Old Exams Fall 2010 MICRO

# Old Exams Fall 2010 MICRO - OLD EXAMS If the diagrams don't...

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EXAM # 1 1. Bob decided to go on a year-long cruise he won after graduation instead of working, although he got an offer from company A with a salary of \$40,000 per year and an offer from company B with a salary of \$35,000 per year. What is the opportunity cost per year for Bob to be on the cruise? a. \$5,000 b. \$40,000 c. \$35,000 d. \$75,000 2. Which of the following statements is true? a. A point of allocative efficiency is also a point of production efficiency b. A point of production efficiency is also a point of allocative efficiency c. Both a and b are true d. Both a and b are false 3. If the marginal cost of a good is less than the marginal benefit, then a. We have not achieved allocative efficiency. b. We should produce more of the good. c. We should produce less of the good. d. We cannot tell whether to produce more or less. e. both (a) and (b) 4. Suppose two countries, A and B, both are engaged in the production of two goods, a and b. If country A has comparative advantage in producing good a, then a. Country A must also have absolute advantage in producing good a. b. Country A must also have comparative advantage in producing good b. c. Country B must have absolute advantage in producing good a. d. Country B must have comparative advantage in producing good b. 2
5. Suppose that in one day Harry can produce 5 pens or 10 pencils while John can produce 3 pens or 9 pencils. Then a. Harry should specialize in the production of pencils. b. John should specialize in the production of pencils. c. Harry has an absolute advantage in the production of pens while John has an absolute advantage in the production of pencils. d. Harry has an absolute advantage in the production of pencils while John has an absolute advantage in the production of pens. Use this diagram for next two questions 6. In the above figure, a. some resources are unemployed at point C. b. production at A is inefficient whereas production at point D is efficient. c. opportunity costs are decreasing. d. moving from A to B is attainable. 3 B A C D Guns (Millions per month) 60 50 40 30 20 10 0 10 40 50 20 30 Butter (Million pounds per month) 60 A production possibility frontier

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7. In the above figure, the opportunity cost for butter when we move from A to D is a. 20 million guns. b. 10 million guns. c. 30 million guns. d. 20 million pounds of butter. 8. Suppose that an increase in the price of good A causes an increase in the demand for good B, ceteris paribus . Then goods A and B are a. normal b. inferior c. substitutes d. complements 9. Which of the following statements is true ? a. Demand curves slopes downward because of technological advance.
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## This note was uploaded on 03/10/2012 for the course ECON 200 taught by Professor Newton during the Spring '08 term at Ohio State.

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Old Exams Fall 2010 MICRO - OLD EXAMS If the diagrams don't...

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