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Test 1 version 2 - Page 1 of 14 McMaster University...

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Page 1 of 14 McMaster University Department of Economics ECON 1B03 Midterm Test #1 VERSION 2 Instructor: Professor H Holmes Duration: 2 hours Total Number of Pages: 14 INSTRUCTIONS : Answer all questions on the scan sheets. USE AN HB PENCIL ONLY. Make sure you carefully fill in the bubbles. YOU MUST FILL IN YOUR STUDENT NUMBER, VERSION NUMBER AND SECTION NUMBER ON THE SCAN SHEET OR YOUR GRADE WILL NOT BE RECORDED. You may use the Casio FX calculator. Hand in the scan sheet and this test copy. TOTAL MARKS AVAILABLE : 50 NAME:____________________________________________________ STUDENT #: _______________________________________________ MUGSI ID: ________________________________________________ SECTION : Circle One: 9:30-10:20 11:30-12:20 Wednesday Night
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Page 2 of 14 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Economists view positive statements as a. affirmative, justifying existing economic policy. b. optimistic, putting the best possible interpretation on things. c. descriptive, making a claim about how the world is. d. prescriptive, making a claim about how the world ought to be. ____ 2. Which of the following is an example of a normative statement? a. If the price of a product decreases, quantity demanded increases. b. Reducing tax rates on the wealthy would be good for the country. c. If the national saving rate were to increase, so would the rate of economic growth. d. All of the above are correct. ____ 3. Any point on a country's production possibilities frontier represents a combination of two goods that an economy Table 1 Labor Hours Needed to Make 1 Pound of: Pounds produced in 40 hours: Meat Potatoes Meat Potatoes Farmer 8 2 5 20 Rancher 4 5 10 8 ____ 4. Refer to Table 1 . The opportunity cost of 1 pound of meat for the farmer is ____ 5. Refer to Table 1 . The opportunity cost of 1 pound of potatoes for the farmer is ____ 6. Refer to Table 1 . The Rancher has an absolute advantage in a. both goods, and the Farmer has a comparative advantage in meat. b. meat, and the Farmer has a comparative advantage in potatoes. c. meat, and the Farmer has a comparative advantage in neither good. d. both goods, and the Farmer has a comparative advantage in potatoes.
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Page 3 of 14 Figure 1 ____
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