midterm2007-08 - EC1301 NATIONAL UNIVERSITY OF SINGAPORE...

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EC1301 NATIONAL UNIVERSITY OF SINGAPORE EC1301 PRINCIPLES OF ECONOMICS (SEMESTER I : AY2007-2008) MidTerm Exam Oct 1, 2007 Time Allowed : 1 Hour INSTRUCTIONS TO CANDIDATES 1. This examination paper contains FORTY-FOUR (44) questions. 2. For each question, choose the one alternative that best completes the statement or answers the question. 3. Answer all questions. 4. This is a CLOSED BOOK examination.
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EC1301 2 1. Scarcity can best be defined as a situation in which A) there are no buyers willing to purchase what sellers have produced B) there are not enough goods to satisfy all of the buyers’ demands C) resources are limited in quantity and can be used in different ways D) consumers do not have enough money E) quantity demanded of a good exceeds quantity supplied 2. The three elements of the economic way of thinking includes all of the following except : A) economists use assumptions to make things simpler and focus attention on what really matters B) economic analysis often involves variables and how they are related to one another C) economic analysis uses the key assumption that rational decision-making means if something is good, then more of it must be consumed. D) economists often consider how a small change in one variable affects another variable E) None of the above. 3. Which of the following is an example of a marginal question? A) How much will my chances of a job improve if I raise my CAP (average grade point) from a C to a C+ grade average? B) What is the average cost of a college education? C) How many students borrow money in order to attend college? D) What is the net benefit from a college education? E) None of the above. 4. Suppose that the quantity supplied of pizzas exceeds the quantity of pizzas demanded. We would expect that: A) the price of pizza will increase B) the supply of pizza will decrease C) the demand for pizza will increase D) the price of pizza will decrease 5. Bananas and apples are substitutes. When the price of bananas falls, the equilibrium quantity of apples will ________ and the equilibrium price of apples will ________. A) rise; rise B) rise; fall C) fall; rise D) fall; fall 6. Mark quit his job as a salesman where he made $35,000 per year to start his own t - shirt making business. His business expenses are $6,000 per year on rent, $12,000 per year on supplies, and $4,000 per year on part - time help. As for his personal expenses, his apartment costs him $4,800 per year and his other bills are $1,200 per year. What is Mark's opportunity cost of running the business? A) $63,000 B) $57,000 C) $41,000 D) $35,000 E) $22,000 7. A perfectly competitive firm in a long-run equilibrium: A) produces at the minimum of average variable cost. B) produces at the minimum of marginal cost C) produces at the minimum of average total cost. D) enjoys economies of scale. E) C and D
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EC1301 3 Use the following to answer Questions 8 and 9: Crusoe and Friday are the only two persons on an island, completely cut off from the outside world, living on fish and coconuts only. They trade with each other freely. Each day, the combinations of fish and coconuts each is able to produce are as follows: Crusoe Friday Output Per Day
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This note was uploaded on 02/27/2009 for the course ECONOMICS ec1301 taught by Professor Roland during the Spring '09 term at National University of Singapore.

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midterm2007-08 - EC1301 NATIONAL UNIVERSITY OF SINGAPORE...

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