Econ1 F07 Final (Stein)

# Econ1 F07 Final (Stein) - Econ 001 Final Exam(Dr Stein...

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Econ 001: Final Exam (Dr. Stein) Answer Key Dec 17, 2007 Instructions: This is a 120-minute examination. Write all answers in the blue books provided. Show all work. Use diagrams where appropriate and label all diagrams carefully. Write your name and your Recitation Instructor's name in every blue book that you use. This exam is given under the rules of Penn's Honor system. All blue books, blank or filled, must be handed in at the end of this exam. No blue books may be taken from the room. The use of Programmable Calculators is in violation of Departmental rule. It is strictly forbidden! Check: The Exam has 2 parts. Part 1 consists of 14 multiple-choice questions. Please write you answers in blue book 1. Part 2 consists of 2 short answer questions. Please use one book for Q1 & Q2. Part 3 consists of 2 short answer questions. Please use one book for Q3 & Q4. Part I: Multiple Choice Questions (3 points each/42 points total): 1. Man has 1000 units of genius that he can use to produce art masterpieces and science theorems. Man’s PPF has the following shape: Art (# masterpieces) Science (# theorems) The marginal opportunity cost of Art (in terms of theorems) will be: a. Negative b. First increasing and then constant c. First constant and then increasing d. First constant and then diminishing

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2. The country of Sweetland can produce candies and shoes. We know that Sweetland exports candies to the rest of the world and import shoes. If we know the Production Possibilities Frontier (PPF) of Sweetland, what can we say about its Consumption Possibilities Frontier (CPF)? a. We know the maximum amount of shoes that Sweetland can consume. b. We know the maximum amount of candies that Sweetland can consume. c. Both a and b are correct. d. Neither a nor b are correct. 3. Suppose Sweetland has the absolute advantage in both goods around the world. Assume that Sweetlanders want candies and shoes and no other product. Which of the following is true? a. Sweetland should not trade with other countries since it is the best in both goods; trade creates no benefit for its citizens. b. Sweetland should export both goods to the rest of the world since it is the best in both goods. c. Sweetland should export either shoes or candies but not both. d. None of the above is true. 4. A common stereotype is that women buy more shoes than men. Suppose that you have the following information concerning the supply and demand for shoes (all units are in pairs): Women's supply and demand for shoes: Q s (w) = -10 + P(w) Q d (w) = 50 – 2 P(w) Men's demand for shoes: Q d (m) = 30 - P(m) The supply curve for men's shoes is not given, but you are told that at equilibrium, P(w) = 2*P(m). That is, women’s shoes cost twice the price of men's shoes. Which of the following is true?
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Econ1 F07 Final (Stein) - Econ 001 Final Exam(Dr Stein...

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