Key for Midterm 1 Spring 2006

Key for Midterm 1 Spring 2006 - Economics 100 Key for...

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Economics 100 – Key for Midterm 1 Spring 2006 Page 1 of 4 Question Answer Notes (3 points each for a total of 75 points) 1 B Scarcity is a situation of unlimited wants and limited resources. 2 D People must make choices when confronted with scarcity. 3 E Opportunity cost is your best alternative foregone. Therefore, Amy foregoes the dog-sitting job of $30 and pays for the movie of $10 for a total of $40. 4 A The vertical intercept is the value of P when Q = 0. The slope is defined as the change in P / change in Q. 5 C According to the Economic Way of Thinking, an individual undertakes an action until the marginal benefit equals the marginal cost, which is $10 in this example. 6 D The objective of the firm is to maximize economic profits. 7 A The substitution effects tells us that an increase in the relative price of CSU-LB will lead students to substitute out of taking classes and into buying clothes. 8 D The Canadian opportunity cost of one more hockey player is 10 / 100 = 1 / 10 figure skater. 9 C The French opportunity of one more hockey player is 20 / 10 = 2 / 1 figure skaters. 10 B The idea of comparative advantage says that each country should specialize in the production of the good that it produces at a lower opportunity cost.
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This note was uploaded on 04/18/2008 for the course ECON 100 taught by Professor Kasilwal during the Spring '07 term at CSU Long Beach.

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Key for Midterm 1 Spring 2006 - Economics 100 Key for...

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