ECON 1100 Global Economics Section 03 Exam 1 Fall 2009 Version C Multiple Choice Questions 2 12 points each 1 The states that a person is more likely to take an action if its benefit rises and less likely to take an action if its cost rises a Cost Benefit Principle b Incentive Principle c Principle of Comparative Advantage d Principle of Absolute Advantage 2 The current economic system of Spain is best described as a Pure Capitalism b a Mixed Economy c Pure Socialism d Perfect Communism 3 refers to the rights related to the ability of an individual to seek employment in the occupation and location of their choosing a Coercion b Economic Competitiveness c Freedom of Association d Freedom of Mobility and Employment 4 is are the currently available stock of machines factories and inventories of finished goods available as industrial capital as well as social capital such as transportation infrastructure communications infrastructure and educational institutions a Natural Assets b Produced Assets c Human Capital d Idle Capital 5 Armen Alchain and Gordon Tullock a were the first to recognize that imposing rent controls would lead to a decrease in the quantity quality of available housing units b wrote a letter to FDR in 1939 advising him to have the U S government assist physicists in the U S working on research related to the creation of a uranium bomb c argued that automobile accident rates could be decreased by installing five point harness seat belts and improved airbags in every car d argued that automobile accident rates could be decreased by installing a sharp irremovable foot long iron spike to the steering wheel of every car 6 refers to problems that arise because of difficulties associated with getting workers to take actions that are best for the owners of a firm a The Principal Agent Problem b The Mixed Economy Consensus c The Principle of Comparative Advantage d Coercion 7 A Self Interested person a cares only about their own well being and does not care at all about the well being of others b does not care about the well being of anyone including themselves c cares about their own well being more than the well being of others d cares about the well being of others more than their own well being 8 Privately owned enterprises in a free market economy have a primary goal of a damaging the environment b providing maximum benefits to the consumers of their products c making sure that their workers are earning a living wage d earning as large a profit as possible 9 refers to the degree to which decision makers in an economy experience a real system that differs from the nominally defined system a The Distribution of Income b Economic Freedom c Economic Competitiveness d Corruption 10 Voluntary Trade generally a makes both parties to the trade better off b makes both parties to the trade worse off c makes buyers better off but sellers worse off d makes sellers better off but buyers worse off 11 In which of the following countries do individuals enjoy the least amount of Economic Freedom a New Zealand b Hong Kong c Singapore d Mexico 12 The restriction that all workers in the United States must be paid at least 7 25 per hour is an example of a a law which restricts the behavior of market participants b a procedure which restricts the behavior of firms c a custom or tradition which has a substantial impact on the labor market d an organizational rule which makes all members of society better off 13 In 2002 High School graduates earned 15 150 per year more than non High School graduates If this difference had instead been 9 700 per year then we would expect a more people to stay in school and earn a High School diploma b fewer people to stay in school and earn a High School diploma c nobody to change their behavior in regards to High School graduation d the government to pass a law requiring everyone to stay in school until the age of 18 14 Under Command Planning a the government directly controls all economic activity and nearly all production takes place in government owned enterprises b the government relies upon the voluntary response of the private sector to a set of guidelines jointly formulated by government industry and labor c rational utility maximizing consumers and profit maximizing firms freely decide which goods to trade and in what quantities d None of the above answers is correct 15 traces its philosophical roots to the work of 19th Century Philosopher Karl Marx a Capitalism b Communism c Socialism d The Mixed Economy 16 Lou manages a fast food Mexican restaurant While working the register Pete sometimes doesn t charge his friends for tacos when they come to the restaurant This situation is an example of a A Company Union making workers better off b The Principle of Comparative Advantage c A Principal Agent Problem d Indicative Planning 17 In a modern economy the behavior of economic decision makers is restricted by a both formal rules and informal customs b formal rules but not by informal customs c informal customs but not by formal rules d neither formal rules nor informal customs 18 With which of the following statements is there general agreement among most economists a Cash payments increase the welfare of recipients to a greater degree than do transfers in kind of equal cash value b The U S should eliminate agricultural subsidies c Trade restrictions usually reduce general economic welfare d All of the above answers are correct 19 refer s to the skills education and training which individuals in the labor force possess a A Labor Organization b Human Capital c Produced Assets d Natural Assets For Questions 20 though 22 consider a society facing the Production Possibilities Curve illustrated below Pumpkins 1 350 E C 1 000 800 500 D 375 A B Footballs 0 0 150 210 300 20 Which of the following combinations of output is feasible and efficient a A 300 Footballs and 500 Pumpkins b B 150 Footballs and 375 Pumpkins c C 210 Footballs and 1 000 Pumpkins d More than one of the above answers is correct 21 If this society wanted to produce 210 Footballs then the maximum number of Pumpkins which they could produce would be a exactly 1 000 Pumpkins b exactly 800 Pumpkins c exactly 500 Pumpkins d fewer than 500 Pumpkins 22 Consider the three combinations of output A D and E illustrated above Of these three output combinations the Opportunity Cost of Producing a Football is greatest a at point A b at point D c at point E d None of the above answers is necessarily correct
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