midterm - Midterm 1 Practice Problems Econ 1101.01:...

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1 Midterm 1 Practice Problems Econ 1101.01: Principles of Microeconomics Katherine Lande Schmeiser Opportunity cost is: a. the benefit of an activity. b. the cost of an activity. c. the lowest valued alternative that must be given up to engage in an activity. d. the highest valued alternative that must be given up to engage in an activity. The production possibilities frontier shows: a. the various products that can be produced now and in the future. b. attainable combinations of two products that may be produced in a particular time period with available resources. c. what an equitable distribution of products among citizens would be. d. what people want to have produced in a particular time period. If George can mow 10 lawns or cultivate 5 gardens a day while Jack can mow 6 lawns or cultivate 4 gardens a day, then: a. Jack has comparative advantage in both lawn mowing and garden cultivating. b. George has comparative advantage in both lawn mowing and garden cultivating. c. Jack has comparative advantage in lawn mowing. d. Jack has comparative advantage in garden cultivating. The substitution effect results in: a. sellers substituting less expensive inputs in production. b. buyers buying more of a good because their purchasing power has increased. c. sellers producing products when input prices fall. d. buyers buying more of a relatively cheaper good. Which of the following is not held constant along a demand schedule or curve? a. The buyer's tastes and preferences. b. The buyer's incomes. c. The price of the product. d. The buyer's expectations about future prices. What causes a deadweight loss under a price floor? a. With a higher price, less is purchased, causing a loss in economic surplus. b. With a lower price, less is produced, causing a loss in economic surplus. c. Producers have less incentive to produce. d. Consumers have more incentive to buy.
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2 Steve’s currently spends his entire income on two goods: cameras and computers. Currently, his marginal utility from consuming one more camera is 6 and the marginal utility from consuming one more computer is 10. Additionally, the prices of cameras are $300 and the prices of computers are $600. At his current consumption bundle, a. Steve is consuming the optimal quantity of cameras and computers. b. Steve should be consuming more computers and fewer cameras. c. Steve should be consuming more cameras and fewer computers. d. Steve should not change his consumption since he is spending his full income. Which of the following is a positive economic statement? e.
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midterm - Midterm 1 Practice Problems Econ 1101.01:...

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