ECON 1000 (Maymester 2018 Section 01) Exam #1A

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1 ECON 1 (Maymester 218 Section 1) Exam #1A Multiple Choice Questions: (3 points each) 1. I am taking of the exam. A. Version A 2. Recall the results of the Economic Freedom of the World study discussed in lecture and summarized on page 55 of the textbook. According to this study, of the 157 countries examined, the country in which people have the greatest amount of economic freedom is and the country in which people have the least amount of economic freedom is. A. Germany; the United States. B. the United States; Norway. C. Canada; Mexico. D. Hong Kong; Venezuela. 3. The Preliminary Circular Flow Diagram illustrates A. the movement of economic resources (i.e., factors of production and finished goods/services) between households and firms. B. the interactions between buyers and sellers in a market which give rise to a unique quantity of trade and per unit price for a good or service. 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 are correct. 4. Which of the following two statements is a Positive Statement? A. LEEDS (the new solo project of Spacehog s Royston Langdon) released the album Everything s Dandy on May 4, 218. B. The album Resident Alien by Spacehog was the best album released in C. Both A and B are positive statements D. Neither A nor B is a positive statement. 5. While playing baseball in their front yard, Wally and his little brother break the windshield of Ward s car. Wally and his brother concede that it is right for them to cover the costs of repairing the broken windshield. In taking this position, they are recognizing that Ward has a in regards to his car windshield. A. right to exchange B. right to transfer C. right to restitution D. right to control 6. 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 Comparative Advantage B. Law of Absolute Advantage C. Invisible Hand D. Rationality Principle

2 7. Between January 218 and April 218 there was an increase in both equilibrium price and equilibrium quantity traded in the market for Good Z. This change in the market equilibrium outcome would result from A. a decrease in Demand. B. a decrease in Supply. C. an increase in Demand. D. an increase in Supply. 8. is the study of how individual decision maker behave and interact with each other, often with a focus on how households and firms behave and interact with each other in markets. A. Decision Theory B. Marketing C. Macroeconomics D. Microeconomics 9. Consider the following two statements. Statement 1: Tariffs and import quotas usually reduce the general welfare of society. Statement 2: A minimum wage increases unemployment among young and unskilled workers. Most economists would A. agree with both Statement 1 and Statement 2. B. agree with Statement 1, but disagree with Statement 2. C. agree with Statement 2, but disagree with Statement 1. D. disagree with both Statement 1 and Statement 2. For Questions 1 through 12, consider the following scenario. Amy and Bill spend their workdays producing corn and shirts. 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. Corn Shirts Amy Bill has an Absolute Advantage in the production of corn, and has an Absolute Advantage in the production of shirts. A. Bill; Bill. B. Bill; Amy. C. Amy; Bill. D. Amy; Amy. 11. Amy s Opportunity Cost for producing one shirt is. A. 24 units of corn B. 3 units of corn C. 2 units of corn D. half a unit of corn 12. has a Comparative Advantage in the production of corn, and has a Comparative Advantage in the production of shirts. A. Bill; Bill. B. Bill; Amy. C. Amy; Bill. D. Amy; Amy.

3 13. In the writings of Karl Marx, the bourgeoisie referred to the and the proletariat referred to the. A. business owners; working class. B. government planners; tax collectors. C. unskilled workers; entrepreneurs. D. buyers; sellers. 14. The quote on page 17 of the course textbook suggests that Milton Friedman believed that Mother Theresa was A. irrational and not self-interested. B. irrational but self-interested. C. rational and self-interested. D. rational but not self-interested. Answer Questions 15 and 16 based upon the information conveyed in the following graph (which illustrates the Marginal Cost and Marginal Benefit of an activity for a decision maker): 255 $ Marginal Cost Q Marginal Benefit 15. If the decision maker increased the amount which she was engaging in the activity from Q=22 to Q=24, then A. Total Costs, Total Benefits, and Total Economic Surplus would all decrease. B. Total Costs, Total Benefits, and Total Economic Surplus would all increase. C. Total Costs and Total Benefits would both increase, but Total Economic Surplus would decrease. D. Total Costs would increase, but Total Benefits and Total Economic Surplus would both decrease. 16. Total Economic Surplus would be maximized by choosing Q equal to A. 78 B. 49 C. 18 D.

