First+Exam+v1+_with+answers_

First+Exam+v1+_with+answers_ - v1 Name_ UMID_ Winter 2009...

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v1 Name___________________________ UMID___________________________ Winter 2009 First Exam Economics 101 1. ___ Choose the statement below which BEST makes use of the idea of opportunity cost. (a) When Chad applied for college, only one institution accepted him. Since he had no alternative, his opportunity cost of attending that college was zero. (b) When Owen applied to college, he was offered a scholarship that would pay for his tuition and all living expenses. Therefore, his opportunity cost of attending college was zero. (c) Julia chooses not to go to college. Instead, she spends her time writing a screenplay that will probably never be made into a movie. Since she preferred to do this worthless task rather than going to college, the opportunity cost of going to college must have been zero. (d) The opportunity cost of doing the homework for this class is an improved grade. (e) Brian initially chose to take a job as a Wall Street trader rather than to attend graduate school. But when he realized that Wall Street bonuses were likely to be significantly reduced, the opportunity cost of college fell and he changed his mind. 2. ___ Four economics discussion sections require GSIs, and only Brian and Owen are available to teach them. Fortunately, Brian and Owen are both exceptional teachers, and the students of the classes would be equally thrilled to have either of them lead their discussions. Each of the GSIs likes to teach 1 discussion section, but likes teaching 2 discussion sections even more. Each GSI prefers to teach only 1 discussion section rather than 3, and each would prefer to teach no discussion sections rather than 4. Which of the following combinations of sections taught is Pareto efficient? (a) Brian teaches no sections and Owen teaches 4. (b) Brian teaches 3 sections and Owen teaches 1. (c) Brian teaches 2 sections and Owen teaches 2. (d) Brian teaches 3 sections and Owen teaches none. (e) Any allocation of sections is Pareto efficient, as long as all 4 sections are taught.
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3. ___ Suppose that Australia and New Zealand are the only two countries producing coarse wool and fine wool. Each has a linear PPF. The following table gives information about the maximum quantities of the two grades of wool they can produce respectively: Suppose the following information is known: I. Australia has the absolute advantage in producing both kinds of wool II. Australia has the comparative advantage in producing fine wool, while New Zealand has the comparative advantage in producing coarse wool. Which value of X is consistent with these two facts? (a) 2 (b) 7 (c) 12 (d) 17 (e) 22 Maximum output of fine wool (million bales/day) Maximum output of coarse wool (million bales/day) Australia 10 X New Zealand 5 8 2
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4. ___ The diagram below shows Farmer Brown’s PPF for wheat and corn production, and some points (marked A-E) representing potential combinations of wheat and corn production. Of the following statements, which is FALSE?
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First+Exam+v1+_with+answers_ - v1 Name_ UMID_ Winter 2009...

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