Final F08 edited for released in F09

# Final F08 edited for released in F09 - ECONOMICS 211 FINAL...

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ECONOMICS 211 FINAL EXAMINATION, Fall 2008 (3 hours, 200 points) Circle the name of your instructor: Dinh Ertemel Kumar Soligo Wu You NAME: __________________________________________________________________________ PLEDGE:_______________________________________________________________________________________ _________________________________________________________________________________________________ PART 1: MULTIPLE CHOICE: Circle the correct answer (48 points in total) 1. (3 points) Columbia would have a comparative advantage over the US in producing coffee if a) it takes Columbian workers fewer hours to produce a pound of coffee. b) the opportunity cost of producing coffee is lower in Columbia. c) the marginal product of labor is higher in Columbia. d) All of the above 2. (3 points) Consider butter and margarine, which are substitutes. When the price of butter falls, the demand curve for margarine is likely to a) shift to the right. b) shift to the left. c) remain stationary, although its price will fall. d) remain stationary, although its price will rise. 3. (3 points) The budget line shows a) the combination of goods which can be purchased by an individual who has a particular income regardless of prices. b) all combinations of goods which satisfies the individual equally well . c) all combinations of goods which satisfy the individual equally well at given prices and income level. d) all combinations of goods that can be purchased by an individual at given prices and income level. 1

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4. (3 points) Which of the following statements is FALSE? a) the slope of an indifference curve represents the marginal rate of substitution of one good in terms of another. b) an indifference map assumes that an individual's tastes are affected by prices. c) two indifference curves cannot cross each other. d) along an indifference curve each bundle of goods yields the same level of satisfaction. 5. (3 points) For an input, such as labor, which of the following is true in the short run (where AP is average product of labor and MP is marginal product of labor): a) average product is at a maximum when AP = MP. b) total product is at a maximum when AP = MP. c) total product declines when marginal product begins to decline. d) when MP < AP, AP is decreasing. 6. (3 points) The production of good X needs two inputs, capital and labor. The production function is given as q = KL, where K represents capital and L represents labor. It exhibits: a) decreasing returns to scale. b) constant returns to scale. c) increasing returns to scale. d) decreasing returns to scale in one region and increasing returns to scale in another region. 7. (3 points) Assume that both capital and labor are required for production. If the price of labor increases, but total cost remains constant, then a) we can produce the same level of output by using more capital and less labor. b)
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Final F08 edited for released in F09 - ECONOMICS 211 FINAL...

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