Practice Questions Midterm 1

Practice Questions Midterm 1 - Practice Questions for...

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Practice Questions for Midterm One, Econ 101-008, Professor Michael Salemi Salemi has intentionally omitted the right answers from the following list so that students do the work necessary to determine what the right answers are and why they are correct. If you are confused by a question, please raise the issue in recitation. 1. Which of the following is true of the basic economic problem of scarcity? a. The problem is with us as long as resources are not available in unlimited amounts. b. The problem exists only in highly industrialized economies. c. The problem will quite likely disappear as production increases. d. The problem will be sure to disappear with the growth of technology. 2. The simultaneous existence of limited resources and unlimited wants forces an economy to a. produce inside its production possibilities frontier. b. make choices among alternative uses for resources. c. suffer from inflation and a lack of economic growth. d. distribute income unequally among people. 3. Economic inefficiency exists if a. some members of society do not hold jobs. b. the society has a low standard of living. c. there is underemployment of economic resources. d. the society is operating on its production possibilities frontier. 4. Which of the following is the correct definition of “opportunity cost”? a. the amount of money that must be paid to acquire an additional unit of a commodity. b. the amount of labor utilized in producing an additional unit of a commodity. c. the price of a commodity. d. the amount of reduction in the production of one commodity necessary to produce more of another commodity. 5. Which of the following should not be included in calculating the opportunity cost to a student of attending a college football game? a. the cost of hot dogs and drinks he would purchase at the game. b. hours of undisturbed study time while everyone else is at the game. c. the goods you could buy with the money you would receive by selling your ticket. d. the opportunity to watch other games on television. 6. Along a given production-possibilities curve involving two goods, producing more of one good requires that a. less of the other good be produced. b. the production of the other good be held constant. c. more of the other good be produced. d. a better technology be employed. 7. The basis for the law of increasing costs is that a. economic resources are equally adaptable to the production of all goods. b. economic resources are not equally adaptable to the production of all goods. c. as the production of a good increases, the amount of other goods sacrificed diminishes. d. as the unemployment rate falls, business will pay a higher wage rate to labor.
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8. Assume that the economy can produce two goods, A and B. An increase in the technological know-how for producing good A will result in a. expanded production possibilities for both goods A and B. b.
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This note was uploaded on 07/28/2008 for the course ECON 101 taught by Professor Balaban during the Spring '07 term at UNC.

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Practice Questions Midterm 1 - Practice Questions for...

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