examIc - ECON 2306 Principles of Microeconomics Exam I...

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ECON 2306 – Principles of Microeconomics Exam I -- Spring 2001 – Version C - KEY 1. The latest Jennifer Lopez CD is available for $16.99. Is this price a rationing device? b. Yes: many will not buy the CD because they are unwilling to sacrifice other things $16.99 will buy. 2. At the optimal level of an activity, its marginal benefit must c. equal the marginal cost. 3. The opportunity cost of your attending college is b. the highest valued alternative you forfeit to attend college. 4. Decision making "at the margin" means making a choice based on ________ of a decision. d. comparing the additional benefits and costs 5. Here are three things you could do if you do not attend your next-door neighbor's barbecue: watch television with some friends (you value this at $8), read a good novel (you value this at $4), or go in to work (you could earn $6 during the barbecue). The opportunity cost of going to your neighbor's barbecue is c. $8, because this is the highest valued alternative forfeited. 6. "Entrepreneurship" is a. the talent for organizing the use of land, labor and capital, among other things. 7. The rationing function of prices refers to the b. capacity of a competitive market to equate the quantity demanded and the quantity supplied of a good. 8. At a price below equilibrium price there is b. a shortage. 9. If the price is $30, b. sellers will lower the price.
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10. Country C has an economic system that can be described as one with government ownership of non- labor factors of production, government allocation of resources, centralized decision making, and a major role for the government in economic activities. Which of the following classifications correctly labels the economic system of country C? c. a command economy 11. Market pricing as a kind of automatic signaling system that responds to changes in relative scarcities and rapidly redirects economic activity is part of a. the capitalist vision.
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