Econ_198_Aut_06_Exam__1 - Introduction to Microeconomics...

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Introduction to Microeconomics Allen R. Sanderson Economics 19800 Autumn 2006 FIRST HOUR EXAMINATION Name (Please Print): ______________________________________ [40 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 17 points total. 1. On a traditional PPF diagram, the two goods in question: a. have a cross elasticity of zero. b. must be complements. c. exhibit constant opportunity costs. d. are inferior goods. . e. are substitutes. 2. “Yogurt is better for your health than ice cream.” This would be an example of: a. a normative statement. b. a positive statement. c. the post hoc fallacy. d. a sample selection bias. e. taking only efficiency into consideration but ignoring the equity aspects. 3. As reported in a September 9, 2006, article in The Economist, according to a survey, only 41% of business travelers said they would turn on their cell phones (if allowed) in flight. “One reason is cost: at prices above $3 a minute, demand drops off considerably.” This statement: a. ignores income elasticity, and cell phones on airplanes are likely an inferior good. b. confuses demand with quantity demanded. c. implies that cell phone demand is highly inelastic. d. suggests that cell phone companies would still collect more revenue even if demand dropped. e. can’t be true because there are simply no good substitutes available for cell phones. 4. The social (or economic) arrangement that gives popular author John Grisham ownership of and control over his novels is: a. property rights. b. dynamic comparative advantage. c. absolute advantage. d. productive efficiency. e. the paradox of value. 5. Comparative advantage is just a fancy term or economic jargon for: a. the gains from trade. b. diminishing marginal utility. c. tradeoffs. d. lower opportunity costs. e. being better at everything than someone else is. 6. The Production Possibilities Frontier has the shape it does because: a. demand curves are downward sloping. b. opportunity costs are constant as production of a particular good increases. c. resources are not equally productive in alternative uses. d. of diminishing marginal utility. e. of some unemployed resources, or at least ones that are being employed inefficiently. 1
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7. “For someone going on a $500 cruise, adding $100 for a passport to the price could make them look at an alternative vacation.” That comment appeared in an April 14, 2006, Wall Street Journal story on the fact that beginning in 2007 Americans going to the Caribbean, Canada or Mexico will
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This test prep was uploaded on 04/07/2008 for the course ECON 198 taught by Professor Sanderson during the Spring '08 term at UChicago.

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Econ_198_Aut_06_Exam__1 - Introduction to Microeconomics...

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