Midterm Exam 1 - Midterm Exam 1 Econ 251 20 May 2011 40...

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Midterm Exam 1 Econ 251 20 May 2011 40 Questions Please select the best answer to each question. 1. _____________ are foregone opportunities or foregone benefits. a. Production possibilities b. Sunk costs c. Opportunity costs d. Opportunity benefits 2. If the price of Pepsi rises, one would expect the demand for Coke to move _______________ because the two goods are considered _____________? a. Up or to the right, substitute goods b. Down or to the left, substitute goods c. Up or to the right, complementary goods d. None of the above 3. If supply decrease and demand does not change, equilibrium price decreases and equilibrium quantity increases. a. True b. False 4. If the price of sugar, an ingredient in ice cream, increases, the demand for ice cream will _____________. a. Increase b. Not change c. Decrease a little d. Decrease substantially 5. The three of the four main productive resources in economics are a. entrepreneurship, machines, and money b. corn, robots, and people c. natural resources, labor, and capital d. money, entrepreneurship, and capital 6. It is possible to produce more of one good without giving up units or another good if society is producing ______________ its production possibilities curve. a. Inside b. Outside c. On d. Above 7. Expenses for room and board
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a. are opportunity costs of attending college, because they are subsidized by the government or by college b. are opportunity cost of attending college since they involve cash expenditures c. are opportunity cost of attending college if you are on scholarship, but not otherwise d. are not usually part of the opportunity costs of attending college, because you have to live somewhere and eat something even if you don’t attend college 8. If a person is rational, a. he or she will only take an action if the cost exceeds the benefit b. he or she will only take an action if the benefit is as least as great as the cost c. he or she will only take an action when the cost of the action is zero d. he or she will only take and action when the benefits cannot be measured in monetary terms 9. Stefano and Larissa are the only two people in the world. Stefano’s marginal cost for producing apples is 2 apples per brick. Larissa’s marginal cost for producing apples is 4 apples per brick. Which of the following trading arrangement ranges will result in gains from trade for both Stefano and Larissa? (hint: what arrangement could make both Stefano and Larissa better off?) a. 2 to 5 apples per brick b. 0 to 4 apples per brick c. 2 to 3 apples per brick d. 1 to 2 apples per brick The information below is to be used for the next four questions: John and Bob operate a tire shop. If John uses all of his resources to fix flat tires, he can fix 30
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This note was uploaded on 02/23/2012 for the course ECONOMICS 251 taught by Professor Kelly during the Summer '11 term at Purdue.

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Midterm Exam 1 - Midterm Exam 1 Econ 251 20 May 2011 40...

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