ECON 1000 (Fall 2016 Section 03) Exam #1B

Transcription

1 ECON 1000 (Fall 2016 Section 03) Exam #1B Multiple Choice Questions: (3 points each) 1. I am taking of the exam. B. Version B 2. 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. used as a basic unit of measuring economic activity. B. an asset used as payment when purchasing goods and services. C. an asset that can be used as a means to hold wealth. D. None of the above answers are correct. 3. 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 but inefficient. C. All output combinations above the PPF are attainable and efficient. D. More than one (perhaps all) of the above answers is correct. 4. Consider the costs of complying with bureaucratic regulations to economic decision makers in Singapore, South Africa, and Venezuela. According to the results of the Ease of Doing Business study, of these three countries, such costs are: A. lowest in South Africa and highest in Venezuela. B. lowest in South Africa and highest in Singapore. C. lowest in Singapore and highest in South Africa. D. lowest in Singapore and highest in Venezuela. 5. The Preliminary Circular Flow Diagram illustrates A. 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. 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 transfer of money between households and firms. D. the movement of economic resources (i.e., factors of production and finished goods/services) between households and firms. 6. The Incentive Principle states that A. firms can only ever reduce costs of production by being inventive and devising new ways of producing a good at lower cost. B. 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. C. if the marginal benefit of an activity increases, then a rational person will engage in more of the activity. D. 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.

2 7. The Law of Demand implies that A. demand curves should be downward sloping. B. demand for a good will increase if consumers realize an increase in income. C. if the price of a good increases, then the quantity demanded of the good will increase. D. More than one (perhaps all) of the above answers is correct. 8. Which of the following statements is a Positive Statement? A. The Kennesaw State University football team had a record of 6-5 (i.e., 6 wins and 5 losses) during the 2015 season. B. Noel Gallagher (formerly of the band Oasis) played a sold-out show at the Tabernacle in Atlanta, GA on July 1, C. Both A and B are Positive Statements. D. Neither A nor B is a Positive Statement. 9. Which of the following countries has an economic system that is closest to pure Capitalism? A. New Zealand. B. The United States. C. Spain. D. China. 10. Privately owned enterprises in a free market economy have a primary goal of A. employing as many workers as possible. B. convincing consumers that they are environmentally conscious. C. earning as large of a profit as possible. D. producing goods of low quality. 11. Which of the following could NOT result in a Change in Demand for donuts? A. A decrease in the price of muffins. B. A decrease in the price of donuts. C. An increase in the number of consumers of donuts. D. An increase in consumer income. Answer Questions 12 and 13 based upon the information conveyed in the following table, which states Amy s Total Benefits from consumption of cups of coffee per day (measured in dollars): Cups of Coffee Consumed per Day Total Benefits from Consumption Amy s Marginal Benefit from consuming coffee is A. negative for all levels of consumption up to 8 cups of coffee. B. positive for her first 2 cups of coffee (but negative beyond 2 cups of coffee). C. positive for her first 4 cups of coffee (but negative beyond 4 cups of coffee). D. positive for all levels of consumption up to 8 cups of coffee. 13. Amy works in an office where she can drink as much coffee as she likes for free (i.e., her total costs and marginal costs of consuming coffee are zero for all levels of consumption). In order to maximize her total economic surplus she should consume cups of coffee per day. A. 1 B. 2 C. 4 D. 8

