Mdt1-1A - ECO 201 MIDTERM 1 A Dr Antonio Saravia Multiple...

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ECO 201 MIDTERM 1 A Dr. Antonio Saravia Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price would result in a a. 40 percent decrease in the quantity demanded. b. 400 percent decrease in the quantity demanded. c. 4.0 percent decrease in the quantity demanded. d. 10 percent decrease in the quantity demanded. Table 3-2 Labor Hours needed to make one unit of: Amount produced in 160 hours: Quilts Dresses Quilts Dresses Helen 40 10 4 16 Carolyn 80 16 2 10 2. Refer to Table 3-2. Helen has an absolute advantage in a. both goods and Carolyn has a comparative advantage in dresses. b. quilts and Carolyn has a comparative advantage in dresses. c. dresses and Carolyn has a comparative advantage in quilts. d. both goods and Carolyn has a comparative advantage in quilts. 3. Which of the following is NOT correct? a. Trade allows individuals to consume outside of their individual production possibilities curve. b. Trade allows for specialization. c. Trade is based on absolute advantage. d. Trade is good for nations. 4. Suppose that the incomes of buyers in a particular market for a normal good decline and there is also a reduction in input prices. What would we expect to occur in this market? a. The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous. b. The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous. c.
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This note was uploaded on 04/18/2008 for the course ECO 201 taught by Professor Saravia during the Spring '08 term at American University of Sharjah.

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Mdt1-1A - ECO 201 MIDTERM 1 A Dr Antonio Saravia Multiple...

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