mid-exam1_fall09 - ECON 251 Exam #1 Fall 2009 1. What are...

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ECON 251 Exam #1 Fall 2009 1. What are the four basic economic resources? a. Natural resources, money, stocks, bonds b. Labor, capital, investment, and wages c. Land, labor, investment, and oil d. Entrepreneurship, capital, labor, and natural resources 2. The opportunity cost of an action is a. the value of the action b. the same as monetary cost of the action c. the value of the best alternative action d. the sum of the monetary cost of an action and the value of that action 3. Your friend calls you to see if you want to see a movie. Which of the following would NOT be included in the opportunity cost of going to the movie? a. The price of the dinner you prepared for yourself before your friend called b. The price of the movie ticket you have to purchase c. The price of the snacks you will buy at the movie theater d. The value of your time spent studying (your best alternative to going to the movie) 4. Suppose Vanessa can make 3 Snickers bars or 4 Twizzlers in one hour, while Anel can make 1 Snickers bars or 3 Twizzlers in one hour. What is Anel’s marginal cost of making a Twizzler? a. 3 Snickers b. 1/3 of a Snickers c. 3 Twizzlers d. 1/3 Twizzlers 5. In making Twizzlers, ________ has the comparative advantage and _________ has the absolute advantage. a. Vanessa; Anel b. Anel; Vanessa c. Anel; Anel d. Vanessa; Vanessa 6. What is the slope of Vanessa’s production possibility frontier if the number of Snickers bars is measured on the x axis? a. -3 b. -1/3 c. -3/4 d. -4/3
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7. If Vanessa and Anel work together to make Twizzlers and Snickers bars, which of the following points will be on their combined economy-wide production possibility frontier? a. 4 Twizzlers and 1 Snickers bar b. 7 Twizzlers and 1 Snickers bar c. 1 Twizzler and 4 Snickers bars d. 3 Snickers bars and 3 Twizzlers 8. This figure shows an economy-wide production possibility frontier. The PPF gets steeper as production of the good on the X axis increases. This implies that a. The costs of producing good X are the same as the costs of producing good Y. b. The marginal cost of producing good X is always higher than the marginal cost of good Y c. The marginal cost of producing good X increases as production of X increases d. The marginal cost of producing good Y increases as production of X increases 9. Which of the following shifts the production possibility frontier outward? a. A natural disaster b. An decrease in labor productivity c. An increase in population d. None of the above 10. When the price of peanut butter rises, the demand for peanut butter a. increases b. decreases c. does not change d. becomes less elastic 11. Which of the following will decrease the supply for air-transportation? a.
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This note was uploaded on 10/04/2011 for the course ECONOMICS 251 taught by Professor Kelly during the Spring '11 term at Purdue University-West Lafayette.

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mid-exam1_fall09 - ECON 251 Exam #1 Fall 2009 1. What are...

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