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Wing_ECON_201_054_Midterm2

Wing_ECON_201_054_Midterm2 - -I'~ G~pk5 006 E l UrJ ~A l~ N...

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[' -- I , (*,'~ G~pk5 006 .' E l UrJ ~ A l~(,.../"" N N\.\. Kettering University \ A'" j\ ~ ECON201 " \J\J. J Principles of Economics ./ t... Midterm Examination 2 Fall 2005 You may work together on the examination, but DO NOT WRITE THE ANSWERS TOGETHER. Write the responses to each question separately,on a seDarate sheet of Qaper. Type your answers wherever possible, but you can draw the graphs by hand. This examination is due by Monday class session. Please staple this to the front of your examination. OQ(j 1. Explain the notion of opportunity cost, and why the opportunity cost of a choice is not the same for all people. 2. Explain why we will not run out of factors of production. 3. Using the production possibilities curve (PPC), illustrate a country that has a comparative advantagein Y, and one that has a comparative advantage in X. 4. In what ways does exchange encourage prosperity and the accumulation of wealth?-5. In what ways does private property encourage efficient use of resources? 6. Explain why equilibrium occurs at the intersection of the demand and supply curves, and what happens at other prices. 7. Illustrate consumerand producer surplus using supply and demand. 8. Illustrate, using supply and demand curves, what happens to the equilibrium quantity and price of beef when: 1) the price of chicken goes down and 2) the price of cow feed goes up. 9. Illustrate, using supply and demand curves, what happens to equilibrium quantity (\0(; and price of spam, when: 1) income decreases and 2) the price of pork increases. .J J 10. In the article "What Happened to American Cars?" in what ways does George Reisman blame the government for what happened to GM? After all, he's an Austrian, and doesn't like government.
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