Econ2010FirstMidtermFall2010_A_withanswers

Econ2010FirstMidtermFall2010_A_withanswers - Econ 2010 (sec...

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Page 1 Econ 2010 (sec 100), Fall 2010 First Midterm, Version A Name: __________________________ Date: _____________ With some comments from Edward on some of the questions. Almost 80% got question 44 incorrect. People who got it correct know their demand and WTP stuff. Around 60% had difficulties with 11, 18 and 29. The objective is to include questions everyone gets right and to include questions that only the best students get right. For example 98% got question three right. 1. A severe drought in California destroys many red grapes. As a result of the drought, consumer's surplus from the consumption of grape products likely _________. A) decreases because the profits of grape producers decline B) is unaffected but producer surplus declines C) decreases because the price of grapes goes up D) increases because more expensive wine tastes better 2. If action A makes you better off and me worse off, before action A is undertaken the allocation is A) There is not enough information to tell whether the allocation is efficient before A is undertaken. B) Efficient C) Inefficient The answer would have been “efficient” if the question had said something like, “From the current situation, there is no action that would make you better off and not make me worse off. 3. An economy is said to have a comparative advantage in the production of a good if it can produce that good: A) outside its production possibilities curve. B) with more resources than another economy. C) at a lower opportunity cost than another economy. D) with a higher opportunity cost than another economy.
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4. Which of these two statements is correct? A) The opportunity cost of activity A is always expressed by units of activity A B) The opportunity cost of activity A in terms of activity B is the inverse of the opportunity cost of activity B in terms of activity A. A) Only A B) Only B C) Both A and B D) Neither A nor B 5. Assume that Brazil gives up 3 automobiles for each ton of coffee it produces, while Peru gives up 7 automobiles for each ton of coffee it produces. A) Brazil has a comparative advantage in automobile production and specialize in the production of automobiles. B) Brazil has a comparative advantage in automobile production and should specialize in coffee production C) Brazil has a comparative advantage in coffee production and should specialize in the production of automobiles D) Brazil has a comparative advantage in coffee production and should specialize in the production of coffee Use the following to answer question 6: 6. (Table: Consumer Surplus) If the price of a ticket to see The Nutty Nutcracker is $50, then Narum's consumer surplus is: A) $15. B) $240. C)
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This note was uploaded on 07/17/2011 for the course ECON 102 taught by Professor Jarv during the Summer '09 term at Rio Hondo College.

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Econ2010FirstMidtermFall2010_A_withanswers - Econ 2010 (sec...

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