sample test microeconomics

sample test microeconomics - 1 Forest is a mountain man...

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1. Forest is a mountain man living in complete isolation in Montana. He is completely self- sufficient through hunting, fishing, and farming. He has not been in the city to buy anything in five years. One can infer A) the scarcity principle does not apply to Forest. B) Forest is not required to make choices. C) the scarcity principle still applies because more hunting means less fishing and farming. D) Forest is very satisfied. E) Forest is not rational. 2. The 7th glass of soda that Tim consumes will produce an extra benefit of 10 cents and has an extra cost of zero (Tim is eating at the cafeteria). The cost-benefit principle predicts that Tim will A) realize he has had too much soda to drink and go home. B) drink the 7th glass and continue until the marginal benefit of drinking another glass of soda is zero. C) volunteer to empty out the fountain. D) not drink the 7th glass. E) flip a coin to decide. 3. Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and drinks rather than spending an equal amount of money to go to a movie. The opportunity cost of going to the beach is: A) zero, because the money she spent was for food, drinks and an umbrella rather than to enter the beach. B) the $12 she spent on the umbrella, food and drinks. C) only $2 because she would have spent the money on food and drinks whether or not she went to the beach. D) the movie she missed seeing. E) the movie she missed seeing plus the $12 she spent on the umbrella, food and drinks. 4. Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck, but she finds one for $12,000. Her __________ is __________. A) benefit; $12,000 D) economic surplus; $12,000 B) cost; $15,000 E) economic surplus; $0 C) economic surplus; $3,000 Use the following to answer questions 5-6: Shoes Per Hour Pants Per Hour Jenny 3 2 Craig 4 3 5. According to the data, Jenny has an absolute advantage in A) the production of shoes. D) both shoe and pants production. B) neither shoe nor pants production. E) pants and possibly shoe production. C) the production of pants. 6. Jenny's opportunity cost of producing an extra pair of pants is A) 2/3 pair of shoes. D) 2 pairs of shoes. B) 1 pair of shoes. E) 2.5 pairs of shoes. C) 1.5 pairs of shoes. 7. Once a country has acquired a comparative advantage A) it cannot lose it, because comparative advantage comes from natural resources and climate. B) it will keep it as long as it continues to specialize. C) It will keep it only if it also has an absolute advantage. D) it might lose it if trade restrictions are established. E) It might lose it if other countries become better at producing the same product. Use the following to answer questions 8-9: This graph describes the production possibilities on the island of Genovia: Cars
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1,000 50,000 Tons of Agricultural Products 8. The opportunity cost of producing one car in Genovia is A) 5,000 tons less of agricultural products. D) 50,000 tons less of agricultural products
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This note was uploaded on 03/26/2008 for the course ECON 06e taught by Professor Popov during the Spring '08 term at University of Iowa.

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sample test microeconomics - 1 Forest is a mountain man...

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