Econ101 s03 Bansak exam1

Econ101 s03 Bansak exam1 - EBEL NOIlVHOdHOO NOULNVOS Q...

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Unformatted text preview: EBEL NOIlVHOdHOO NOULNVOS Q "LR‘NHE‘C ON LVri S W USM‘JHSEH ‘a‘JHDIH 1W LUDD'SLUJO}UOJIUEUS‘MMM ,— Nouoamo S‘in 0335 —I- ZEDEBLEGOL llZl EEG 20?! 31W 1708020 _L ommqmman—L SUBJECTIVE SCORE - INSTRUCTOR USE ONLY an EC) ED] EE: :33 :C: * EEZI :B: EC: 5-! [En ‘*1 Cc: :D: -:E: EB: 1-9: :03 :E: EB] ['CJ * r'Ej .9; cc: ED] L5: *5 [03 ED] EE: [BI :03 *5 :E: :3: :c: -9- IE: ia'lleVXEl ° QSNVHO OJ. V A'ISJB'IdWOO ESVHS - maams ' :IO awwvxa .LOEll‘BnS wnngem slugod 99L . £331 uo au” Jad spam auo Muo - slugud aAuoalqns a|qgssad [9101 mew 3 PART 1 SMHVW MHVO EDIVW - “I. I I MNO'mwdz ONJSJ .LNVlHOdINI :BHRLVES 33005 EALLDSF‘EGS 35H 0i NOHiNVDS 3-388 'ON WHOj GHOOEH .lSEIJ. iNBWiHVdSG EDI/\HES HHWOLSHD 9189‘881'008'1 'I'IVD 8308035 01 Nam * ' ‘ Bartram Economics 101 — Exam #1 -- Spring 2003 Professor Cynthia Bansak INSTRUCTIONS Multiple choice (3 points each -- 90 points total.) In each question there is only one correct answer. Select the answer you believe to be most correct. 1. Economics is defined as the study of business. @the study of how society manages its scarce resources. c. the study of central planning. (1. the study of government regulation. 2. Macroeconomics is concerned primarily with: a. the way things are produced. b. the prices of particular goods and services. . the behavior of consumers. @he study of economy-wide phenomena. 3. Which of the following is important for policy makers to consider when designing public policy? a. the possibility that policies might change behavior b. the direct effect of policies the indirect effect of policies d all of the above 4. Carolyn decides to spend an additional hour working overtime rather than watching a video with her friends. She earns $8 for her hour’s work. Her opportunity cost of working is ‘ /a/th-e $8 she earns. the enjoyment she would have received had she watched the video. flhe $8 minus the enjoyment she would have received from watching the video. d. nothing, since she would have received less than $8 of enjoyment from the video. 5. To increase living standards, public policy should "' move workers into jobs directly from high school. )3: " make unemployment benefits more liberal. c.‘ ensure that workers are well educated and have the necessary tools and technology. d. ensure that workers have access to union membership and benefits. 12. Which i the best statement about the way economists study the economy? I. i hey study the past, but do not try to predict the future. @ They devise theories, collect data, then analyze the data to test the theories. ‘ c. They use a probabilistic approach based on correlations between economic e ents. {fliey use controlled experiments in much the same way a biologist or physicist does. 13. The most common data for testing economic theories come from fi/carefully controlled and conducted laboratory experiments. Jar/centrally planned economies. _e./ traditional economies. (1. historical episodes of economic change. 14. Which of the following is the most accurate statement about economic models? xii/ Economic models attempt to mirror reath exactly. b. Economic models are useful, but should not be used for policy-making. c. Economic models cannot be used in the real world because they omit details. Economic models omit many details to allow us to see what is truly important. 15. According to the simple circular-flow model, firms: a. buy the output of households. y sell goods and services to households. /e./ sell factors of production to households. /d.’buy goods and services from households. 16. Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that: a. the nation is producing beyond its capacity, and inflation will occur. CED the nation is producing inefficiently. Me nation is producing efficiently. , d. there will be a large opportunity cost if the nation tries to increase production. 20. Normative statements are a. descriptive, making a claim about how the world is. ,b/statements about the normal condition of the world. @rescriptjve, making a claim about how the world ought to be. ,d/Statements which establish production goals for the economy. 21. Which is the best statement about the roles of economists? a. Economists are best viewed as policymakers. b. Economists are best viewed as scientists. In trying to explain the world, economists are scientists; in trying to improve the world, they are policymakers. d. In trying to explain the world, economists are policymakers; in trying to improve the world, they are scientists. 0 50 100 150200 Weight 22. Based on the graph shown above, what would you say about the relationship between age and weight? a. As people age from 10 to 30, their weight tends to increase. MAS people age from 10 to 30, their weight tends to decrease. . As people age from 10 to 30, their weight seems to remain constant. As people age from 10 to 30, their weight changes in an unpredictable way. 23. Mary can produce housing at a lower opportunity cost than Joan. Economists would say that a " Mary has the comparative advantage in the production of housing. W has the comparative advantage in the production of housing. c. Mary has the absolute advantage in the production of housing. d. Joan has the absolute advantage in the production of housing. 29. Exports are a limit placed on the quantity of goods brought into a country. ®gwds produced domestically and sold abroad. 5% country's ability to produce a good. (1. goods produced abroad and sold domestically. 