practiceexam1A - ECON 251 Exam 1 Fall 2010 (Practice Exam...

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Econ 251 Page 1 of 9 Fall 2010 Exam 1 Pink ECON 251 Exam 1 Fall 2010 (Practice Exam #1A for Spring 2011) Use the following information to answer the following four questions: Jonathan and Pete produce two goods, basketballs and footballs. In a day Jonathan can produce 10 basketballs or 5 footballs. Pete can produce either 12 basketballs or 4 footballs in a day. 1. What is Jonathan’s marginal cost of producing a basketball? a. 1/3 of a football b. ½ of a football c. 2 footballs d. 3 footballs 2. ______________ has an absolute advantage in producing basketballs and __________ has a comparative advantage in producing footballs. a. Jonathan, Jonathan b. Jonathan, Pete c. Pete, Jonathan d. Pete, Pete 3. If footballs are measured on the x axis, what is the slope of Jonathan’s production possibilities frontier (PPF)? a. -1/2 b. -1 c. -2 d. -1/3 4. Assume that Jonathan and Pete work together to produce basketballs and footballs. Which of the following production combinations is on their joint PPF? a. 22 basketballs and 9 footballs b. 12 basketballs and 5 footballs c. 10 basketballs and 4 footballs d. 20 basketballs and 2 footballs
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Econ 251 Page 2 of 9 Fall 2010 Exam 1 Pink 5. Teagan is trying to decide how to spend her day. She can travel to Chicago which she values at $75. Or she can stay in West Lafayette and study economics which she values at $25. Teagan could also attend the Purdue football game with friends which she values at $50. She can only do one activity for the day. What is the opportunity cost for Teagan of studying economics? a. $25, the value to her of studying economics b. $50, the difference between the value to studying economics and the value of traveling to Chicago c. $75, the value of going to Chicago d. $125, the sum of the value of going to Chicago and the value of going to the football game 6. Micah bought a new car last week for $22,000. The sticker price on the car was $25,000. Today, he could sell the car for $20,000. Based on this information, what is his opportunity cost of owning the car today? a. $20,000 b. $22,000 c. $42,000 d. $45, 000 7. The table below represents the production possibilities for a small country that produces only books and chocolate. What is the marginal cost of producing the 8 th pound of chocolate? Books 18 15 9 0 Chocolate 3 6 9 12 a. 1 book b. 2 books c. 3 books d. 9 books
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Econ 251 Page 3 of 9 Fall 2010 Exam 1 Pink 8. The table below shows Miles’ marginal benefit for tuna sandwiches. Using this information, how many tuna sandwiches would Miles buy if the price of a tuna sandwich is $4? Quantity Marginal Benefit 1 10 2 6 3 3 4 2 5 0 a. 2 b. 3 c. 4 d. 5 9. An Iowa egg producer is recalling 380 million eggs linked to an outbreak of salmonella poisoning. How does this widely publicized news affect the demand for eggs? a.
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This note was uploaded on 07/15/2011 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue University-West Lafayette.

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practiceexam1A - ECON 251 Exam 1 Fall 2010 (Practice Exam...

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