Exam 1_Answers.pdf - ECON 1200 Spring 2018 First Midterm...

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ECON 1200 Spring 2018 First Midterm Exam 1. Suppose that there are three methods of financing the transportation of prisoners from Point A to Point B: I. The boat's captain is paid $100 by the government for every live prisoner that is loaded on board at Point A. II. The boat's captain is paid $100 by the government for every live prisoner that is unloaded at Point B. III. The boat's captain is paid $800 by the government for every live prisoner that is loaded on board at Point A. Which financing method will result in the greatest number of prisoners surviving the trip? A) I B) II C) III D) All methods affect prisoner survival equally. 2. Susan quits her administrative job, which pays $40,000 a year, to finish her four-year college degree. Her annual college expenses are $8,000 for tuition, $900 for books, and $2,500 for food. The opportunity cost of attending college for the year is: A) $11,400. B) $8,900. C) $48,900. D) $51,400. 3. Joe runs a landscape company and uses one of his home's bedrooms as a home office. This office could be used to earn rental income from college students. If average rental income in Joe's neighborhood were to rise: A) Joe's opportunity cost of using a bedroom as a home office would decrease. B) Joe's landscape company would experience a decrease in demand for services at all prices. C) Joe should expand his office space in his home. D) Joe's opportunity cost of using a bedroom as a home office would increase. 4. David sells his car, which he considers worthless, to Cameron for $200. Which of the following statements is true? A) David and Cameron must have different preferences for the car. B) This trade did not create value because Cameron is buying a car that David considers worthless. C) Cameron is the only one made better off by the trade. D) David is made better off by the trade, but Cameron is made worse off. Page 1
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5. If instead of specialized doctors (neurologists, cardiologists, gastroenterologists, etc.) we had doctors who each knew the same things about all aspects of medicine it would be: A) better because we could just go to one doctor who could handle all our needs. B) better because total medical knowledge in society would increase. C) worse because the human brain is unlimited. D) worse because total medical knowledge in society would decrease. 6. Jesse is good at math and excellent at making friends and Addae is equally good at both. Mathematically and socially challenged Jordan wants to hire tutors to help in each area. Who should tutor Jordan in which area to maximize Jordan's college experience? A) Jesse and Addae should tutor Jordan in both math and social skills. B) Jesse should teach math and Addae should teach how to make friends. C) Jesse and Addae should both teach how to make friends. D) Jesse should teach how to make friends and Addae should teach math.
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