ECON 1000 (Fall 2017 Section 07) Exam #1A

Transcription

1 ECON 1000 (Fall 2017 Section 07) Exam #1A Multiple Choice Questions: (3 points each) 1. I am taking of the exam. A. Version A 2. The present economic system of the United Kingdom would be most accurately described as, while the present economic system of Spain. A. Pure Socialism; would be most accurately described as Communism. B. Pure Capitalism; would be most accurately described as Pure Socialism. C. a Mixed Economy: would be most accurately described as Pure Socialism. D. a Mixed Economy; would also be most accurately described as a Mixed Economy. 3. During the last several decades, health officials in the United States have argued that eating too much beef might be harmful to humans. As a result, there has been a significant decrease in the amount of beef produced. Which of the following best explains this decrease in production? A. Animal Rights Activists have made it difficult for both buyers and sellers of beef to freely trade the good in free markets. B. Government officials ordered beef producers to produce relatively less beef (out of concern for consumer health). C. Individual consumers (concerned about their own health) decreased their demand for beef (resulting in a decrease in both the equilibrium price and equilibrium quantity of beef). D. Beef producers (whose primary concern is the health of their customers) decided to produce relatively less beef. 4. In 2015 High School graduates earned $11,037 per year more than non-high School graduates. If this difference had instead been $8,500 per year, then we would expect A. more people to drop out of school before graduating High School. B. fewer people to drop out of school before graduating High School. C. that nobody would change their behavior. D. more children to start eating breakfast at school. 5. The quote on page 17 of the course textbook suggests that Milton Friedman believed that Mother Theresa was A. irrational but self-interested. B. irrational and not self-interested. C. rational and self-interested. D. rational but not self-interested. 6. For two individuals who engage in the same two productive activities, it is generally impossible for one of the two individuals to A. gain from trading with the other individual. B. have a Comparative Advantage in both activities. C. have an Absolute Advantage in both activities. D. More than one (perhaps all) of the above answers is correct.

2 7. first said From each according to his ability, to each according to his need. A. Adam Smith B. Sean Hannity C. Louis Blanc D. Gordon Tullock 8. Michael recently travelled from Georgia to Nevada to attend the Floyd Mayweather Jr. vs. Conor McGregor boxing match in person. His Total Benefits from this trip were $17,500, while his Total Costs were $12,500. From this information, it follows that his Economic Surplus A. from attending the fight was: $17,500 + $12,500 = $30,000. B. from attending the fight was: $17,500 $12,500 = $5,000. C. from attending the fight was: $12,500 $17,500 = $5,000 (i.e., negative $5,000). D. would have been greater if he instead stayed in Georgia and watched the fight on PPV TV. For Questions 9 through 11, consider a society facing the Production Possibilities Frontier illustrated below which is bowed-out from the origin (in that it becomes steeper as one moves down the curve): Computers 2,700 2,000 A 1,600 1,000 D B C 0 Wheat Which of the following combinations of output is attainable/feasible and characterized by productive efficiency? A. D (480 units of wheat and 1,000 computers). B. B (630 units of wheat and 1,600 computers). C. A (630 units of wheat and 2,000 computers). D. More than one (perhaps all) of the above answers is correct. 10. Starting at Point B (i.e., 630 units of wheat and 1,600 computers), if this society wanted to produce 150 more units of wheat then the maximum amount of computers they could produce would A. be less than 1,600 computers but greater than 1,000 computers. B. be exactly equal to 1,000 computers. C. be less than 1,000 computers. D. still be equal to 1,600 computers. 11. The opportunity cost of producing an additional unit of wheat is A. exactly equal at Point B and Point C (and positive in value). B. exactly equal at Point B and Point C (and equal to zero in value). C. greater at Point B than at point C. D. greater at Point C than at point B.

3 12. Amy and Bill spend their days producing coffee and paper. In a single day Amy can produce either 10 units of coffee or 40 units of paper, while Bill can produce either 20 units of coffee or 30 units of paper. Based upon this information, it follows that A. Amy has both the absolute advantage and comparative advantage in coffee production. B. Amy has the absolute advantage while Bill has the comparative advantage in coffee production. C. Bill has both the absolute advantage and comparative advantage in coffee production. D. Bill has the absolute advantage while Amy has the comparative advantage in coffee production. 13. A statement aims to assess the desirability of how the world functions, perhaps with suggestions of things that could be done to improve matters. A. Normative B. Descriptive C. Positive D. Negative For questions 14 through 16, consider a market with demand and supply as illustrated below. 40 price Supply Demand quantity 14. In this market there would be at a price of $22. A. neither excess demand nor excess supply. B. both excess demand and excess supply. C. excess supply D. excess demand 15. In equilibrium, units would be traded each at a price of. A. 750; $40. B. 375; $20. C. 150; $16. D. 0; $ Focusing on the 450 th unit, the Buyer s Reservation Price for this unit is and the Seller s Reservation Price for this unit is. A. $36; $45. B. $20; $9. C. $16; $25. D. $4; $5.

