Review Questions-part 1 - Econ 101 Review Questions for Midterm 1 Professor Korinna K Hansen Use the graph below to answer the following question 1 In

# Review Questions-part 1 - Econ 101 Review Questions for...

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Econ 101 - Review Questions for Midterm 1 Professor Korinna K. Hansen Use the graph below to answer the following question. 1) In the above Figure, which of the following is true? a) Point Ais the most efficient b) Point Bis the most efficient. c) Point C is unattainable. d) b) and c) are true Use this graph for the next question. 2) If an economy operates at point Aon the production possibilities curve shown in Figure above.
Use this graph for the next question: 3) Points A, B, and Cin the above Figure indicate consumption and investment for three economies. Other things constant, which of the economies is likely to grow more rapidly in the future? Haircuts T-shirts 4) The picture above gives you the production possibility frontier (PPF) for t-shirts and haircuts in an economy. What is the explanation for the over time shift in the PPF?
5) In a simple two-person (person A and B), two-good economy (good 1 and 2), determine whether each of the following statements is ALWAYS TRUE. Statement 1: If A has the absolute advantage in the production of a good 1 and B has the absolute advantage in the production of a good 2, then A also has the comparative advantage in the production of good 1. Statement 2: If A has the comparative advantage in the production of a good 1 and B has the comparative advantage in the production of a good 2, then A also has the absolute advantage in the production of good 1. a) Both Statement 1 and Statement 2 are always true. b) Statement1 is not always true but Statement2 is always true. c) Statement 1 is always true but Statement 2 is not always true. d) Neither Statement1 nor Statement2 are always true. 6) Patricia is calculating her opportunity cost of attending college. She pays \$30,000 per year in tuition and forgoes a salary of \$25,000 per year. After graduating from college, she expects a startup salary of \$60,000 per year. Patricia is considering a 4-year time horizon for her calculations. What is Patricia’s opportunity cost of attending college, given this information only?