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ECON 1010 Study Guide - Midterm Guide: Potential Output, Marginal Cost, Capital AccumulationExam

Course Code
ECON 1010
Study Guide

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Econ 1010A- Summer 2013- Sample Midterm exam questions
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Note: The correct answer choice is highlighted in bold text
1) Which of the following is the best definition of economics? 1) _______
A) The study of how producers decide what inputs to hire and what outputs to produce.
B) The study of how a provincial government allocates tax dollars.
C) The study of how individuals, businesses, governments, and entire societies make
choices as they cope with scarcity and the incentives that influence and reconcile those
D) The study of how consumers spend their income.
E) The study of how consumers and producers meet each other at the market.
2) Which of the following newspaper headlines concerns a macroeconomic issue? 2) _______
A) Why do grain producers purchase less pesticides?
B) Why are people buying more SUVs and fewer minivans?
C) How would an unexpected freeze in Oxford, Nova Scotia change the price of blueberries
in the Maritimes?
D) How would a tax on e-commerce affect
E) Why is Japan's economy stagnant?
3) When a farmer decides to harvest tomatoes using machines instead of migrant workers, the
farmer is answering the ________ question.
3) _______
A) "how" B) "who" C) "where" D) "when" E) "what"

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4) Which of the following is an example of a positive statement? 6) _______
A) Increasing the minimum wage results in more unemployment.
B) Canada should have lower tax rates for wealthier Canadians.
C) The Bank of Canada ought to cut the interest rate.
D) Canada should cut back on its use of carbon-based fuels such as coal and oil.
E) Every Canadian should have equal access to health care.
5) The bowed-out (concave) shape of a production possibilities frontier 8) _______
A) reflects the existence of increasing opportunity cost.
B) is due to the equal usefulness of resources in all activities.
C) is due to capital accumulation.
D) is due to technological change.
E) reflects the existence of decreasing opportunity cost.
6) With allocative efficiency, for each good produced, 9) _______
A) marginal benefit exceeds marginal cost by as much as possible.
B) marginal benefit equals marginal cost.
C) marginal benefit is at its maximum.
D) marginal cost is at its minimum.
E) marginal cost exceeds marginal benefit by as much as possible.
7) A production possibilities frontier will shift outward FOR ALL OF THE FOLLOWING
10) ______
A) an increase in the stock of capital.
B) a technological improvement.
C) opportunity cost is increasing.
D) an increase in the labour force.
E) none of the above.
Use the information below to answer the following questions.
Fact 2.4.2
Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units
of Y in an hour.
8) Refer to Fact 2.4.2. Which one of the following statements is true? 11) ______
A) Brenda has an absolute advantage over Agnes in the production of both goods.
B) Brenda will not gain from trade.
C) Agnes has a comparative advantage in the production of Y.
D) Brenda has a comparative advantage in the production of X.
E) Agnes will not gain from trade.
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