Econ 211 quiz 1 answer key

Econ 211 quiz 1 answer key - Econ 211 Spring 2008...

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Econ 211 Page 1 of 4 Spring 2008 Instructor: Patrick McLaughlin Quiz 1: Choose the correct answer to each question and fill in the corresponding bubble on your answer sheet. There is only one answer to each question. There are 13 questions total; you have until the end of the period to finish. Good luck. 1. When we refer to the “opportunity cost” of an action, we mean: A. the amount of money we pay to do that action B. the sum total of any and all things we might have done instead of that action C. the fair market value of that action D. the highest-valued alternative sacrificed in order to do that action E. none of the above Questions 2 and 3 are based on the following information. Two countries, France and Cuba, are capable of producing only two goods: potables (P) and edibles (E). Cuba can produce a maximum of 3 P and 0E, or 6 E and 0P, or any linear combination of these numbers (e.g., 1.5 P and 3 E). France can produce a maximum of 2 P and 0 E, or 3 E and 0 P, or any linear combination of these numbers (e.g., 1 P and 1.5 E). 2. Given this information, you can conclude that A. France has a comparative advantage in producing P B. France has a comparative advantage in producing E C. Neither has a comparative advantage in producing D. Cuba has a comparative advantage in producing P E. Both (b) and (d) 3. You can also conclude that, because these are linear PPCs, A. Both Cuba and France face rising marginal costs of producing edibles as each produces more edibles B. Both Cuba and France each have constant marginal costs of producing edibles. C. Cuba has rising marginal costs of producing edibles, but France’s marginal costs of
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Econ 211 quiz 1 answer key - Econ 211 Spring 2008...

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