PM1 - Name: _ Class: _ Date: _ ID: A Practice Midterm 1...

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Name: ________________________ Class: ___________________ Date: __________ ID: A 1 Practice Midterm 1 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"? a. Melissa can attend the concert only if she takes her sister with her. b. Greg is hungry and homeless. c. Brian must repair the tire on his bike before he can ride it to class. d. Kendra must decide between going to Colorado or Cancun for spring break. ____ 2. Economists are particularly adept at understanding that people respond to a. laws. b. incentives. c. punishments more than rewards. d. rewards more than punishments. ____ 3. Adam Smith argued that in a market system, when people act in their own self-interest, they typically a. help only themselves. b. harm others. c. help others, but not as much as they would have if they were not self-interested. d. help others even more than when they deliberately try to help others. ____ 4. Which of these consumption activities will most likely impose an external cost? a. An executive plays a vigorous game of golf. b. A student in a dorm plays her CDs at 120 decibels late at night. c. A young mother exercises to an aerobics video. d. A construction worker eats a sandwich during his lunch break. ____ 5. The self-interest of the participants in an economy is guided into promoting general economic self-interest by a. the invisible hand. b. market power. c. government intervention. d. oikonomos . ____ 6. During which decade did the United States experience an inflationary episode similar to that experienced by Germany during the 1920s? a. the 1880s b. the 1930s c. the 1970s d. None of the above are correct.
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2 ____ 7. Most economists believe that an increase in the quantity of money results in a. an increase in the demand for goods and services. b. lower unemployment in the short run. c. higher inflation in the long run. d. All of the above are correct. ____ 8. Shannon bakes cookies and Justin grows vegetables. In which of the following cases is it impossible for both Shannon and Justin to benefit from trade? a. Shannon does not like vegetables and Justin does not like cookies. b. Shannon is better than Justin at baking cookies and Justin is better than Shannon at growing vegetables. c. Justin is better than Shannon at baking cookies and at growing vegetables. d. All of the above are correct. ____ 9. A country's consumption possibilities frontier can be outside its production possibilities frontier if a. the country’s technology is superior to the technologies of other countries. b.
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This note was uploaded on 02/15/2010 for the course ECON 2106 taught by Professor Minjaesong during the Spring '06 term at Georgia Institute of Technology.

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PM1 - Name: _ Class: _ Date: _ ID: A Practice Midterm 1...

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