Econ201_MidtermI_Practice
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Econ201_MidtermI_Practice

Course Number: ECON 201, Spring 2012

College/University: Drexel

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Principles of Microeconomics ECON 201 Spring 2011/2012 MIDTERM I PRACTICE 1. The scarcity principle indicates that A. no matter how much one has, it is never enough. B. compared to 100 years ago, individuals have less time today. C. with limited resources, having more of "this" means having less of "that." D. because tradeoffs must be made, resources are therefore scarce. 2. Choosing to study...

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of Principles Microeconomics ECON 201 Spring 2011/2012 MIDTERM I PRACTICE 1. The scarcity principle indicates that A. no matter how much one has, it is never enough. B. compared to 100 years ago, individuals have less time today. C. with limited resources, having more of "this" means having less of "that." D. because tradeoffs must be made, resources are therefore scarce. 2. Choosing to study for an exam until the extra benefit (improved score) equals the extra cost (mental fatigue) is A. not rational. B. an application of the cost-benefit principle. C. an application of the scarcity principle. D. the relevant opportunity cost. 3. According to the cost-benefit principle, A. the lowest cost activity usually gives the lowest benefit. B. a person should always choose the activity with the lowest cost. C. a person should always choose the activity with the greatest benefit. D. the extra costs and benefits of an activity are more important considerations than the total costs and benefits. 4. Janie must either mow the lawn or wash clothes, earning her a benefit of $30 or $45, respectively. She dislikes both equally and they both take the same amount of time. Janie will therefore choose to _________because the economic surplus is ________. A. mow; greater B. wash; greater C. mow; smaller D. wash; smaller 5. Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. What is the opportunity cost of attending State College? A. $30,000 B. $20,000 C. $15,000 D. $10,000 6. Based on the information in the previous question, Larry maximizes his surplus by attending: A. Elite U, because $60,000 is greater than the benefit at the other schools. B. State College, because the difference between the benefit and cost is greatest there. C. NoName U, because Larry has a full scholarship there. D. Elite U, because the opportunity costs of attending Elite U are the lowest. 7. Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and drinks rather than spending an equal amount of money to go to a movie. The opportunity cost of going to the beach is: A. the $12 she spent on the umbrella, food and drinks. B. only $2 because she would have spent the money on food and drinks whether or not she went to the beach. C. the movie she missed seeing. D. the movie she missed seeing plus the $12 she spent on the umbrella, food and drinks. 8. Relative to a person who earns minimum wage, a person who earns $30 per hour has A. a lower opportunity cost of working longer hours. B. a higher opportunity cost of taking a day off. C. a lower opportunity cost of driving farther to work. D. the same opportunity cost of spending time on leisure activities. 9. Alex received a four-year scholarship to State U. that covered tuition and fees, room and board, and books and supplies. As a result A. attending State U. for four years is costless for Alex. B. Alex has no incentive to work hard while at State U. C. the cost of attending State U. is the amount of money Alex could have earned working for four years. D. the cost of attending State U. is the sum of the benefits Alex would have had attending each of the four other schools to which Alex had been admitted. 10. Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck, but she finds one for $12,000. Her __________ is __________. A. benefit; $12,000 B. cost; $15,000 C. economic surplus; $3,000 D. economic surplus; $12,000 11. The cost-benefit model used by economists is A. unrealistic because it is too detailed and specific to apply to a variety of situations. B. unrealistic because everyone can think of times when he or she violated the principle. C. useful because everyone follows it all of the time. D. useful because most people follow it most of the time. 12. Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450. If you do not use the frequent-flyer coupon to fly, should you go to Miami? A. Yes, your benefit is more than your cost B. No, your benefit is less than your cost C. Yes, your benefit is equal to your cost D. No, because there are no benefits in the trip 13. Based on the information in Question (12), what is the opportunity cost of using the coupon for the Miami trip? A. $100 B. $450 C. $500 D. $550 14. Continuing with the information in Question (12), if the Chicago-Atlanta round-trip air fare is $350, should you go to Miami? A. No, there is a loss of $50. B. No, there is a loss of $100. C. Yes, there is economic surplus of $50. D. Yes, there is economic surplus of $400. 