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

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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?
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(4) A friend notes that ice cream sales at a local lake are highly correlated with drowning. What logical error are they making? (5) Identify the normative statement? (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
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exam_1_version_A_sp08-1 - ECON 002 Spring 2008 G Dirk...

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