ECON 2001.01 Study Guide - Midterm Guide: Ceteris Paribus, Average Variable Cost, Economic Equilibrium

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Published on 9 Mar 2016
School
Ohio State University
Department
Economics
Course
ECON 2001.01
Professor
OLD EXAMS
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EXAM # 1
1. Bob decided to go on a year-long cruise he won after graduation instead of working,
although he got an offer from company A with a salary of $40,000 per year and an offer
from company B with a salary of $35,000 per year. What is the opportunity cost per year
for Bob to be on the cruise?
a. $5,000
b. $40,000
c. $35,000
d. $75,000
2. Which of the following statements is true?
a. A point of allocative efficiency is also a point of production efficiency
b. A point of production efficiency is also a point of allocative efficiency
c. Both a and b are true
d. Both a and b are false
3. If the marginal cost of a good is less than the marginal benefit, then
a. We have not achieved allocative efficiency.
b. We should produce more of the good.
c. We should produce less of the good.
d. We cannot tell whether to produce more or less.
e. both (a) and (b)
4. Suppose two countries, A and B, both are engaged in the production of two goods, a
and b. If country A has comparative advantage in producing good a, then
a. Country A must also have absolute advantage in producing good a.
b. Country A must also have comparative advantage in producing good b.
c. Country B must have absolute advantage in producing good a.
d. Country B must have comparative advantage in producing good b.
2
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5. Suppose that in one day Harry can produce 5 pens or 10 pencils while John can
produce 3 pens or 9 pencils. Then
a. Harry should specialize in the production of pencils.
b. John should specialize in the production of pencils.
c. Harry has an absolute advantage in the production of pens while John has an absolute
advantage in the production of pencils.
d. Harry has an absolute advantage in the production of pencils while John has an
absolute advantage in the production of pens.
Use this diagram for next two questions
6. In the above figure,
a. some resources are unemployed at point C.
b. production at A is inefficient whereas production at point D is efficient.
c. opportunity costs are decreasing.
d. moving from A to B is attainable.
3
B A C
D
Guns
(Millions per month)
60
50
40
30
20
10
0 10 40 50 20 30 Butter
(Million pounds per month)
60
A production possibility frontier
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Document Summary

If the diagrams don"t show up on your screen, go to print preview or view. 2: suppose that in one day harry can produce 5 pens or 10 pencils while john can produce 3 pens or 9 pencils. 5: at a price of , the quantity demanded of wine is 1,250 bottles. When the price increases to , the quantity demanded of wine is 750 bottles. Then the price elasticity of demand for wine is: 3/4, 2/5, 1/3, 4/3, suppose that ketchup is a complement for a big mac. The price elasticity of demand for this system is calculated to be 0. 6. The total revenue from the sales of the system after the price increase is likely to a. increase b. decrease c. remain unchanged d. cannot be determined from the information given in the problem. The price of a is and the price of b is .

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