15. You paid $35 for a ticket (which is non-refundable) to see JAM, a local rock band, in concert on Saturday. (Assume that you would not have been willing to pay any more than $35 for this concert.) Your boss called and she is looking for someone to cover a shift on Saturday at the same time as your concert. You will have to work 4 hours and she will pay you time and a half, which is $9/hr. What is the opportunity cost of going to the concert? A. $1 B. $9 C. $35 D. $36 16. Based on the information in Question (15), what is your opportunity cost if you go to work on Saturday? A. $0 B. $9 C. $35 D. $36 17. Based on the information in Question (15), what is your economic surplus of going to work on Saturday? A. $0 B. $1 C. $35 D. $36 18. If Jane works for 6 hours she can rent 12 apartments, and if she works for 7 hours she can rent 15 apartments. The marginal benefit of the 7th hour of Jane's work equals: A. 12 apartments. B. 15 apartments. C. 1 apartment. D. 3 apartments. 19. Based on their comparative advantages, Pat should specialize in _______ while Corey should specialize in _______ A. pizza delivery; pizza production B. pizza production; pizza delivery C. neither; both D. both; neither 20. Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather mangoes faster than Maryann and can also catch more fish per hour than can Maryann. Therefore, A. Ginger should specialize in fishing because it is harder than gathering mangoes, and Maryann should specialize in gathering mangoes. B. Ginger should strike out on her own, because Maryann reduces their combined productivity. C. Maryann should specialize in the activity for which she has a comparative advantage. D. Ginger should specialize in the activity for which she has an absolute advantage. 21. The production possibilities curve shows A. the minimum production of one good for possible every production level of the other good. B. how increasing the inputs used for one good increases the production of the other good. C. the maximum production of one good for every possible production level of the other good. D. how increasing the production of one good allows production of the other good to also rise. 22. This graph describes the production possibilities on the island of Genovia: What is the opportunity cost of producing one car in Genovia? A. 5,000 tons less of agricultural products. B. 500 tons less of agricultural products. C. 5 tons less of agricultural products. D. 50 tons less of agricultural products. 23. Based on the information in Question (22), and assuming efficient production, if 500 cars are produced in Genovia, ______________ A. 50,000 tons of agricultural products are being produced. B. 25,000 tons of agricultural products are being produced. C. 45,000 tons of agricultural products are being produced. D. 40,000 tons of agricultural products are being produced. 24. Point A on a linear production possibilities curve represents a combination of 12 coffees and 3 cappuccinos, and point B represents 3 coffees and 6 cappuccinos. Suppose coffees are on the vertical axis and cappuccinos are on the horizontal axis. What is the opportunity cost of a cup of coffee? A. 3 cappuccinos B. 9 cappuccinos C. 1/3 of a cappuccino D. 6 cappuccinos 25. Refer to the figure above. For Pat, the opportunity cost of removing one bag of trash is A. 25 bulbs not planted. B. 5 bulbs not planted. C. 10 bulbs not planted. D. one-fifth of a bulb not planted. 26. Refer to the figure above. If Pat and Chris were to specialize in the task for which each has a comparative advantage, A. Chris would plant bulbs and Pat would haul out trash. B. Chris would haul out trash and Pat would plant bulbs. C. Pat and Chris would each spend one hour on each task. D. both would plant bulbs as they both have an absolute advantage in that task. 27. Refer to the figure above. Sven could move from the bold PPC to the dashed PPC by A. finding a job that paid a higher wage. B. studying fewer hours but more effectively per hour. C. devoting fewer hours to sleeping. D. spending more time on the activity for which he has a comparative advantage. 28. The fundamental reason the production possibilities curve has a downward slope is A. workers are inefficient. B. resources are of low quality. C. resources are fixed and therefore tradeoffs must be made. D. it has empirical support but why it is so is still a mystery. 