practicefinalexam - ECON 251 PRACTICE FINAL EXAM Fall 2006...

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Unformatted text preview: ECON 251 PRACTICE FINAL EXAM Fall 2006 1. Sams production possibilities frontier has good A on the horizontal axis and good B on the vertical axis. If Sam is producing at a point inside his frontier, then he a. can increase production of both goods with no increase in resources. b. is fully using all his resources. c. values good A more than good B . d. s values good B more than good A . 2. Which of the following is NOT an economic factor of production? a. natural resources b. workers c. machinery d. money 3. Ron can cook 3 dozen waffles in an hour, while Beth can cook only 2 dozen waffles in an hour. Ron can cook 4 dozen pancakes in an hour, while Beth can cook 3 dozen pancakes in an hour. Based on this information, which of the following statements is true? a. Ron has the comparative advantage in pancake production, and Beth has the comparative advantage in waffle production. b. Ron should produce pancakes, and Beth should produce waffles. c. Beths marginal cost of pancake production is 3 dozen waffles, and Rons marginal cost of pancake production is 3 dozen waffles. d. Ron has absolute advantage in pancake production, but Beth has comparative advantage in pancake production. 4. Ron is thinking of opening up a restaurant. He currently has a job as a postal carrier that pays $45,000 a year. He anticipates earning $80,000 a year as a restaurant owner. Based on this information, what is Rons opportunity cost of running the restaurant? a. $17,700 b. $35,000 c. $45,000 d. $80,000 5. The price of a gallon of milk falls. Which of the following is a possible cause? a. A decrease in the price of oatmeal, a complement to milk. b. A scientific discovery that milk cause diabetes. c. An increase in the income of the average household, with milk being a normal good. d. A drought that reduces supplies of feed grains fed to cows that produce milk. 6. In 2004 there were 200,000 gas grills demanded at a price of $500. In 2005 there were more than 220,000 gas grills demanded at a price of $550. This increase could be the result of any of the following EXCEPT a. an increase in the supply of gas grills. b. an increase in income if gas grills are a normal good. c. a fall in the price of natural gas, a complement for a gas grill. d. an increase in population. 7. Consumers and producers are expecting the price of computers to increase within the next two months. Which of the following would you expect to see as a result? a. an increase in the current demand for computers and an increase in the current supply of computers b. an increase in the current demand for computers and a decrease in the current supply of computers c. a decrease in the current demand for computers and an increase in the current supply of computers d. a decrease in the current demand for computers and a decrease in the current supply of computers 8. In the figure above, which movement reflects how consumers would react to an increase in the price of Popsicles, a substitute good for fruit snacks?the price of Popsicles, a substitute good for fruit snacks?...
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This note was uploaded on 04/27/2011 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue University-West Lafayette.

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practicefinalexam - ECON 251 PRACTICE FINAL EXAM Fall 2006...

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