PracticeMidterm2 - Economics 201 (Section 025) Introduction...

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1 Economics 201 (Section 025) – Introduction to Microeconomics Practice Midterm Exam 2 Instructor: G. Lepori Instructions: fill in your name and student number both on this sheet and on the attached scantron sheet. For each question circle, fill in ONE bubble on the scantron sheet that you feel is the most appropriate solution to the question. 1) In market economies, resources are allocated by a. a single central planner. b. a small number of central planners. c. those firms that use resources to provide goods and services. d. the combined actions of millions of households and firms. ANS: D 2) What you give up to obtain an item is called your a. opportunity cost. b. explicit cost. c. true cost. d. direct cost. ANS: A 3) When you calculate your true costs of going to college, what portion of your room- and-board expenses should be included? a. Your full room-and-board expenses should always be included. b. None of your room-and-board expenses should ever be included. c. You should include only the amount by which your room-and-board expenses exceed the income you earn while attending college. d. You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college. ANS: D 4) After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still weeks away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision? a. The marginal benefit of going to Cancun increases. b. The marginal cost of going to Cancun decreases. c. The marginal benefit of going to Ft. Lauderdale decreases. d. The marginal cost of going to Ft. Lauderdale decreases. ANS: D
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5) Which is the most accurate statement about trade? a. Trade can make every nation better off. b. Trade makes some nations better off and others worse off. c. Trading for a good can make a nation better off only if the nation cannot produce that good itself. d. Trade helps rich nations and hurts poor nations. ANS: A 6) Economists make use of assumptions, some of which are unrealistic, for the purpose of a. teaching economics to people who have never before studied economics. b. advancing their political agendas. c. developing models when the scientific method cannot be used. d. focusing their thinking on the most relevant factors. ANS: D 7) In the simple circular-flow diagram, the participants in the economy are a. firms and government. b. households and firms. c. households and government. d. elected officials and ordinary citizens. ANS: B 8) Production is efficient if the economy is producing at a point a. on the production possibilities frontier.
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This note was uploaded on 03/30/2008 for the course ECON 201 taught by Professor C.liedholm during the Spring '07 term at Michigan State University.

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PracticeMidterm2 - Economics 201 (Section 025) Introduction...

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