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ECON 2106

Georgia Institute of Technology School of Economics ECON 2106 JK1&JK2! Principles of Microeconomics!!!! Fall 2012 Instructor: Dr. Johnson Kakeu (kakeu.johnson TAs: Joseph Greene ([email protected] "Winners must have two things: definite goals and a burning desire to achieve them." - Brad Burden - PREPTEST 1 1. Which of the following is an example of individual choice? A) The government announces plans to ban smoking in all Florida restaurants. B) Lauren spends her allowance on pillows for her bed. C) France decides to withhold funding to rebuild Iraq. D) Africa decides to accept U.S. aid for humanitarian efforts. 2. Grades are low in class and your professor makes available a 10-point extra credit assignment. Most of the students turn in the assignment. This statement best represents this economic concept: A) The real cost of something is what you must give up to get it. B) “How much” is a decision at the margin. C) People usually exploit opportunities to make themselves better off. D) There are gains from trade. 3. Resources are being used efficiently when: A) scarcity is no longer an issue. B) they are also used equitably. C) every opportunity to make people better off has been utilized. D) there are still gains from trade available. Page 1 Use the following to answer question 4. Figure: Wine and Wheat 4. (Figure: Wine and Wheat) Look at the figure Wine and Wheat. If this economy is producing at point A, we know the economy is: A) using its resources efficiently. B) using its resources inefficiently. C) producing at an unattainable point. D) trading with another country. 5. Coworkers Yvonne and Rodney are trying to finish cleaning up the store by washing dishes and sweeping the floors. To finish both tasks as quickly as possible, they know that each of them should focus on just one task, but they don't know who should do what. To decide which coworker should wash dishes, Yvonne and Rodney should determine which one: A) has the absolute advantage in dishwashing. B) has the comparative advantage in dishwashing. C) has the largest production possibility frontier in dishwashing. D) can complete the dishwashing in the least amount of time. 6. The simplest circular-flow model shows the interaction between households and firms. In this model: A) only barter transactions take place. B) households and firms interact in the market for goods and services, but firms are the only participants in the factor markets. C) firms supply goods and services to households, which in turn supply factors of production to firms. D) attention is focused on “real” flows of goods, services, and factors of production, but money flows between households and firms are ignored for simplicity. Page 2 Use the following to answer question 7. 7. (Table: Production of Good Z and Good X in Urbanville) Look at the table Production of Good Z and Good X in Urbanville. Suppose this represents the production possibility frontier and Urbanville is currently producing 15 of Z and 45 of X. This combination is: A) both allocatively and productively efficient. B) productively efficient. C) allocatively efficient. D) neither productively nor allocatively efficient. 8. After graduation from college, you might have an increase in your income from a new job. If, as a result, you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered: A) a normal good. B) a substitute good. C) a complementary good. D) an inferior go
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