ECON 1000 (Spring 2018 Section 19) Exam #1A

Transcription

1 ECON 1000 (Spring 2018 Section 19) Exam #1A Multiple Choice Questions: (3 points each) 1. I am taking of the exam. A. Version A 2. refers to the natural and undirected emergence of order out of chaos. A. Excess Demand B. Economics C. Market Equilibrium D. Spontaneous Order 3. Chad is a life-long Philadelphia Eagles fan who currently reside in Utah. He recently travelled to Minnesota to attend Super Bowl LII between the New England Patriots and Philadelphia Eagles. His Total Benefits from this trip were $25,000, while his Total Costs were $11,000. From this information, it follows that his Economic Surplus A. from attending the game was: $25,000 $11,000 = $14,000. B. from attending the game was: $11,000 $25,000 = $14,000 (i.e., negative $14,000). C. from attending the game was: $25,000 + $11,000 = $36,000. D. from attending the game was: ($25,000)($11,000) = $275,000, In the model of Supply and Demand, the market equilibrium A. is an unstable outcome, which we should never expect to persist for any extended period of time. B. is unique, as a direct consequence of the Law of Supply and Law of Demand. C. is self-enforcing, since there is downward pressure on price at prices above the equilibrium price and upward pressure on price at prices below the equilibrium price. D. More than one (perhaps all) of the above answers is correct. 5. When interpreting a Production Possibilities Frontier, which of the following statements is true? A. All output combinations on the PPF are attainable and efficient. B. All output combinations below the PPF are attainable and efficient. C. All output combinations above the PPF are unattainable and inefficient. D. All output combinations above the PPF are unattainable and efficient. 6., an 18 th Century Scottish economist, wrote An Inquiry into the Nature and Causes of the Wealth of Nations. A. Leonard Read B. Alec Nove C. Karl Marx D. Adam Smith 7. A buyer s reservation price for an item is visually illustrated by A. the height of the demand curve. B. the height of the supply curve. C. the vertical distance between the demand curve and supply curve. D. the horizontal distance between the demand curve and the supply curve.

2 8. Consider the following two statements. Statement 1: Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. Statement 2: A minimum wage increases unemployment, particularly among young and unskilled workers. Most economists would A. agree with Statement 1, but disagree with Statement 2. B. agree with Statement 2, but disagree with Statement 1. C. disagree with both Statement 1 and Statement 2. D. agree with both Statement 1 and Statement Consider the level of economic freedom in the three countries of Australia, Hong Kong, and Venezuela. According to the results of the Economic Freedom of the World study, of these three countries, the amount of economic freedom is A. greatest in Hong Kong and least in Venezuela. B. greatest in Venezuela and least in Hong Kong. C. greatest in Venezuela and least in Australia. D. greatest in Australia and least in Hong Kong. 10. In the writings of Karl Marx, the bourgeoisie referred to the and the proletariat referred to the. A. business owners; working class. B. uneducated class; educated class. C. concentration camp prisoners; government officials. D. factory workers; farmers. For Questions 11 through 13, consider the following scenario. Amy and Ben spend their workdays producing soup and tires. The table below provides a summary of the number of units of each good that each worker produces in a full workday. Answer the following questions based upon these values. Soup Tires Amy 12 4 Ben has an Absolute Advantage in the production of soup, and has an Absolute Advantage in the production of tires. A. Amy; Amy. B. Ben; Ben. C. Ben; Amy. D. Amy; Ben. 12. Ben s Opportunity Cost for producing one tire is units of soup. A. 3 B. 5 C. 12 D has a Comparative Advantage in the production of soup, and has a Comparative Advantage in the production of tires. A. Amy; Amy. B. Ben; Ben. C. Ben; Amy. D. Amy; Ben.

3 14. One of the three primary types of economic incentives is coercion, which could be described as A. the freedom for an individual to purchase (or not purchase) a good at a price determined in a free, unfettered market. B. the use of monetary rewards or direct increases in consumption which result from engaging in an activity. C. the use or threat of force or incarceration to obtain compliance. D. attempts to convince individuals to behave in a certain manner because doing so is the right thing to do. 15. Consider the following two statements: (I) On Wednesday, February 28, 2018, Noel Gallagher (former songwriter of the defunct band Oasis) will perform at the Tabernacle in Atlanta with his current band Noel Gallagher s High Flying Birds, and (II) Professional golfer Phil Mickelson is the most exciting and charismatic player on the PGA Tour in the last thirty years. Statement (I) is a statement, and Statement (II) is a statement. A. Normative; Normative. B. Normative; Positive. C. Positive; Normative. D. Positive; Positive. 16. refers to the freedom of an individual to choose to purchase (or to choose to not purchase) a good or service at a price determined in a free market. A. Spontaneous Order B. Consumer Sovereignty C. Indicative Planning D. The Invisible Hand 17. In the opening paragraph of the textbook it was noted that Mike Ditka has suggested that football related injuries could likely be reduced by have participants play without helmets (or at least without facemasks on their helmets). His underlying argument A. implicitly assumes that football players are irrational. B. earned him the Nobel Prize in Economics in C. does not make any sense whatsoever when analyzed using the tools of economics. D. relies heavily upon the Incentive Principle. Answer Questions 18 and 19 based upon the information conveyed in the following table, which states Brandon s Total Benefits from consumption of iced coffee per week (measured in dollars): Cups of Iced Coffee Consumed Total Benefits from Consumption 0 $9 $16 $21 $24 $26 $27 $ Brandon s Marginal Benefit of consuming a 3 rd cup of iced coffee would be. A. $46 B. $21 C. $7 D. $5 19. If iced coffee costs $2.56 per cup, then Brandon should consume cups per week. A. 3 B. 4 C. 5 D. 6

