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sample_midterm1_S11 - 73-100/Kesten-Deuss SAMPLE QUESTIONS...

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73-100/Kesten-Deuss SAMPLE QUESTIONS for MIDTERM 1 ________________________________________________________________________ The following questions/problems are meant to help you prepare for the exam. Some of the midterm problems/questions will be similar to the following. Needless to say, you are also responsible for the material covered in lectures, recitations and in the homework assignments, which may or may not have been covered in these sample questions/problems. Keep in mind that in the test there will be fewer questions than below since you will have only 50 minutes. ________________________________________________________________________ A. Sample Explanation Questions a. Explain the following principle of economics and give two examples: “People face trade-offs.” b. Using tools of economic decision making, how would you explain why Kobe Bryant chose to skip college? c. Explain the difference between microeconomics and macroeconomics using examples. d. What are the common features of economic models? e. How does an economist sort out good models from bad ones? f. Draw and explain the circular flow diagram. g. Why do economists often disagree? Explain with examples. h. In trade why does the price of a good always need to be between the opportunity costs of the two traders in order to achieve mutually beneficial trade? Explain. i. If trade is so good, why are so many people opposed to it? Explain with an example. j. Why don’t countries always specialize completely in the production of goods for which they have a comparative advantage? k. Explain the water-diamond paradox. How was it solved? l. What are the determinants of supply/demand? Explain with examples. m. Explain and graphically illustrate why the price of oil rose between 2007 and mid 2008? n. Explain the concepts of elasticity with examples. o. How are elasticity and total revenue related? B. Sample Questions/Problems [Some of the following problems were asked in last year’s midterm. They are meant to help you practice. Of course, you will have a completely new set of questions in the midterm.] 1. Explain the moral of the following story using economic terminology: “Suppose that the president of Isoland decides not to allow free trade in textiles. Then, one day, some Isolandian inventor discovers a new way to make textiles at very 1
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low cost. What is odd about the new technology is that the inventor uses wheat as input rather than traditional inputs such as cotton or wool.
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