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samplemidkey - Econ 1 Sample Midterm Examination Winter...

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Econ 1 Sample Midterm Examination Winter Quarter 2008 1. (a) 2. (a) 3. (b) 4. (b) 5. (a) 6. (a) 7. (c) 8. (c) 9. (d) 10. (a) 11. (a) 12. (c) 13. (c) 14. (d) 15. (a) 16. (a) 17) In Oregon, they grow trees which are used to produce wood products, and they fish salmon which are eaten for dinner. (a) Draw a production possibilities frontier (PPF) showing possible combinations of wood products and salmon dinners that can be produced with the available resources in Oregon. Is the PPF upward sloping or downward sloping? Why? Downward sloping because of opportunity costs (b) Suppose the people of Oregon begin to study forestry and fishing, increasing their human capital. What effect will their studies have on Oregon’s PPF? Why? Show the effect on your graph. Increase in productivity, change in technology, will shift PPF out. 18) If there is a decrease in supply, what would happen to the amount of consumer surplus and why? Show in a graph. A decrease in supply would drive the equilibrium price upward. This would decrease the area under the demand curve and above the price. This of course is the amount of consumer surplus.
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