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# Economics 1021A/B Study Guide - Midterm Guide: Competitive Equilibrium, Social Cost, Demand Curve

Department
Economics
Course Code
ECON 1021A/B
Professor
Michael Parkin
Study Guide
Midterm

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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 C.
B) movement from A to B would require a technological advance.
C) point B 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.
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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 goods X and Y.
The following table gives points on their production possibilities frontiers.
Vulcan Romulus
Good XGood YGood XGood Y
0 16 0 12
2 12 2 9
48 46
64 63
80 80
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 Y.
B) Romulus has a comparative advantage in the production of X.
C) Romulus has both an absolute advantage and a comparative advantage in the production of X.
D) Vulcan has a comparative advantage in the production of X.
E) Vulcan should specialize in the production of X.
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