Exam1_Practice_Spring2008

# Exam1_Practice_Spring2008 - ECON 251 Exam#1 Spring...

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ECON 251 Exam #1 Spring 2008 (Practice Exam #1B for Summer 2009) 1. A production possibility frontier shows a. the exact amounts of two types of goods that an economy will decide to produce. b. the most valuable combination of two types of goods that an economy will decide to produce. c. the alternative combinations of goods that can be produced from a fixed amount of resources with a given technology. d. the growth of the economy over time. 2. In 30 minutes, Mike can make 10 pancakes while Jill can make 4 pancakes. In the same amount of time, Jill can make 6 hash browns while Mike can make 3 hash browns. When we plot their production possibility frontiers, what is the slope of Jill’s PPF if we graph pancakes on the x axis? a. -1.33 b. 0.75 c. -1.5 d. -.75 3. Based on Mike and Jill’s production possibilities, which of the following is true? a. Mike has comparative and absolute advantage in producing pancakes. b. Jill has comparative and absolute advantage in producing hash browns. c. Mike has comparative advantage in making pancakes but absolute advantage in making hash browns. d. Both a and b are true. 4. An economy produces only beer and pizza. If the economy adopts a new technology that decreases the cost of production of both goods, this will result in the economy’s a. production possibilities frontier shifting out from the origin b. production possibilities frontier shifting in toward the origin c. production possibilities frontier becoming steeper d. production possibilities frontier becoming linear 5. Peter decides to attend the one-hour review session for microeconomics instead of working at his job. His job pays him \$10 per hour. Peter’s opportunity cost of attending the review session is a. the value of the session minus the \$10 he could have earned at his job. b. nothing, because the review session does not cost anything. c. equal to the benefit he gets from the review session. d. the \$10 he could have earned at his job. Econ 251 Page 1 of 8 Spring 2008 Exam 1 Pink

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6. Which of the following is NOT true concerning a society’s production possibilities frontier? a. It reveals the maximum amount of any two goods that can be produced form a given quantity of resources b. Tradeoffs occur along a PPF c. Production efficiency is achieved at any point on the PPF. d.
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## This note was uploaded on 02/06/2012 for the course ECON 251 taught by Professor Blanchard during the Summer '08 term at Purdue.

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Exam1_Practice_Spring2008 - ECON 251 Exam#1 Spring...

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