ECON 1100 – Global Economics (Section 08) Exam #1 – Spring 2010 (Version A) – Answer Key Multiple Choice Questions (212 points each): 1. Which of the following is NOT one of the “Three Basic Economic Questions” that every society must address? a. “How can we guarantee that all individuals in society have relatively equal levels of income?” 2. A “Rational Decision Maker” should c. take an action if and only if the Marginal Benefit of the action is at least as great as the Marginal Cost of the action. 3. The Gini-Coefficient provides a quantitative measure of a. the degree of income equality/inequality within a society. 4. When considering potential government policies, it is important to recognize that b. 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. 5. A.C. and Zack produce surfboards and oranges. A.C.’s opportunity cost of producing a surfboard is lower than Zack’s opportunity cost of producing a surfboard. The _________________ suggests that they can increase their total output of these two goods if A.C. focuses his production on surfboards while Zack focuses his production on oranges. a. Principle of Comparative Advantage 6. Socialism refers to an economic system in which c. the means of production are owned by the government. 7. In 2004 tuition at a typical private High School was $11,450 per year. If this tuition had instead been $8,500, then we would expect c. more people to attend private High Schools. 8. _____________ is/are “the skills, education, and training which individuals in the labor force possess.” c. Human Capital 9. Ed and Fred produce Raincoats and Shirts. In a single day, Ed can produce either 40 Raincoats or 10 Shirts, while Fred can produce either 30 Raincoats or 20 Shirts. Based upon this information, we know that a. Ed has an Absolute Advantage in the production of Raincoats.10. “Voluntary Trade” generally c. makes both parties to the trade better off. 11. Under “Indicative Planning” b. the government relies upon the voluntary response of the private sector to a set of guidelines jointly formulated by government, industry, and labor. 12. Company Unions d. More than one of the above answers is correct. 13. Which of the following output combinations is “unattainable” or “not feasible”? c. “C” (210 Tanks and 1,000 bushels of Wheat). 14. If this society wanted to produce 900 bushels of Wheat, then their maximum possible output of Tanks would be __________ units. a. greater than 160 but less than 210 15. Supposing that this society is producing an efficient combination of output, the “opportunity cost of producing the 60th Tank” is ______________ the “opportunity cost of producing the 300th Tank.” c. less than 16. _____________ is the subfield of economics that compares the structure and performance of different types of economic organization. d. Comparative Economic Systems 17. Anthony attended the Atlanta Hawks-San Antonio Spurs basketball game on Wednesday, January 27, 2010. His Total Benefits from doing so were $140, while his Total Costs from doing so were $100. From this information alone, it follows that b. his Economic Surplus from attending the game was ($140)-($100)=($40). 18. The “Sierra Club” is an example of b. a Non-Governmental Organization. 19. One of the distinct property rights discussed in lecture was the “Disposal Right,” which refers to the right c. to exchange or sell a resource at a price deemed appropriate by the owner. 20. Mike states that, “The face value of a pair of tickets to Super Bowl XLIV is $2,000. At such a high price, no rational person would want to go to the game.” The primary problem with this claim is that it: b. only focuses on one particular cost and ignores the benefits of going to the Super Bowl.21. In 2006, the value of the Gini-Coefficient in Canada was 0.32, while the value of the Gini-Coefficient in Belgium was 0.28. These values directly suggest that b. incomes are distributed “more equally” in Belgium than in Canada. 22. ___________ traces its philosophical roots to the work of the 19th Century German Philosopher Karl Marx. c. Communism 23. In 2006 the U.S. government paid a $5 million reward to informants who provided information which led to the successful killing of terrorist Khadaffy Janjalani in the Philippines. In this example the U.S. government used _______________ to obtain the desired information. d. a Material Incentive 24. The “Environmental Sustainability Index” discussed in the textbook and lecture d. More than one of the above answers is correct. 25. Which of the following is an example of a “Produced Asset”? a. The Kia Motors plant which recently opened in West Point, GA. 26. In which country listed below do individuals enjoy the greatest amount of “Economic Freedom”? a. Singapore. 27. Pete enjoys going to the movies. In January he saw 4 movies in the theatre. His Marginal Benefit of the 4th movie was $10, while his Marginal Cost of the 4th movie was $12. Based upon this information alone, his Economic Surplus c. would have been larger if he had instead gone to only 3 movies. 28. Woody spends each hour of his working day either fixing computers or growing corn. In order to increase his output of corn he must spend more time growing corn and less time fixing computers (thereby decreasing the number of computers he is able to repair). This scenario illustrates that he c. faces a tradeoff between corn output and computer repairs, since his labor time is scarce. 29. In a modern economy the behavior of economic decision makers is restricted by c. both “formal rules” and “informal customs.” 30. The Lorenz Curve provides a direct graphical illustration of c. the distribution of income within a society. 31. Economics is the a. social science that studies decision making in the face of scarcity, and the implications of such decisions on individuals and society.32. ___________________ the rights related to the ability of an individual to seek work in the occupation and location of their choosing. d. “Freedom of Mobility and Employment” refers to 33. The “economic institution” of “Households” a. are the ultimate consumers of most finished goods/services. 34. Which of the following
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