Exam1 - Name _ PSU last 4_ Seated _ Exam 1 Econ 004 Spring...

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Name _____________________________ PSU last 4_______________ Seated ____ Exam 1 – Econ 004 – Spring 2007 – Chuderewicz FORM A Please do all work on exam sheet and when you are completely done with exam – fill out your scantron and then stick the scantron in your exam and place on the correct pile. Thank you in advance and best of luck! 1
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True / False Questions – Answer A for True and B for False 1. The author of “Highway Robbery” (the speeding in Finland article) believes that it is appropriate to charge the rich more for speeding because this is the only way to keep them (the rich) from speeding! 2. We should raise the minimum wage is an example of a normative economic statement. 3. The Governor of S. Carolina got an F in econ 101 because he failed to put a price ceiling on plywood which resulted in the citizens of S. Carolina paying extremely high prices for plywood during this disaster. 4. Adam Smith’s invisible hand suggests that if everyone pursues their own self interest, then social welfare will be maximized. This notion is consistent with allowing markets to work, since the competition when markets are allowed to work essentially forces us to be the best that we can be. 5. According to the article about speeding fines in Finland, the fine for speeding is based on the speeder’s income. 6. The hurricane Hugo example about plywood showed clearly that if markets are allowed to work, prices reflect the relative scarcity of a good or service. 7. “In the past, increases in the minimum wage have resulted in a rise in teenage unemployment” is an example of a positive economic statement. 8. Overheating, by definition, occurs when the stock market grows ‘too’ fast. 9. The rationality assumption suggests that you if you make yourself worse off, regardless if it was intentional or not, then you are behaving irrationally. 10. The class size amendment (Amendment 9) that we discussed in class demonstrated that there is essentially no empirical evidence that smaller class sizes increase student performance. 11. Part of the opportunity costs of mandating smaller class sizes could very well be the value of playing on a play ground, since schools would need to expand and find places for more classrooms. 12. Opportunity cost is defined as the difference between the benefits and the costs of your choice. 13. An economist would classify 100 shares of Google stock as capital. 14. The opportunity cost of college is the same for all students who are ‘in-state’ receiving full-tuition scholarships. 15. We argued that total welfare in a command economy is smaller relative to that of a capitalistic economy but also argued that the distribution of income is more equal in a command economy. 16. A rational decision maker will take only those actions for which the
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This note was uploaded on 03/29/2008 for the course ECON 004 taught by Professor Graf,pauledwin during the Spring '07 term at Pennsylvania State University, University Park.

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Exam1 - Name _ PSU last 4_ Seated _ Exam 1 Econ 004 Spring...

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