29. You are the Minister of Trade for a small island country in the South Pacific with the following annual production possibilities curve: You are negotiating a deal with a neighboring island that has the following annual PPC: When the other island's delegate offers to give you 1,000 fish in exchange for 500 coconuts, you A. accept because you will then have a total of 2,500 fish. B. refuse because the trade would leave you at a level of consumption that is less than what you could produce on your own. C. accept because the trade will leave you at a level of consumption that is more than what you could produce on your own. D. counter, offering to give them 400 coconuts in exchange for 1,000 fish. 30. Based on the information in Question (29), if you offer to give the other island 400 coconuts in exchange for 1500 fish, then A. they will refuse your offer because it makes them worse off than producing on their own. B. they will accept your offer because it keeps them on their original PPC, and so is efficient. C. they will accept your offer because it gives them 800 coconuts, which is more than they can make on their own. D. they will accept your offer because it allows them to consume a combination of fish and coconuts that would be unattainable on their own. 31. Large developed countries can produce more of practically everything than can a small less developed country. Therefore, A. the large country has no incentive to trade with the smaller country. B. it would be impossible for the smaller country to have a comparative advantage in making any products that the larger country wants to buy. C. trade will benefit both countries if each country has a comparative advantage in a traded product. D. trade between the countries is more likely to benefit the small country and harm the larger country. 32. You have noticed that your next-door neighbor Mary always works in the garden and her husband Joe always walks the dog. Based on this observation, you conclude that A. Mary has an absolute advantage in gardening. B. Joe has a comparative advantage in walking the dog. C. Mary does not understand the principle of low-hanging-fruit. D. Joe experiences increasing opportunity costs when he gardens, but not when he walks the dog. 33. Refer to the figure above. In the country whose PPC is shown, it must be true that A. the residents are better at herding cattle than at making movies. B. the residents are better at making movies than at herding cattle. C. some residents are better at herding cattle and some residents are better at making movies. D. this country has a comparative advantage in cattle herding. 34. Refer to the figure above. At Point D, A. resources that are better suited to making movies than to herding cattle are all being used to make movies. B. the opportunity cost of herding more cattle is low because the economy is specializing in cattle herding. C. the opportunity cost of herding more cattle is high because resources that are better suited to movie production are being used to herd cattle. D. the economy is not operating efficiently. 35. Whenever the quantity demanded is not equal to the quantity supplied, the quantity that is actually sold in the market is A. the quantity demanded. B. the quantity supplied. C. the smaller of the quantity demanded and the quantity supplied. D. the greater of the quantity demanded and the quantity supplied. 36. Refer to the figure above. The equilibrium price and quantity for this market is A. $8, 6. B. $6, 4. C. $4, 6. D. $2, 8. 37. Refer to the figure above. You notice that your grocery store always has day-old bakery products at a reduced price. Why might that be? A. At the original price the quantity demanded was greater than the quantity supplied. B. At the original price, there was a shortage of bakery products. C. The original price was an equilibrium price because it was established in a free market. D. At the original price, quantity supplied was greater than quantity demanded. 38. In a free market, if the price of a good is below the equilibrium price, then A. government needs to set a higher price. B. suppliers, dissatisfied with growing inventories, will raise the price. C. demanders, to acquire the good, will bid the price higher. D. suppliers, dissatisfied with growing inventories, will lower the price. 39. In a market where government has set the price below the equilibrium price, one might expect A. quantity demanded to equal quantity supplied. B. excess supply. C. a black market to develop as individuals try to take advantage of unexploited opportunities. D. quantity supplied to surpass quantity demanded. 40. Suppose the local slaughterhouse gives off an unpleasant stench. The price of meat would then be _______ because not all of the _________ are accounted for in the marketplace. A. too high; benefits B. too low; benefits C. too high; costs D. too low; costs

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McGill - MATH - 133
10
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McGill - MATH - 133
McGill - MATH - 133
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