4 20. Socialism is defined as an economic system in which A. the means of production are collectively owned by all people in society. B. the means of production are owned by the government. C. the means of production are privately owned and operated for a profit. D. the means of production are owned by an aristocratic nobility. 21. Which markets are represented in the Basic Circular Flow Diagram? A. Markets for Goods and Services and markets for Financial Assets. B. Markets for Financial Assets and markets for Factors of Production. C. Markets for Goods and Services and markets for Factors of Production. D. Markets for Crypto Currencies and markets for Illegal Drugs. For questions 22 through 24, consider the market for beef, with demand in 2016 and 2018 as illustrated below. In 2016, market equilibrium price was $4.35 per unit and market equilibrium quantity traded was 7,240 units. Suppose beef is a normal good and beef is a substitute for chicken. price 4.35 Demand ,240 Demand In 2016 there would have been at a price of $3.50. A. both Excess Supply and Excess Demand B. neither Excess Supply nor Excess Demand C. Excess Supply D. Excess Demand quantity 23. Given that beef is a normal good and beef is a substitute for chicken, which of the following could be a possible explanation for the change in demand between 2016 and 2018 illustrated above? Between 2016 and 2018 there was A. a decrease in the price of chicken. B. an increase in the number of consumers of beef. C. an increase in the price of cattle feed (an input used in the production of beef). D. an increase in average income of beef consumers. 24. Supposing that the Supply of beef was unchanged between 2016 and 2018, it follows that between 2016 and 2018, equilibrium price will have and equilibrium quantity will have. A. increased; increased. B. decreased; decreased. C. increased; decreased. D. decreased; increased.

5 25. Phil got the video game ARMS for the Nintendo Switch for Christmas. His older brother George wants to play the game, but Phil doesn t want to share. Their dad says, George, I wish Phil would share his game with you, but if he doesn t want to let you play he doesn t have to. In taking this position, their dad is essentially maintaining that Phil has a in regards to the video game. A. right to restitution B. right to control C. right to scarcity D. right to transfer 26. In general, the downward sloping nature of a production possibilities curve illustrates A. the tradeoff in production between two goods that society faces. B. the difference between positive statements and normative statements. C. the fact that there is typically both excess supply and excess demand at the market equilibrium. D. the fact that economic surplus is maximized by applying the Cost-Benefit Principle. 27. refers to someone who organizes and manages a business, typically with considerable initiative and exposure to risk is. A. An Exploiter B. A Self-Interested Individual C. Economic Man D. An Entrepreneur 28. Which of the following could NOT result in a Change in Demand for pears? A. An increase in income for pear consumers. B. An increase in the price of apples. C. A decrease in the price of pears. D. An increase in the number of consumers of pears. For Question 29, consider the continuum between the economic systems of Pure Socialism and Pure Capitalism illustrated below. Point D Point C Point B Point A Pure Socialism North Korea Cuba China France Norway U.K. Hong Kong Pure Capitalism 29. Based upon the discussion in lecture, along the continuum illustrated above the economy of the United States currently would most accurately lie at. A. Point A B. Point B C. Point C D. Point D

6 30. is the study of how individual decision makers behave and interact with each other, often with a focus on how households and firms behave and interact with each other in markets. A. Comparative Economic Systems B. Anthropology C. Macroeconomics D. Microeconomics 31. Which of the following would be considered a Produced Asset? A. The Volkswagen Chattanooga Assembly Plant in Chattanooga, TN. B. The 157 billion tons of coal reserves in Russia. C. The college education which has been acquired by approximately 27% of the U.S. population. D. More than one (perhaps all) of the above answers is correct. 32. The economy of present day Canada is best described as A. Pure Capitalism B. Pure Socialism C. Feudalism D. a Mixed Economy 33. One of the principle functions of money is that it serves as a medium of exchange. This role could be described by recognizing that money is A. an asset that can be used as a means to hold wealth. B. an asset used as payment when purchasing goods and services. C. used as a basic unit of measuring economic activity. D. None of the above answers are correct.

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