ECON 252 Midterm 1 - Fall 2010

ECON 252 Midterm 1 - Fall 2010 - The Production...

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The Production Possibilities Frontier for the Republic of Artem is show below. 1. Which of the statements below is not correct? a) Baskets D and E are attainable but inefficient. b) Artem does not have enough resources to be producing basket F. c) Baskets A, B, and C are all efficient, but basket A is the most efficient. d) The opportunity cost of production of Barbie dolls is higher at basket C than it is at basket B. All of the above statements are correct. 2. Given the Artem’s production possibilities frontier shown above we can conclude that the opportunity cost of producing textbooks is smallest at the basket a) B b) C c) A d) E 3. In 2009, consumption in Freedonia was $1,850. Spending on capital equipment and structures amounted to $420. Government spending equaled $600, exports $350, and imports $470. Freedonia reported GDP of $3,000 for that year. What was the change in business inventories during this period? a) $250 b) $10 c) $0 d) $80 4. Thomas Edison received patents on many of his inventions. While the patents existed ,his ideas were a) public goods and proprietary knowledge b) public goods but not proprietary knowledge c) private goods and proprietary knowledge d) private goods but not proprietary knowledge 5. In a particular production process if the quantities of all inputs used are increased by 60 percent , then the quantity of output increases by 60 percent as well. We can conclude from this information: a) the production will not be affected by technological advances. b) no mathematical representation of the production process can be formulated. c) capital is not subject to diminishing marginal productivity. d) the relevant production function has constant returns to scale. EXAM I – Econ 252 Page 1 of 6 Blue Version
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6. Investment in a) physical capital , unlike investment in human capital, has an opportunity cost. b) either physical capital or human capital will increase labor productivity. c) human capital will not contribute to long run economic growth, whereas investment in physical capital can increase the rate of growth of aggregate output. d) All of the above are correct. 7.
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ECON 252 Midterm 1 - Fall 2010 - The Production...

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