and 10 hours to prepare the slides. It would take Diane 12 hours to do the calculations and 20 hours to prepare the slides. a. How much time would it take the two to complete the project if they divide the calculations equally and the slides equally? b. How much time would it take the two to complete the project if they use comparative advantage and specialize in calculating or preparing slides? c. If Diane and Gary have the same opportunity cost of $5 per hour, is there a better solution than for each to specialize in calculating or preparing slides? 32. Suppose we are analyzing the market for hot chocolate. Graphically illustrate the impact each of the following would have on demand or supply. Also show how equilibrium price and quantity have changed. a. Winter starts and the weather turns sharply colder. b. The price of tea, a substitute for hot chocolate, falls. c. The price of whipped cream falls. d. A better method of harvesting cocoa beans is introduced. e. f. g. h. The Surgeon General of the U.S. announces that hot chocolate cures acne. Consumer income falls because of a recession and hot chocolate is considered a normal good. Producers expect the price of hot chocolate to increase next month. Currently, the price of hot chocolate is $0.50 per cup above equilibrium. Quiz 1 Answer Section MULTIPLE CHOICE 1. ANS: MSC: 2. ANS: MSC: 3. ANS: MSC: 4. ANS: MSC: 5. ANS: MSC: 6. ANS: MSC: 7. ANS: MSC: 8. ANS: TOP: 9. ANS: MSC: 10. ANS: MSC: 11. ANS: MSC: 12. ANS: MSC: 13. ANS: MSC: 14. ANS: MSC: 15. ANS: MSC: 16. ANS: MSC: 17. ANS: MSC: 18. ANS: MSC: 19. ANS: MSC: 20. ANS: TOP: 21. ANS: MSC: 22. Register to View AnswerDIF: 1 REF: 1-0 Interpretive A DIF: 1 REF: 1-1 Definitional C DIF: 2 REF: 1-1 Applicative A DIF: 1 REF: 1-1 Interpretive A DIF: 2 REF: 1-3 Interpretive A DIF: 2 REF: 1-3 Applicative C DIF: 2 REF: 3-2 Applicative A DIF: 2 REF: 3-2 Absolute advantage, Comparative advantage D DIF: 2 REF: 3-2 Applicative D DIF: 2 REF: 3-3 Applicative B DIF: 2 REF: 3-3 Applicative C DIF: 2 REF: 4-2 Interpretive B DIF: 1 REF: 4-2 Interpretive A DIF: 1 REF: 4-3 Definitional D DIF: 2 REF: 4-3 Interpretive D DIF: 2 REF: 4-3 Interpretive C DIF: 2 REF: 4-3 Interpretive C DIF: 2 REF: 4-4 Interpretive C DIF: 1 REF: 4-4 Interpretive B DIF: 3 REF: 4-4 Surpluses, Law of supply and demand D DIF: 3 REF: 4-4 Interpretive C DIF: 2 REF: 4-4 TOP: Scarcity TOP: Opportunity cost TOP: Opportunity cost TOP: Marginal changes TOP: Productivity, Standard of living TOP: Productivity, Standard of living TOP: Opportunity cost MSC: Applicative TOP: Comparative advantage TOP: Opportunity cost TOP: Comparative advantage, Trade TOP: Demand curve TOP: Demand, Negative relationshipss TOP: Supply schedule TOP: Supply TOP: Supply curve TOP: Supply, Inputs TOP: Shortages TOP: Equilibrium MSC: Applicative TOP: Shortages TOP: Equilibrium, Demand, Supply MSC: 23. ANS: MSC: 24. ANS: MSC: 25. ANS: MSC: TRUE/FALSE 26. ANS: MSC: 27. ANS: MSC: 28. ANS: MSC: 29. ANS: MSC: 30. ANS: MSC: Interpretive D Applicative D Applicative D Analytical DIF: 3 DIF: 2 DIF: 3 REF: 4-4 REF: 4-4 REF: 4-4 TOP: Substitutes TOP: Complements TOP: Equilibrium, Demand, Supply F Interpretive T Interpretive T Definitional T Definitional T Definitional DIF: 1 DIF: 1 DIF: 1 DIF: 1 DIF: 1 REF: 1-1 REF: 1-1 REF: 1-1 REF: 4-2 REF: 4-3 TOP: Opportunity cost TOP: Opportunity cost TOP: Marginal changes TOP: Complements TOP: Quantity supplied SHORT ANSWER 31. Register to View AnswerIf both tasks are divided equally, it will take 11 hours for the calculations and 15 hours for the writing, for a total of 26 hours. b. If Diane specializes in calculating and Gary specializes in preparing slides, it will take 22 hours to complete the project. c. If Diane specializes in calculating, her opportunity cost will be $60; hence, Diane would be better off if she paid Gary any amount less than $60 to do the calculating. Since Gary's opportunity cost of doing the calculations is only $50, he would be better off if Diane paid him between $50 and $60 dollars to do the calculations. In this case, the total time spent on the project would be 20 hours. DIF: 2 MSC: Applicative 32. ANS: REF: 3-2 TOP: Opportunity cost, Comparative advantage DIF: 3 MSC: Applicative REF: 4-4 TOP: Demand, Supply

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