4 17. Recall the results of the Ease of Doing Business study discussed in lecture and summarized on page 60 of the textbook. According to this study, of the 189 countries examined, the country with the lowest costs of conducting business (i.e., the country ranked at the top of this list) is A. the United States. B. Brazil. C. Singapore. D. Venezuela. 18. The Preliminary Circular Flow Diagram illustrates A. the transfer of money between households and firms. B. the movement of economic resources (i.e., factors of production and finished goods/services) between households and firms. C. the limits of production that a society faces, by identifying the maximum amount of one good that can be produced for every possible level of production of another good. D. None of the above answers is correct. 19. Consider a good for which quantity demanded is 500 units at a price of $10 and (all other factors fixed) quantity demanded is 650 units at a price of $8. These observations begin to provide evidence that A. money serves as a store of value. B. seller s reservation price for this item is illustrated by the height of the supply curve. C. this good is a normal good (since an increase in income will increase demand for this good). D. the Law of Demand is satisfied for this good. 20. Consider the following two statements. Statement A: Tariffs and import quotas usually reduce the general welfare of society. Statement B: A minimum wage decreases unemployment, particularly among highly skilled workers. Most economists would A. agree with Statement A, but disagree with Statement B. B. agree with Statement B, but disagree with Statement A. C. disagree with both Statement A and Statement B. D. agree with both Statement A and Statement B. 21. is/are broadly defined as a decision-making institution with the legal authority to impose restrictions or mandates on the behavior of other decision makers. A. Households B. Firms C. Markets D. Government 22. The equilibrium in the model of supply and demand is A. unstable. B. unique. C. self-enforcing. D. More than one (perhaps all) of the above answers is correct. 23. Tucker recently spent $400 on at the KSU bookstore on textbooks for his fall semester classes. He was able to use the money to acquire these books since money serves as A. coercion. B. a store of value. C. a unit of account. D. a medium of exchange.

5 24. Reggie Dunlop (coach/player of the Charlestown Chiefs ice hockey team) offered to pay $100 to any player on his own team that could injure opposing player Tim McCracken of the Syracuse Bulldogs during an upcoming game between the two teams. By offering this money, Coach Dunlop was trying to get his teammates to play more aggressively by A. offering a material reward. B. moral suasion. C. the Invisible Hand. D. coercion. 25. Between June 2017 and September 2017 there was a decrease in equilibrium price and increase in equilibrium quantity traded in the market for good y. This change in the market equilibrium outcome would result from A. an increase in Demand. B. an increase in Supply. C. a decrease in Demand. D. a decrease in Supply. 26. Which of the following is one of the Three Basic Economic Questions that every society must address? A. How can we reduce our carbon footprint? B. How can we guarantee that all people have a sufficient amount of leisure time? C. Who gets to consume the goods and services that we have chosen to produce? D. More than one (perhaps all) of the above is one of the Three Basic Economic Questions that every society must address. 27. The economy of the former Soviet Union A. functioned so efficiently that the country produced a combination of goods beyond its production possibilities curve year after year after year. B. perhaps provides the best example of a large society with an economic system close to pure socialism. C. achieved Karl Marx vision of an ideal communist society, since the ownership and use of all resources was in the hands of the people without any intervention whatsoever by the government. D. None of the above answers are correct. 28. Last week Roger Federer lost to Juan Martín del Potro in the quarterfinals of the U.S. Open tennis tournament. Around the same time hurricane Harvey killed 70 people. If Roger Federer is more upset about being eliminated from the U.S. Open than about the loss of life caused by the hurricane, it would seemingly suggest that he A. is an irrational individual. B. is a self-interested individual. C. does not care about anyone other than himself. D. is not as good of a person as Juan Martín del Potro. 29. The provides a guide for allocating scarce productive resources to various tasks, which states that when increasing the production of a good, a society should do so by using the available productive resource with the lowest opportunity cost. A. Law of Demand and Supply B. Cost-Benefit Principle C. Law of Comparative Advantage D. Law of Absolute Advantage

6 30. refers to the natural and undirected emergence of order out of chaos. A. Spontaneous Order B. Opportunity Cost C. Indicative Planning D. Market Equilibrium 31. Robbie is a ventriloquist. In order to get money to buy tickets to a concert, Robbie decides to sell his ventriloquist puppet (named Rex) to his friend Andre for $350. When selling the puppet to Andre, Robbie is exercising a in regards to his puppet Rex. A. right to control B. right to scarcity C. right to transfer D. right to restitution Answer Questions 32 and 33 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 $8 $14 $19 $23 $26 $28 $ Brandon s Marginal Benefit of consuming a 2 nd cup of ice coffee would be. A. $6 B. $7 C. $14 D. $ If iced coffee costs $2.79 per cup, then Brandon should consume cups per week. A. 0 B. 4 C. 5 D. 7

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