practiceexam1B - ECON 251 Exam #1 Spring 2010 (Practice...

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Econ 251 Page 1 of 8 Spring 2010 Exam 1 Pink ECON 251 Exam #1 Spring 2010 (Practice Exam #1B for Spring 2011) Suppose you have to decide how to spend your day. You can only choose one activity to do for the entire day. Your three options are as follows: Activity Value Studying $100 Playing Guitar Hero $75 Watching an NCIS marathon on TV $50 1. What is the opportunity cost for you of spending the day studying? a. $75 b. $100 c. $125 d. $0 2. The computer that Melinda Gates uses in her foundation work is an example of what kind of economic resource? a. Natural resource b. Labor c. Capital d. Entrepreneurship 3. Why are production possibility frontiers negatively sloped? a. Marginal costs of producing a good decrease as we produce more of that good. b. Marginal benefits rise as we consume more of any good. c. Resources are scarce, so increasing production of one good requires a decrease in production of another good. d. The negative slope of the production possibility frontier reflects that fact that marginal costs are always negative.
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Econ 251 Page 2 of 8 Spring 2010 Exam 1 Pink 4. Bob can make either pizzas or pasta. He just bought a new oven that allows him to produce more pizza than before. The change in his PPF is illustrated in the figure above. As a result of the change in productivity from having a new oven, the marginal cost of producing pizzas and the marginal cost of producing pasta _______. a. Decreases, remains unchanged b. Increases, decrease c. Decreases, increases d. Increases, remains unchanged 5. Jeff and Angela make two goods, coats and scarves. In one day, Jeff can make either 80 coats or 200 scarves. Angela can make either 100 coats or 220 scarves. Jeff’s marginal cost of producing coats is . a. 80 coats b. 200 scarves c. 2.5 scarves d. 1.8 scarves 6. Based on the information above for Jeff and Angela, ________ has comparative advantage in producing coats, and __________ has absolute advantage in producing scarves. a. Jeff; Angela b. Jeff; Jeff c. Angela; Jeff d. Angela; Angela 7. Based on the same information, if the quantity of coats is measured on the x axis, what is the slope of Angela’s production possibility frontier? a. -11/5 = -2.2 b. -5/11 = -0.45 c. -6/5 = -1.2 d. 5/4 = 1.25 Pasta Pizza
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Econ 251 Page 3 of 8 Spring 2010 Exam 1 Pink 8. Using the same information from the previous question, if Jeff makes 80 coats and Angela makes 220 scarves, this level of production a. is on the economy-wide PPF for Jeff and Angela. b. is infeasible. c.
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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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practiceexam1B - ECON 251 Exam #1 Spring 2010 (Practice...

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