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2000 - ECON201 Midterm Exam Fall 2002 Dr Jaques Multiple...

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ECON201 Midterm Exam Fall 2002 Dr. Jaques Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. Rational choice requires that opportunity cost be a. ignored in making a decision. b. considered for individual choices, but not for societal choices. c. computed, but not actually used in making a decision. d. considered as part of making a decision. c. used as the sole decision criterion. 2. The opportunity cost to you of an action is a. how much you must pay for the opportunity to take the action. b. the value to you of thc next best action you could have taken. c. the cost to society of giving you the opportunity to take the action. d. the dollar cost to you of the action. 3. During a war, a government will often draft people, most of whom are presently empl,)yed, into the a:m). \n economist, computing the real cost ofthe war, would be sure to include which of the following items? a. the value of the civilian goods no longer produced by the new soldiers b. the cost of feeding and clothing the new soldiers c. the dollar cost ofthe payroll d. the higher prices of civilian goods due to wartime shortages e. the cost of transporting the soldiers to combat 4. The principle of comparative advantage explains how a. one nation can take advanta.ge of another one through international trade. b. two nations may engage in mutually beneficial trade, even though one of them is more productive than the other. e. one individual can take advantage of another through international trade. d. some people arc good at producing everything, while others have no comparativf~ advantages. c. some nations end up with large trade surpluses. 5. The United States produces hoth automobiles and computers more efficiently than M~xico. Nevertheles~, t is possible that both nations would benefit from trade in these items. The reas<?n for this is a. the law of comparative advantage. b. the inflation-unemployment trade-off. e. externalities. d. the cost disease of personal services. e. attempts to repeal the law of supply and demand. 1
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6. The law of comparative advantages explains why
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