1 Final - fall 2006

1 Final - fall 2006 - Eco 1: Principles of Economics Final...

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Eco 1: Principles of Economics Final Exam Fall 2006 Name:_______________________________________ Section: (Or day and time of recitation):______________________ 1. Several answers to a multiple-choice question may appear to be partially "correct," you must select the best answer. 2. Do your own work. Copying someone else's answer will lead to a zero on this exam and, possibly, an F in the course. 3. You have three hours to complete this exam. 4. No calculators are allowed. 5. The correct answer is Much Ado About Nothing. 6. Please mark your answers on the answer sheet. Also, please make sure that your name and ID number are legibly entered onto both sides of your answer sheet. 7. Write the color of your exam (e.g. while, yellow or blue) on the upper right-hand corner of the answer sheet. 8. Good luck! And have a good holiday!
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1. The fundamental question in economics is how to a. eliminate poverty. b. make the best use of scarce resources to satisfy our unlimited wants. c. how to reduce the consumption of oil in wealthy nations. d. find more resources to satisfy everyone's wants. 2. An example of a capital input is a. furniture and fittings in a store. b. stocks, bonds, and money market mutual funds. c. deposits of crude oil in the ground. d. all of the above 3. When economists say that people act rationally, they mean that a. People rarely make errors when they are looking out for themselves. b. People select only those activities that minimize their costs. c. People consider only the benefits when making a decision. d. People consider both the relevant costs and relevant benefits of a decision and select actions for which relevant benefit exceeds or at best, equal the relevant cost. 4. Javier has spent $400 purchasing and restoring a piece of antique furniture that he expect to sell for $800 once the job is complete. After he has spent $400, he discovers that he needs an additional part, which will cost $200, in order to complete the restoration. Javier can sell the piece of furniture as it is now for $300. What should he do? a. Javier should complete the restoration and sell the piece of furniture. b. Javier should cut his losses and take the $300. c. Javier should never sell something for less than it costs. d. It doesn’t matter which action Javier takes; the outcome is the same either way. 5. The difference between a positive economic analysis and a normative economic analysis is a. Positive analysis deals with issues that improve the welfare of individuals while normative analysis deals with issues that are subjective to interpretation. b. Positive analysis reaches conclusions based on verifiable statements while normative analysis reaches conclusions based on opinions. c.
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1 Final - fall 2006 - Eco 1: Principles of Economics Final...

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