E1_sample_Econ 102

E1_sample_Econ 102 - Economics 102: Principles of...

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Economics 102: Principles of Microeconomics 1 Sample Exam 1 1.- Suppose that there are 10 million workers in Canada and that each of these workers can produce either 2 cars or 30 bushels of wheat in a year. A. What is the opportunity cost of producing a car in Canada? What is the opportunity cost of producing one bushel of wheat in Canada? B. Draw Canada’s PPF with wheat on the horizontal axis and cars on the vertical axis. If Canada chooses to consume 10 million cars, how much wheat can it consume without trade? Label this point on the PPF. C. Now suppose that the U.S. offers to buy 10 million cars from Canada in exchange for 20 bushels of wheat per car. If Canada continues to consume 10 million cars, how much wheat does this deal allow Canada to consume? Label this point on your diagram. Should Canada accept the deal?
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2 2.- Draw a circular-flow diagram. Identify the parts of the model that correspond to the flow of goods and services and the flow of dollars for each of the following activities. A. Selena pays a storekeeper $1 for a quart of milk. B. Stuart earns $4.50 per hour working at a fast-food restaurant. C.
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E1_sample_Econ 102 - Economics 102: Principles of...

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