Exam I - EXAM I ECON 2106 Instructions: Choose the best...

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Unformatted text preview: EXAM I ECON 2106 Instructions: Choose the best available answer for each question and fill it in the corresponding number on the scantron sheet. I.) At one point along a PPF, 10 pirzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost ot'a pizza between these points is: m H A) 7x10 ofa sandwich. ; HQ (on: 3 1;anqu a) 10:7 ofa sandwich. 5“) 9 \ G {3 H3 ofa sandwich. 3 sandwiches. E) None of the above Piece. ‘1 to Price antity Quantity (dollars per supplied demanded pound) { ounds) (pounds! a5@ 2.) The above table shows the demand schedule and supply schedule for chocolate chip cookies. ll‘the price was $4.00 per pound, there is a shortage of 2 pounds of chocolate chip cookies. shortage of3 pounds of chocolate chip cookies. shortage of5 pounds ofchocolate chip cookies. surplus of3 pounds of chocolate chip cookies. surplus of2 pounds of chocolate chip cookies 3.) All economic questions arise because Sire/('1’? 1.1 peeple are greedy production possibilities are unlimited we want more than we can get ‘91 people are irrational E) None of the above 4.) lflhe WWW), then its 6 : ‘3 supply curve is vertical. (3 supply curve is horizontal. ‘Sl. ‘3; as; demand curve must be vertical. 3 f: 90 supply curve is positively sloped. S supply curve passes through the origin 5.) Tom takes 20 minutes to burn a CD and 5 minutes to make a sandwich. Jerry takes 35 minutes to burn a CD and 3 minutes to make a sandwich. Tom has a comparative advantage in _ and Jerry has a comparative advantage in . w burnng CDs; making sandwiches @ making sandwiches; burning CDs as neither of these activities; both activities m both activities; neither of these activities to .IdCD (ll-OM OJ. -' 75; fat) (did!) 5 of, 5W) x L/ (0 “N, -—-----——‘-.—..:./ a ................... &rf but“) I $4.45," (3-,:3/1 : : Of, Same} ' S (D 50-13: Price ldoltnr: per CD] OHM o l 2 3 A 5 6 ? B 9 I0 Quantity [millions oi CD: per month] 6.) In the figure above, when the price of a CD is $8.00 per CD, total consumer sugglus on all the CDs bought will be A) greater than $30 million. B less than at any other price. $20milhon. ‘ I as S H-S‘:H‘dd will)“ 1c55 than $l5 million. ‘ cfi E) equal to producer surplus. , D §s Inn per mmth| Lid 3 Rant 0 3 m E E 1 sk”¢ D o_s I 2 3 A 5 c: Guamin {thousands oi upunmuul: pm month] 7.) 1n the figure above, originally the apartment rental market is in short run and long run equilibrium with a rental price of $600 per month. Then the government imposes a rent ceiling of $500 per month, which causes a shortage. Suppose that apartments ar a normal ood and incomes rise. The increase in income will lead to the & N shortage shrinking. shortage remaining the same size. g C g C l @ shortage growing. ) rental price increasing. E) return to equilibrium _ 8.) Which of the following is NOT a factor ofproduetion? E (but) I'm-4:. 1f,.-(‘_“‘i.-.!.-l."r'./ (A59. \X)‘ Vans used by a bakery cempany for deliveriesflwfiz _ f I? M ' E A person developing a production schedule for a new product. HUN— r'yv- f'cJ' a?“ “"l ' 4. v.41: .rI-"l . 175 sharesofMicrosoftstoek.£ 1? M '13) Wilderness areas that have yet to be developed. 2'.an E) All are factors of production 1 I 9.) At the quantity of 1000 tacos the marginal social benefit '3 ofa taco”$.50 and the marginal social cost is $.60. To produce the efficient quantity of tacos, A) more tacos should be produced because we are in underproduction. fl fewer tacos should be produced because we are in overproduction ,' r >‘/\ 9 there should be no change in the amount of tacos produced. l ‘- 9.) more information on production costs is needed to determine the efficient level of tacos. (5-: G: a 10.) When income increases, the demand curve for product X shifts rightward and the demand curve for product Yshifts leftward. These shifts mean that XL X and Y are complements. B) X and Y both normal goods. \ Xis an inferior good and Yis a normal good. if"; \ X @ X is a normal good and Y is an inferior good. X and l" are substitutes. Q ‘1 C) 1 l .) If the cross elasticity of demand between goods A and B is negative, N the demands for A and B are both price elastic. the demands for A and B are both price inelastic. + : {was +1,va A and B are complements. m A and B are substitutes. \El Both B and C are correct -' ‘3 (cart? Amer 12.) An outcome is efficient if A) the marginal benefit is equal to the total cost. B) the marginal benefit of the last unit exceeds marginal cost. C) the marginal benefit is less than the marginal cost. D) the total benefit is equal to the marginal cost. a the marginal benefit of the last unit is equal to marginal cost. 13.) An effective minimum wage is a price _ that _ the quantity oflow-skilled labor demanded. a ceiling; decreases w 3 ceiling; increases ' I ET...” ‘ floor; decreases in fl ' ‘ s oor, increase “MS “we ' ' ¢ ‘ u - ‘dd 14.) For “an increase in the quanuty demanded but not “an Increase In dcmail'd to occur, there must be A; a rightward shift ofthe demand curve. ll [1 ® a rightward shift of the Supply curve. (‘1’; t a l t‘ We? \SL a movement along a supply curve. Both answers B and C are correct. None of the above are correct 15. The price elasticity of demand falls; straight stays constant; straight ‘3; ‘6; falls, curved BL rises; straight ‘BL may rise or fall; straight in value when moving downward along a line demand curve. 