problem set 1

problem set 1 - Econ 211 Fall 2008 1 An economic model a b...

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Econ 211 Name:  Jeff Surver Fall, 2008 1. An economic model: a. generally works well in theory, but not in practice b. is unlike models in all other disciplines, because it abstracts from reality c. ideally is simple, general, and useful in predicting behavior d. all of the above e. none of the above 2. When we refer to the "cost" of an action, we mean: a. only the money that must be given up to undertake that action b. the highest-valued alternative sacrificed if that action is chosen c. the sum total of any and all things that might have been done instead of that action d. the minimum amount someone would be willing to give up to take the action e. none of the above 3. Suppose Thelma and Louise are each capable of producing cakes and pies and only these two goods. When we say that Thelma is the low cost producer of pies, we mean that: a. Thelma can produce the most pies b. when Thelma produces any given number of cakes, she must give up more pies than must Louise when Louise produces that number of cakes c. Louise has a comparative advantage in cake production, compared to Thelma d. both (b) and (c) are correct. e. none of the above 4. Assume Peter can produce either radishes or carrots (and only those two goods). Also assume Peter’s production possibility curve (PPC) is a straight line. Based on this information we can conclude that for Peter: a. the marginal cost of producing radishes rises as radish output rises if the absolute value of the slope of his PPC exceeds one b. the marginal cost of producing radishes falls as radish output falls if the absolute value of the slope of his PPC is less than one c. the marginal costs of radish output is rising regardless of whether the absolute value of the slope
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This note was uploaded on 10/06/2008 for the course ECON 211 taught by Professor Johnson during the Fall '07 term at Clemson.

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problem set 1 - Econ 211 Fall 2008 1 An economic model a b...

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