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Practice Test #1

# Practice Test #1 - SHOMU BANERJEE ECON 101-000 SPRING 2011...

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SHOMU BANERJEE ECON 101-000 SPRING 2011 TEST 1 ANSWERS Table 1 Hours studying Physics score Geology score 0 40 30 1 50 60 2 60 80 3 85 90 4 90 100 1. Grant has 3 hours of time in all to divide between studying for a physics exam and a geology exam. Table 1 shows his estimates of the grades (on a scale of 0 to 100) that he could earn from studying a particular number of hours on each subject. If he plans on spending two hours studying physics and one hour on geology, what would be his opportunity cost of an additional hour studying physics? He now spends 3 hours on physics and 0 in geology a. 10 points on his geology exam b. 20 points on his geology exam c. 30 points on his geology exam d. 25 points on his physics exam e. 85 points on his physics exam 2. Carl is considering attending a concert with a ticket price of \$35. He estimates that the cost of driving to the concert and parking there will total an additional \$20. In order to attend the concert, Carl will have to take time off from his part-time job and forgo studying for an exam scheduled for the next morning. He estimates that he will lose 3 hours at work, at a wage of \$6 per hour, plus 2 hours of study time. Carl's opportunity cost of attending the concert equals a. \$73 plus the value of the higher exam grade he could earn by studying longer b. \$73 c. \$35 plus the value of the higher exam grade he could earn by studying longer d. \$35 e. \$55 plus the value of the higher exam grade he could earn by studying longer 3. Suppose that the country of Utopia produces only steel and coffee. In both 2009 and 2010, Utopia produced 1000 tons of steel and 500 pounds of coffee. The labor force in Utopia in 2010 was 5% more than in 2009. There was no improvement in technology. Which of the following is true? 4. Figure 1 on the next page shows the production possibilities for the US and China. Suppose each country were to only produce the good in which they have a comparative advantage. What terms-of-trade is acceptable to both countries?

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5. Figure 1 below shows the production possibilities for the US and China. Suppose each country were to only produce the good in which they have a comparative advantage. If the terms-of-trade is 2 units of shirts for 1 unit of soy and 8 units of shirts are traded between the two countries, the US will consume a. 2 units of soy and 8 units of shirts b. 6 units of soy and 8 units of shirts c. 10 units of soy and 8 units of shirts d. 4 units of soy and 8 units of shirts e. 8 units of soy and 8 units of shirts Figure 1 soy shirts 5 10 15 5 10 15 soy shirts 5 10 15 5
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Practice Test #1 - SHOMU BANERJEE ECON 101-000 SPRING 2011...

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