exam_1_version_A_sp08-1

exam_1_version_A_sp08-1 - ECON 002 Spring 2008 G. Dirk...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON 002 Spring 2008 G. Dirk Mateer Exam #1 Test Form: A LAST NAME: ___________________ FIRST NAME: __________________ LAST 4 DIGITS OF YOUR PSU STUDENT ID: __ __ __ __ Directions: Please answer 37 of the 40 questions. The three questions that you skip will be scored as correct. DO NOT ANSWER ALL 40 QUESTIONS. Each question is worth $6,250. Please remember to turn in the scantron and the printed version of the exam. (1) Adam Smith, the founder of modern economics, put forth the “invisible hand” principle of self-interest. Which modern example is most consistent with what Smith believed? a. McDonald’s has a dollar menu. b. Fans at a game search around the stadium for the shortest concession lines. c. Dunkin Donuts also sells coffee in order to compete with Starbucks. d. Suppliers try to make the largest profit they can by charging the highest price possible. (2) Which issue comes from MACRO economics? a. The price of the buffet at Cici’s Pizza is $4.99. b. The national unemployment rate increased from 4.7 to 5.0% last month. c. New hybrid cars save thirty percent more gas than conventional vehicles. d. Many wine customers from Pennsylvania choose to buy their favorites wines from vendors outside of Pennsylvania in order to avoid high state taxes on alcohol. (3) Why do economists downplay perfection as a goal? a. Since not everything can be “perfect” it doesn’t make sense to try to achieve that goal. b. The total benefits from attaining perfection are low. c. Perfection is scarce. d. The marginal cost of achieving it is quite high and the marginal benefits are quite low.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
(4) A friend notes that ice cream sales at a local lake are highly correlated with drowning. What logical error are they making? a. Incentives play a major role in explaining human behavior. b. They are violating ceteris paribus c. They do not understand the fallacy of composition. d. They are confusing association with causation. (5) Identify the normative statement? a. Tickets to see the upcoming Fergie concert at Beaver stadium are $35. b. Being able to see Fergie perform live for $35 is a good deal. c. Fergie’s favorite Black Eyed Peas song to perform is "Let's Get It Started." d. Fergie’s debut solo album, The Dutchess , went platinum in both America and Japan. (6) If you add up the consumer and producer surplus that occurs when a purchase is made this equals the a. social welfare b. deadweight loss c. opportunity cost of trade d. demand (7) Identify the entire amount of producer surplus in the graph. a. A b. B c. A + B d. A + B + C + D S D A B C D
Background image of page 2
(8) What major criticism applies to Walfogel’s deadweight loss argument? a. Gift givers usually do a good job of purchasing exactly what the recipient wants. b.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 10

exam_1_version_A_sp08-1 - ECON 002 Spring 2008 G. Dirk...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online