ECON 2002.01 Study Guide - Midterm Guide: Opportunity Cost, Scantron Corporation, Multiple Choice
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Macro Econ2002.01 – Midterm 1 – SP14 Name _______________________________
Multiple choice – Mark the best answer for each question on the scantron form. You may write on this
exam. You may use a calculator provided it is not part of a phone, tablet or personal computer. You
must mark answers in pencil.
1) Scarcity refers to the situation in which
A) unlimited wants exceed limited resources.
B) unlimited resources exceed limited wants.
C) a country's population is larger than its resource base.
D) a nation's poverty level increases faster than its population.
2) Opportunity cost is defined as
A) the benefit of an activity.
B) the monetary expense associated with an activity.
C) the highest valued alternative that must be given up to engage in an activity.
D) the total value of all alternatives that must be given up to engage in an activity.
3) In a market economy, who decides what goods and services will be produced?
A) only the producers
B) only consumers
C) consumers and producers
D) the government
4) Which of the following is a positive economic statement?
A) People should not buy imported fruits and vegetables.
B) The government should subsidize solar power for homeowners.
C) The minimum wage law causes unemployment.
D) The number of work visas should not be limited by the government.
5) A production possibilities frontier with a ________ shape indicates increasing opportunity
costs as more and more of one good is produced.
B) bowed inward
C) bowed outward
D) perfectly horizontal
The figure above shows the production possibilities frontier for Vidalia, a nation that produces
two goods, roses and orchids.
6) What is the opportunity cost of one dozen orchids?
A) 0.4 dozen roses
B) 2.5 dozen roses
C) 7.25 dozen roses
D) 16 dozen roses
7) According to the production possibility model, if more resources are allocated to the
production of physical and human capital, then all of the following are likely to happen except
A) fewer goods will be produced for consumption today.
B) the production possibilities frontier will shift outward in the future
C) future economic growth is enhanced.
D) the country's total production will fall.
8) Adam Smith's ________ refers to the process by which individuals acting in their own self-
interest bring about a market outcome that benefits society as a whole.
A) Utopian society
B) comparative advantage model
C) invisible hand
D) survival of the fittest theory
9) The law of demand implies, holding everything else constant, that as the price of yogurt
A) increases, the demand for yogurt will increase.
B) increases, the quantity of yogurt demanded will decrease.
C) decreases, the quantity of yogurt demanded will decrease.
D) decreases, the demand for yogurt will increase.
10) Which of the following would cause an increase in the supply of cheese?
A) a decrease in the price of wine (assuming that cheese and wine are complements)
B) an increase in the price of cheese
C) an increase the price of a product that producers sell instead of cheese
D) an increase in the number of firms that produce cheese
Macro econ2002. 01 midterm 1 sp14 name _______________________________ Multiple choice mark the best answer for each question on the scantron form. You may use a calculator provided it is not part of a phone, tablet or personal computer. Assume that the graphs in this figure represent the demand and supply curves for ramen noodles, an inferior good. Which panel describes what happens in this market as a result of an increase in income: panel (a, panel (b, panel (c, panel (d) 30: the minimum wage is an example of, a subsidy for low-skilled workers, a price floor, a price ceiling, a black market, when sophie, a french citizen, purchases a dell computer in paris that was produced in. Texas, the purchase is: both a u. s. and an french import, a u. s. import and an french export, a u. s. export and an french import, neither an export nor an import for either country.