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Midterm+1+v1-1 - Midterm Version 1 Exam 1 Econ 102 October...

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Version 1 Midterm Exam 1, Econ 102 October 4, 2010 This exam has two parts: a multiple choice section consisting of 20 questions, and a short answer/graphing section, worth 20 points. You will submit all exam materials (scantron, question booklet and completed short answers) and sign yourself out at the end of the exam. 1. Select the normative statement a. “In the past, war spending has coincided with abnormal growth behavior.” b. “There is a positive correlation between cigarette smoking and coffee drinking.” c. “Given his past actions, we expect that Obama will veto the bill.” d. “Given their past effectiveness, Congress should approve the use of sanctions.” 2. Suppose that when you have 5 bagels, the cost of giving up one bagel is W. When you have 3 bagels, the cost of giving up one bagel is V. Which of the following statement is correct generally? 3. Refer to the diagram of a PPF to the right. According to our laws of preferences, which points MUST be preferred to point E? 4. Consider the PPF to the right, describing an economy’s ability to produce tennis balls and tennis racquets. Which statement below must be true? 1
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5. The production choice of the decentralized market system will be the same as the choice of a welfare-maximizing, all-knowing social planner EXCEPT FOR when in the market system, a. the government imposes a binding price floor b. the aggregate price level is high. c. individual firms and consumers aren’t able to influence the behaviors of others d. the production choice is economically efficient
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