4 17. refers to the natural and undirected emergence of order out of chaos. A. Spontaneous Order B. Market Equilibrium C. The Incentive Principle D. Command Planning 18. Which of the following could NOT result in a Change in Demand for tacos? A. An increase in the number of buyers of tacos. B. An increase in the price of tacos. C. An increase in the price of cerveza. D. An increase in income of buyers of tacos. 19. first said From each according to his ability, to each according to his need. A. Gordon Tullock B. Louis Blanc C. Vernon Smith D. Adam Smith For questions 2 through 22, consider a market with demand and supply as illustrated below. price Supply Demand quantity ,25 2. In this market there would be at a price of $25. A. excess demand B. excess supply C. neither excess demand nor excess supply. D. both excess demand and excess supply. 21. In equilibrium, units would be traded each at a price of. A. 1,25; $. B. 595; $ C. 43; $14. D. ; $ Focusing on the 43 th unit, the Buyer s Reservation Price for this unit is and the Seller s Reservation Price for this unit is. A. $66.5; $1.5. B. $56.; $42.. C. $32.75; D. $9.5; $4.5.

5 23. One of the three primary types of economic incentives is coercion, which can be described as A. attempts to convince individuals to behave in a certain manner because doing so is the right thing to do. B. the use of monetary rewards or direct increases in consumption which result from engaging in an activity. C. implementing policies which make both the costs and benefits of actions as small as possible. D. the use or threat of force or incarceration to obtain compliance. 24. James recently travelled from Georgia to New York City to attend the Vasyl Lomachenko vs. Jorge Linares lightweight boxing title fight in person. His Total Benefits from this trip were $1,, while his Total Costs were $6,. From this information, it follows that his Economic Surplus from attending the fight was A. $6, $1, = $4, (i.e., negative $4,). B. $1, $6, = $4,. C. ($1, + $6,) 2 = $8,. D. $1, + $6, = 16,. For Questions 25 and 26, 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): Cars 2,7 2, 1,6 A B D 1, C Wheat Which of the following combinations of output is attainable/feasible and characterized by productive inefficiency? A. A (24 units of wheat and 2, cars). B. B (315 units of wheat and 2, cars). C. C (24 units of wheat and 1, cars). D. More than one (perhaps all) of the above answers is correct. 26. Starting at Point A (i.e., 24 units of wheat and 2, cars), if this society wanted to produce 5 more units of wheat then the maximum amount of cars they could produce would A. still be equal to 2, cars. B. be less than 2, cars but greater than 1,6 cars. C. be exactly equal to 1,6 cars. D. be less than 1,6 cars.

6 27. Socialism is defined as an economic system in which A. the means of production are privately owned by individuals. B. the means of production are owned by the government. C. the means of production are collectively owned by all people in a society (without intervention by a government or state). D. the means of production can only be owned by an aristocratic nobility. 28. Tucker recently spent $275 on at the KSU bookstore on textbooks for his summer semester classes. He was able to use the money to acquire these books since money serves as a A. store of value. B. spontaneous order. C. medium of exchange. D. unit of account. 29. Which of the following countries has an economic system that is closest to pure Capitalism? A. Finland. B. Israel. C. Singapore. D. Canada. 3. is a decision-making institution with the legal authority to impose restrictions or mandates on the behavior of other decision-makers. A. A household B. An entrepreneur C. Government D. A firm 31. The Law of Demand implies that A. a buyer s reservation price is illustrated by the vertical distance between demand and supply. B. demand curves should be downward sloping. C. excess demand for a good will put downward pressure on price. D. More than one (perhaps all) of the above answers is correct. 32. is a general concept that refers to the cost of giving up the best alternative that must be foregone in order to do or acquire something. A. Absolute Advantage B. The Resource Use Decision C. Opportunity Cost D. A Property Right 33. According to the Cost-Benefit Principle, A. a society can produce a greater amount of total output when individuals focus their production on those activities for which they have a comparative advantage. B. if the marginal benefit of an activity increases, then a rational person will engage in more of the activity. C. an action should be taken if and only if the additional benefits from taking the action are at least as great as the additional costs of doing so. D. None of the above answers is correct.

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

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