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Test 1 version 3

# Test 1 version 3 - 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 3 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. The production possibilities frontier is a a. map which shows the frontier beyond which agriculture is unprofitable. b. map which shows areas of the world in which capitalist production is now possible. c. graph which shows the various combinations of resources that can be used to produce a given level of output. d. graph that shows the various combinations of output the economy can possibly produce given the available resources and technology. Figure 1 ____ 2. Refer to Figure 1 . Which point or points are efficient? a. B, E b. A, B, E c. D d. C Figure 2
Page 3 of 14 ____ 3. Refer to Figure 2 on the previous page . The opportunity cost in terms of toothbrushes of getting 10 additional toasters by moving from point B to point A is a. 20 toothbrushes. b. 10 toothbrushes. c. 5 toothbrushes. d. zero, since the economy has the additional resources to produce 10 additional toasters. Figure 3 ____ 4. Refer to Figure 3. . If this economy moved from point C to point E, a. it still would not be producing efficiently. b. there would be no gain in either bathtubs or barrels. c. it would be producing more barrels and more bathtubs than at point C. d. It is not possible for this economy to move from point C to point E without additional resources. ____ 5. Economists consider normative statements to be a. descriptive, making a claim about how the world is. b. statements about the normal condition of the world. c. prescriptive, making a claim about how the world ought to be. d. statements which establish production goals for the economy. ____ 6. Which of the following is an example of a positive statement? a. Prices rise when the government prints too much money. b. If welfare payments increase, the world will be a better place. c. Inflation is more harmful to the economy than unemployment. d. The benefits to the economy of improved equity are greater than the costs of reduced efficiency.

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Page 4 of 14 ____ 7. With trade a a. country is worse off because it becomes dependent on other countries. b.
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Test 1 version 3 - Page 1 of 14 McMaster University...

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