16.) The “law ofdemand“ refers to the fact that, all other things remaining constant on the demand side of the market, when the price of a good rises A) the demand curve will shift rightward. B) the demand curve will shift leftward. 8 there will be a movement down along the demand curve to a larger quantity demanded. p K a} there will be a movement up along the demand curve to a Smaller quantity demanded. ' Nanc ofthe above 17.) Which of the following is a type ofcapital? machine acre of land ‘GJx mineral resource ‘9.)\ low—skilled labor QED A$100,000 bank loan 18. The elasticity ofsupply is (w posttlve and more elastle 1n the long run. 5 positive and more elastic in the short run. ‘Q negative and more elastic in the long run. \B.) negative and more elastic in the short run. 19.) If a production quota is set below the equilibrium quantity, at the quota quantity, marginal benefit is marginal cost and the level of production is A) equal to; inefficient B) major than; efficient C) less than;ineftigi_ent \ l D equal to; efficient P F” 5 greater than; inefficient J Price {dollars per sol? drink} 0 b—uonfiry [soil drinks} 20.) Consider the figure abOve showing the market for soil drinks. Suppose the economy is at point a. An increase in the number of suppliers would be shown as a movement from point a to none of the points that are illustrated. NW (Om rd“ VII-5+ “I {Li/film‘s} {flu-{6r pointb. I M 9’ I H l C) point e. ® point (3. 21.) A fall in the price of cabbage from $10.50 to $9.50 per bushel increases the quantity demanded from 18,80010 21,200 bushels. The price elasticity ofdemand is ‘9! m r) C)r (In! 0 ca , sea/mi,» :> 17% Wm A) 0.30. .—————»—e—-L 3 ’/ to 1.20. lap/’7“: a a) ‘ l.25. {a cl’,aaam D) 8-00. «mo/3e}; , , E) None of the above —) 0 n j d 5““ e‘, {/rx‘e 5; era 1‘ x 5,1704!“ 22.] Which of the following is TRUE regarding marginal benefit? "-7 g" a a ‘3 (9.“,er Ken Jam. -' -. \fk The marginal benefit curve shows the benefit titans receive by wit/1g another unit of a good. . . “W195 . N331 Marginal benefit Increases as more and more ofa good is consumed. Ill) Marginal benefit shows the maximum amount a person is willing to pay to obtain one moreunit of a good. A} I and 11. ~39. I and III. II and [I]. @ III only. ) All are false 23.) All grapefruitjuice producers have decided to blend tangerine juice with the grapcfmitjuiee. This blend results in a higher cost ofproduction, but studies show that consumers prefer the taste of the blend to straight grapefruitjuice. What will happen to the equilibrium price and quantity oflhe new “blended” grapefruit juice now that it costs more to produce but consumers like it better? A) Price and quantity will both increase. 9 B) Price will decrease but quantity will increase. ' The effect on price is uncertain, but quantity will increase. rice will increase, but the effect on quantity is uncertain. 3-; é ,bJ/xego) / R 3 I . According to Utilitarian principles first discussed in the nineteenth century, fairness implies equality of outcome. ) equality ofopportunity. E)‘ winner takes all. ‘91 maximizing consumption. \EQ maximizing total surplus 3 . Technological progress makes the production possibilities frontier 2 } m shift inward toward the origin. become more linear and less bowed. 5 shift outward from the origin. D) become less linear and more bowed. ® both C and D are correct. 33.) A deadweight loss is created /A) only ifthe last unit produced has a marginal social benefit greater than its marginal social cost. \BL only if the last unit produced has a marginal social cost greater than its marginal social benefit. as, only if the last unit produced has a marginal social benefit equal to its marginal social cost. if for the last unit produced, marginal social cost is greater than its marginal social benefit or if its marginal social benefit is greater than its marginal social cost. ...
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This note was uploaded on 12/14/2010 for the course ECON 2106 taught by Professor Minjaesong during the Fall '06 term at Georgia Institute of Technology.

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Exam I - EXAM I ECON 2106 Instructions: Choose the best...

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