EC120 Study Guide - Midterm Guide: Economic Equilibrium, Absolute Advantage, Comparative Advantage
426 views15 pages
Test 1 – Friday, October 3rd, 8:00pm
1) On the front of your computer card, use a dark lead pencil to PRINT the following:
a. Your section letter and instructor’s name
b. WLU ID number - starting at the far left column (leave the last column blank)
i. UW students add a 0 to the end of your 8-digit UW ID number
ii. Fill in the boxes corresponding to your ID number
c. Last name, empty space, first name – starting at the far left column
i. Fill in the boxes corresponding to your name
2) On the back of the computer card, use a dark lead pencil to
a. Answer all 55 questions by completely filling in the bubble. If you change an answer, you must
completely erase your previous answer.
3) You have 90 minutes. No student may leave before 8:30pm. Hand in the computer card only. You can keep
the question paper, and you are advised to record your answers on it.
4) There are 55 multiple choice questions. You will receive one mark for each correct answer, and zero marks
for missing, incorrect or multiple answers.
5) Non-programmable calculators are allowed. Dictionaries are not allowed.
Identify the choice that best completes the statement or answers the question.
____ 1. Daniel decides to spend the last two hours of the night before his economics exam studying instead
of sleeping. For Daniel, what would his tradeoff be?
nothing, since no dollar value can be put on sleep
nothing, since studying would be more beneficial than sleep
the six hours of sleep he could have had if he had gone to bed before midnight
the two hours of rest he would have gotten
____ 2. After much consideration, you have chosen Cancun over Fort Lauderdale for your spring break trip
this year. For this decision to change, which of the following must occur?
The marginal benefit of Cancun must increase.
The marginal cost of Cancun must decrease.
The marginal benefit of Fort Lauderdale must increase.
The marginal cost of Fort Lauderdale must increase.
____ 3. Carol has spent $2000 purchasing and repairing an old car, which she expects to sell for $2400. She
discovers that she needs an additional repair, which will cost $400. She can sell the car as it is now
for $2000. What should she do?
She should sell the car now for $2000.
She should never sell something for less than it cost.
She should complete the repairs and sell the car.
It doesn’t matter which action she takes; the outcome is the same either way.
____ 4. Refer to Figure 2-5. Which of the following most likely caused the shift of the production
possibilities frontier from A to B?
technological improvement in the production of batteries
more labour available in the economy
a general technological breakthrough
more capital available in the economy
____ 5. Refer to Figure 2-6. What is the opportunity cost to society of moving from point B to point D?
100 bananas and 100 baseballs
50 bananas and 50 baseballs
100 bananas and 50 baseballs
50 bananas and 100 baseballs
____ 6. Refer to Figure 2-6. What was the most likely cause of the movement from point C to point D?
a decrease in society’s preference for bananas
a decrease in society’s preference for playing baseball
a shift to a longer working day
____ 7. When is an economic outcome said to be efficient?
if the economy is using all of the resources it has available
if the economy is conserving on resources and not using all it has
if the economy is getting all it can from the scarce resources it has available
if the economy is able to produce more than its current production without
____ 8. Which of the following is an example of a positive statement?
Prices rise when the government prints too much money.
If welfare payments increase, the world will be a better place.
Inflation is more harmful to the economy than unemployment.
The benefits to the economy of improved equity are greater than the costs of