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Midterm

Practise Questions Mid-Term 1

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Department
Economics
Course
Economics 1021A/B
Professor
Michael Parkin
Semester
Fall

Description
THE UNIVERSITY OF WESTERN ONTARIO LONDON CANADA R. Wintrobe Economics 1021A-001 October, 2011 Review 1 1) The night before a history test, you decide to go to the movies instead of reviewing your notes. You get 60 percent on your test compared with the 75 percent that you normally score. You ________ a tradeoff ________, and the opportunity cost of your evening at the movies was ________. A) did not face; because your roommates agreed you should go to the movies and not study; zero B) faced; between a higher test score and an evening at the movies; the 15 percent fall in your grade C) did not face; because you made the best choice; zero D) faced; between a higher test score and an evening at the movies; the mark of 60 percent on your test E) did not face; most students get 60 percent on history tests; the mark of 60 percent on your test Use the figure below to answer the following question. Figure 1 2) Complete the following sentence. In Figure 1, A) some resources must be unused at point . B) movement from Ato B would require a technological advance. C) pointB is a point of production efficiency. D) movement from C to B would require a technological improvement. E) the concept of decreasing opportunity cost is illustrated. 1 Use the information below to answer the following question. Fact 1 In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter. 3) Given Fact 1, the opportunity cost of producing 1 loaf of bread is A) 1/3 kilogram of butter for Andy and 1 kilogram of butter for Rolfe. B) 20 minutes (1/3 hour) for Andy and 1 hour for Rolfe. C) 8 kilograms of butter for both Andy and Rolfe. D) 3 kilograms of butter for Andy and 1 kilogram of butter for Rolfe. E) not calculable from the given information. Use the figure below to answer the following question. Table 1 The planets of Vulcan and Romulus each produce goodand . The following table gives points on their production possibilities frontiers. Vulcan Romulus Good X Good Y Good X Good Y 0 16 0 12 2 12 2 9 4 8 4 6 6 4 6 3 8 0 8 0 4) Refer to Table 1. Which one of the following is true? A) Romulus has both an absolute advantage and a comparative advantage in the production of . B) Romulus has a comparative advantage in the production of . C) Romulus has both an absolute advantage and a comparative advantage in the production of . D) Vulcan has a comparative advantage in the production of . E) Vulcan should specialize in the production of . 2 Use the figure below to answer the following question. Figure 2 5) Which one of the following statements best characterizes poiin Figure 2? A) The most that consumers would be willing to pay for the 9,000th apple is $0.50. B) At a price of $0.50, there will be an apple shortage. C) Producers would be unwilling to sell the 9,000th apple for less than $0.50. D) At point , the market is in equilibrium. E) At a price of $0.50, consumers will be unwilling to buy any apples. 6) Suppose we observe a rise in the price of gooand a decrease in the quantity of goobought and sold. Which one of the following is a likely explanation? A) The demand for A increased. B) The supply ofA increased. C) The demand for A decreased. D) The law of supply is violated. E) The supply ofA decreased. 7) If demand increases and supply decreases, then the A) equilibrium price rises but the effect on the equilibrium quantity is unknown. B) equilibrium quantity increases but the effect on the equilibrium price is unknown. C) effect on both equilibrium price and quantity is unknown. D) equilibrium
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