3 14. Between August 2014 and August 2016 there was a decrease in equilibrium price and an increase in equilibrium quantity traded of pens. This change in the market equilibrium outcome would result from A. a decrease in Demand. B. an increase in Demand. C. a decrease in Supply. D. an increase in Supply. 15. 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. illustrates the vertical interpretation of the demand curve. B. does not make any sense whatsoever when analyzed using the tools of economics. C. implicitly assumes that football players are irrational. D. relies heavily upon the Incentive Principle. 16. Voluntary Trade generally makes buyers and makes sellers. A. better off; worse off. B. worse off; better off. C. better off; better off. D. worse off; worse off. For Questions 17 through 19, consider the following scenario. Alex and Bob spend their workdays producing rice 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. Rice Shirts Alex 32 8 Bob has an Absolute Advantage in the production of rice, and has an Absolute Advantage in the production of shirts. A. Alex; Bob. B. Alex; Alex C. Bob; Bob. D. Bob; Alex. 18. Alex s Opportunity Cost for producing a shirt is units of rice. A. 24 B. 4 C. 3 D Suppose that Alex and Bob have decided to maximize their joint output through specialization in production. Further, they want to produce a total of 6 shirts each day. It follows that A. Alex and Bob should each make 3 shirts. B. Alex should make 2 shirts and Bob should make 4 shirts. C. Alex should make 8 shirts and Bob should make 2 (i.e., negative two) shirts. D. Alex should make all 6 shirts.

4 20. 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: Tariffs and import quotas usually reduce the general welfare of society. 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 Which markets are represented in the Basic Circular Flow Diagram? A. Markets for Goods and Services and markets for Factors of Production. B. Markets for Goods and Services and markets for Financial Assets. C. Markets for Financial Assets and markets for Factors of Production. D. Markets for Imports and markets for Exports. For questions 22 through 24, consider a market with demand and supply as illustrated below. price 80 Supply Demand ,000 quantity 22. In this market there would be at a price of $20. A. excess demand B. excess supply C. neither excess demand nor excess supply. D. both excess demand and excess supply. 23. In equilibrium, units would be traded each at a price of. A. 1,000; $80. B. 600; $32. C. 500; $40. D. 400; $ Focusing on the 400 th unit, the Buyer s Reservation Price for this unit is and the Seller s Reservation Price for this unit is. A. $8; $8. B. $48; $32. C. $80; $16. D. $88; $72.

5 25. One of the three primary types of economic incentives is coercion, which could 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. the use or threat of force or incarceration to obtain compliance. D. attempts to alter behavior by mind control. 26. In the writings of Karl Marx, the bourgeoisie referred to the and the proletariat referred to the. A. voters; non-voters. B. business owners; working class. C. uneducated class; educated class. D. peasants/smurfs; nobles/aristocats. 27. Ralphie got a Red Ryder BB Gun for Christmas last year. He has decided to sell this item to Grover for $40 in order to have some money to buy a new baseball glove. When selling his BB Gun to Grover, Ralphie is exercising which of the following sub-dimension of property rights? A. The right of equilibrium. B. The right to control. C. The right to transfer. D. The right to restitution. 28. Based upon the research findings discussed by Dr. Kaitlyn Harger during her guest lecture, the opening of a new professional sports facility will likely A. induce a substantial number of new businesses to open in the area. B. not have any impact (positive or negative) on the number of new businesses in the area. C. cause many existing businesses in the area to go out of business. D. None of the above answers are correct (since her talk did not address this issue in any way whatsoever). 29. Demand for Good Y increases as a result of an increase in consumer income. This observation implies that Good Y is A. a normal good. B. an inferior good. C. a substitute good. D. a complementary good. 30. The set of rules and methods put in place by a society to answer (directly or indirectly) the three fundamental economic questions of What to produce?, How to produce it?, and For whom to produce it? can be described as A. the Invisible Hand. B. an economic system. C. government. D. scarcity.

6 31. refers to the natural and undirected emergence of order out of chaos. A. Scarcity B. Spontaneous Order C. Command Planning D. Production 32. Economics is A. the study and analysis of business decisions related to promoting and selling products or services, including market research and advertising. B. the social science that studies decision making in the face of scarcity and the resulting impact of such decisions on both society as a whole and on the individual members therein. C. the social science that studies the allocation and transfer of power in decision-making, systems of governance, and the effects of public policy. D. the art of communicating financial information about a business entity to stakeholders, such as employees, managers, shareholders, and customers. 33. Socialism is defined as an economic system in which A. the government has established a wide range of programs intended to provide a safety net to people, thereby equalizing levels of income and consumption across households. B. all decision makers are motivated by selfless benevolence. C. the means of production are owned by the government. D. the means of production are privately owned by individuals.

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