30. According to the State of the Union Speech, ,2.” taxes will continue to rise. spending on Medicaid will be cut. Bush proposed to spend $1 .2B on the development of hydrogen-powered -' cars. A.” we will have a surplus this fiscal year. 2. Gains from Trade Julia can produce 15 apple pics or 1 dozen croissants in one 10-hour day. Jacque can produce 2 apple pies or 10 dozen croissants in one 10-hour day. a. Draw the daily production possibilities frontiers for Julia and Jacque. (Please put croissants on the horizontal axis and pies on the vertical axis.) ‘2 54§b7i§€lo 13M slope of each PPF. \- c. What pattern of specialization and trade will benefit both Julia and J acque? ‘ (){zfi ‘Pli‘s (l’i‘s‘fmhb Juuii ‘ghb lZ/lb An jam, 1‘22.” 7,. _____.__ 6. Productivity is defined as a. the actual amount of effort workers put into an hour of working time. b. the number of workers required to produce a given amount of goods and services. c. the amount of labor which can be saved by replacing workers with machines. {9 the amount of goods and services produced from each hour of a worker’s time. ' 7. Which is the most accurate statement about trade? rade makes some nations better off and others worse off. { b. rade can make every nation better off. c. Trading for a good can make a nation better off only if the nation cannot produce that good. (:1. Trade helps rich nations and hurts poor nations. 8. Adam Smith described the workings of market economies in The Wealth of Nations. What did he call this market mechanism? at." the guiding force e invisible hand ac? the missing link 4) governmental policy 9. The problem of market power arises when: a. production costs increase. b. all firms in an industry produce exactly the same good. . buyers have no influence on market prices. @ a single economic actor (or small group of actors) has substantial influence on market prices. 10. According to the Phillips curve: :gfliere is no tradeoff between inflation and unemployment. . if inflation increases, so does unemployment. K increases in unemployment are associated with a rise in prices. there is a short—run tradeoff between inflation and unemployment. 11. In most cases, high or persistent inflation is caused by: a. too rapid growth in the quantity of money. -/E’ a reduction in the quantity of money. 4’ an increase in unemployment. /d. an increase in productivity. Pizzas 17. On the production possibilities frontier shown above, which point or points are efficient? A, B, C . A, C, F c. E d. D Production Possibilities for Tuneland Cars To 3 50 0 (/91) 40 250 ' to"? <30 450 20 600 ‘15“ 10 700 cat? 0 750 18. The reference table above shows the production possibilities for Tuneland. What is the opportunity cost to Tuneland of increasing the production of cars from 30 to 40? a. 200 toys b. 250 toys c. 450 toys d. It is impossible to tell what the opportunity cost is without knowing production costs for cars and toys 19. Based on the same table above showing the production possibilities for Tuneland, what is the most accurate statement about the opportunity cost of producing an additional 10 cars in Tuneland? a. The opportunity cost of an additional 10 cars is 100 toys. b. The opportunity cost of an additional 10 cars is 200 toys. c. It is impossible to determine the opportunity cost of an additional 10 cars. @e opportunity cost of an additional 10 cars increases as more cars are produced. Short Answer Questions (5 points each -- total 10 points): 1. Two models of the economy a. Using this outline, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram. AM? o E- | [—3 41/5 Sup 0! v _ "Wui/ PM“ fiés PM? W . ‘ W V “union (Aw‘m, V ‘/ [and 1 {It -- - V b. Show how each of the following concepts can be illustrated using a production possibilities frontier: I/i. efficiency AA?) \/ ii. opportunity cost s/iii. economic growth. »- ~ ’ [You may draw one PPF to demonstrate these three concepts. Please label your answers] '6‘ x ‘ \ WA v . ac» Ea owe elrfi c‘wnl' {a ow X“ a (5x; Mama Wm 4,000 m I / owl-15: govt 00‘: 2,000 Combiva [0 to 24. 'l‘he average worker in the United States can producmo “10 tons? er hour. The average worker in Canada can produce either ons o ' or 40 tonggf conclusion is correct? me United States has an absolute advantage in the production of iron . anada has an absolute advantage in the production of iron. ‘ t anada has an absolute advantage in the production of coal. he United States has an absolute advantage in the production of coal. 25. Which of the following orrect? fade allows for s r- 1a1ization. . Trade is good for nations © Trade is based on absolute advantage. ,d/Trade allows individuals to consume outside of their individual production possibilities curve. For the following questions (26 — 28), use the accompanying table. Labor Hours needed to make: ; lbottle of Perfume _1 at of Cloth; vats-um fits’h‘?‘ Nancy 6hours "8 ours ? / ..-v Roger .{Qiours 10 hours ‘/’2. H I 2. 26. Refer to the table shown above. The opportunity cost of 1 bottle of perfume for Nancy is _a. 4/3 yards of cloth. .b. [4 yard of cloth. . 1 yard of cloth. (1. 1/4 yard of cloth. 27. Refer to the table shown above. Nancy has an absolute advantage in m and Roger has an absolute advantage in a. perfume, perfume @ cloth, perfume c. perfume, cloth d. both goods, neither good 28. Refer to the table shown above. Nancyhas a comparative advantage in and Roger has a comparative advantage in Q cloth, perfume . cloth, both goods c. cloth, neither good (1. perfume, cloth ...
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Econ101 s03 Bansak exam1 - EBEL NOIlVHOdHOO NOULNVOS Q...

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