ECON 1100 – Global Economics (Section 02) Exam #1 – Fall 2009 (Version B) Multiple Choice Questions (212 points each): 1. ________________ is an economic system in which the means of production are privately owned and operated for a profit. a. Socialism b. Fascism c. Capitalism d. Communism 2. One of the six primary “economic institutions” in any society is “households.” Households are the a. primary producers of goods/services within a society. b. primary suppliers of labor within a society. c. ultimate consumers of most finished goods/services within a society. d. More than one of the above answers is correct. 3. Which of the following statements is a “Positive Statement”? a. It’s absolutely shameful that the Philadelphia Eagles will be paying Michael Vick up to $1.6 million to play for them during the upcoming NFL season. b. “Manos: the Hands of Fate” is the worst movie that has ever been made. c. President Barack Obama is 6 feet 2 inches tall. d. More than one of the above answers is correct (since more than one of the above statements is a “Positive Statement”). 4. Which of the following is one of the “Three Basic Economic Questions” that every society must address? a. “How can we reduce our carbon footprint?” b. “How can we make sure that every single person in society gets a college education?” c. “Which resources should be used for the production of which goods/services?” d. More than one of the above is one of the “Three Basic Economic Questions” that every society must address. 5. Mike and Xavier spend each workday assembling bicycles and fixing computers. Mike can assemble 10 bicycles in a single day, while Xavier can assemble 12 bicycles in a single day. Based upon this information, we know that a. Mike possesses an Absolute Advantage in assembling bicycles. b. Xavier possesses an Absolute Advantage in fixing computers. c. Mike posses a Comparative Advantage in both tasks. d. None of the above answers are correct.6. The Incentive Principle states that a. a society can produce a greater amount of total output when individuals focus their production on those activities for which they have a comparative advantage. b. a person is more likely to take an action if its benefits rises, and less likely to take an action if its cost rises. c. having more of one thing usually means getting by with less of something else. d. an action should be taken if and only if the additional benefits from taking the action are at least as great as the additional costs of doing so. For Questions 7 though 9, consider a society facing the Production Possibilities Curve illustrated below: 7. Which of the following combinations of output is “not feasible”? a. “A” (150 Tanks and 375 bushels of Corn). b. “B” (300 Tanks and 500 bushels of Corn). c. “D” (210 Tanks and 1,000 bushels of Corn). d. More than one of the above answers is correct. 8. Starting at Point “A” (i.e., 150 Tanks and 375 bushels of Corn), this society could a. only increase its output of Tanks if it decreased its output of Corn. b. only increase its output of Corn if it decreased its output of Tanks. c. increase its output of both Corn and Tanks. d. in no way increase its output of either Corn or Tanks. 9. If this society wanted to produce 1,350 bushels of Corn, then a. they would not be able to produce any Tanks. b. they could produce a positive number of Tanks, but fewer than 405 Tanks. c. they could produce up to 405 Tanks. d. None of the above answers are correct. Corn Tanks B A C 0 150 210 300 1,000 500 375 0 1,350 D 800 160 40510. Craft Unions a. have never been the “predominant union structure” in any country, at any time in history. b. consist of members who are employed by a single enterprise, irrespective of the task they perform within the enterprise. c. consist of members who perform similar jobs or tasks, regardless of what enterprise they are employed by. d. None of the above answers are correct. 11. When considering potential government policies, it is important to recognize that a. voluntary trade generally makes sellers better off but buyers worse off. b. most individuals would prefer that the government decides exactly what mix of goods and services they are able to consume. c. if a policy alters the costs and/or benefits for a decision maker, then the decision maker might change his behavior as a result of the policy. d. most individuals in a modern society care only about themselves (and do not care at all about the well-being of other people). 12. _____________ is the subfield of economics that compares the structure and performance of different types of economic organization. a. The Structure-Conduct-Performance Paradigm b. Comparative Economic Systems c. International Trade d. Money and Banking 13. Which of the following provides an example of government establishing a law which is relevant for the functioning of a modern market economy? a. Minimum Wage Laws. b. Health Codes. c. The Definition of Property and Property Rights. d. All of the above answers are correct. 14. In general, a “Rational Decision Maker” should a. take every action for which there is a positive Marginal Benefit. b. not take any action for which there is a positive Marginal Cost. c. undertake an activity at the level which makes Total Costs as small as possible. d. None of the above answers are correct. 15. Paula enjoys going to the movies. In August she saw 5 movies in the theatre. Her Marginal Benefit of the 5th movie was $16, while her Marginal Cost of the 5th movie was $10. Based upon this information alone, her Economic Surplus a. would have been smaller if she had instead only gone to 4 movies. b. was clearly maximized by going to exactly 5 movies. c. would have been larger if she had instead gone to 6 movies. d. More than one of the above answers is correct.16. Privately owned enterprises in a free market economy have a primary goal of a. producing products that are of the “lowest possible quality.” b. tricking consumers into thinking that they are “environmentally conscious.” c. exploiting workers. d. None of the above answers are correct. 17. The Gini-Coefficient provides a quantitative measure of a. the percentage of the workforce that is currently unable to find a job. b.
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