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Midterm

ECON 1010 Study Guide - Midterm Guide: Opportunity Cost, Resource Depletion, Marginal UtilityExam


Department
Economics
Course Code
ECON 1010
Professor
All
Study Guide
Midterm

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ECON 1010A: INTRODUCTION TO MACROECONOMICS
DEPARTMENT OF ECONOMICS
FACULTY OF LIBERAL ARTS AND PROFESSIONAL STUDIES
YORK UNIVERSITY
MIDTERM EXAM
FALL 2011
Version 1
Course Director: Dr. Sadia Mariam Malik
TOTAL POINTS: 100
TOTAL WORTH: 30%
STUDENT NAME:_____________________________________________________
STUDENT I.D.: ________________________________________________________
INSTRUCTIONS:
1. This exam consists of 40 multiple choice questions. There is only one correct
answer.
2. Circle your final answer for every question on each page of the exam and
carefully mark the selected letter on the computerized Answer Sheet.
3. Use HB pencils only.
4. Only non-programmable calculators and your student I.D is allowed to be with
you on your desk.
5. Time Allowed: 90 minutes
GOOD LUCK!
ANSKER KEY: Answers in Black are Correct, in Red are Incorrect.

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Midterm Exam/Econ 1010A/Fall 2011
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Which of the following is the best definition of economics? 1) ___c____
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 choices.
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) ____e__
_
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 chapters.indigo.ca?
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___
_
A) "how" B) "who" C) "where" D) "when" E) "what"
4) The fact that a hockey star earns $3 million a year while a teacher earns $35,000 annually is an
example of an economy facing the ________ question.
4) _____d_
_
A) "what"
B) "when"
C) "how"
D) "for whom"
E) "where"
5) When the government of Alberta chooses to build more roads, the required resources are no
longer available to provide better health care facilities. This situation illustrates the concept of
5) __a____
_
A) opportunity cost.
B) human capital.
C) entrepreneurship.
D) monetary cost.
E) marginal benefit.
6) Which of the following is an example of a positive statement? 6) ___a___
_
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.

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7) If Sam is producing at a point inside his production possibilities frontier, then he 7) ____d__
_
A) is unaffected by costs and technology.
B) must be doing the best he can with limited resources.
C) is fully using all his resources and allocating his resources to their best use.
D) can increase production of both goods with zero opportunity cost.
E) has a high opportunity cost of moving from this point.
8) The bowed-out (concave) shape of a production possibilities frontier 8) __a
b__d___
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.
9) With allocative efficiency, for each good produced, 9) ___b___
_
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.
10) A production possibilities frontier will shift outward FOR ALL OF THE FOLLOWING
REASONS EXCEPT
10) ___e___
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.
11) Refer to Fact 2.4.2. Which one of the following statements is true? 11) ___a___
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.
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