ECON 1100 – Global Economics (Section 06) Exam #1 – Summer 2011 (Version D) – Answer Key 1. One of the principle functions of money is that it serves as a “unit of account.” This role could be described by recognizing that money B. is used as a basic unit of measuring economic activity. 2. Which of the following is one of the “Three Basic Economic Questions” that every society must address? B. “What mix of goods and services should be produced?” 3. In general, a Production Possibilities Curve C. should be downward sloping and get steeper (i.e., become more negatively sloped) as one moves down the curve. 4. ____________________ broadly refers to rights related to the ability to undertake economic activity as desired (such as the choice by an individual to seek employment in the occupation and location of their choosing). C. Freedom to Engage in Economic Activity 5. When making recommendations regarding public policy, an Economist D. would possibly make both Positive Statements and Normative Statements. 6. The “Principle of Comparative Advantage” 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. 7. __________________ is the study of the behavior of a society’s economy as a whole, focusing on levels and changes in things such as unemployment rates, inflation rates, and GDP growth rates. B. Macroeconomics 8. __________ has an Absolute Advantage in the production of Corn; __________ has an Absolute Advantage in the production of Drums. A. Andy; Andy. 9. Beth’s Opportunity Cost for producing a unit of Corn is C. 5 Drums. 10. Suppose that Andy and Beth wanted to maximize their combined production by specialization. Which of the following combinations is Feasible and Efficient? B. 25 units of Corn and 25 Drums.11. Mike argues, “In 2009, average college tuition was $16,750 per year. Since these costs are so high, nobody should go to college.” The primary problem with this argument is that: A. it only focuses on one particular cost and ignores the many benefits of a college education. 12. With which of the following statements is there “general agreement” among most economists? B. “Rent controls reduce the quantity/quality of available housing.” 13. Which markets are represented in the simple “Circular Flow Diagram”? D. Markets for “Goods and Services” and markets for “Factors of Production.” 14. _________________ broadly refers to any asset that is socially and legally accepted as payment for goods or services. B. Money 15. Union membership in the U.S. A. peaked around 1955, when about one-third of the workforce was unionized. 16. Jane enjoys golfing. This past April she played 12 rounds of golf. Her Marginal Benefit for her 12th round of golf was $35, while her Marginal Cost for her 12th round of golf was $29. Based upon this information alone, we know that B. her Economic Surplus would have been smaller if she had instead played only 11 rounds of golf. 17. Kristen manages an ice cream parlor. While working the register, Brian sometimes does not charge his friends for sundaes. This is an example of A. a Principal/Agent Problem. 18. LeBron James chose to skip college and enter the NBA draft in 2003 straight out of high school. The fact that he made this choice suggests that C. he properly understood that his opportunity cost of attending college was very high. 19. Kyle has $60 to spend and wants to purchase either a new DVD player or a new MP3 player. Each item costs exactly $60, so he can only purchase one of the two goods. This scenario illustrates the basic concept that A. people face tradeoffs. 20. Trevor and Samantha spend their workdays producing computers and mowing lawns. In a single workday Trevor can either make 15 computers or mow 8 lawns. If Samantha has an Absolute Advantage in mowing lawns, then A. Samantha must be able to mow more than 8 lawns per day.21. Within the past week, the Miami Heat lost the NBA Finals in six games against the Dallas Mavericks and flooding in China resulted in the death of 97 people & the destruction of $760 million worth of property. If Miami Heat guard Dwayne Wade is more upset about the outcome of the NBA Finals than about the destruction resulting from the floods in China, then it would appear as if he C. is a self-interested individual. 22. Which of the following output combinations is both “Feasible” (i.e., “Attainable”) and “Efficient”? D. More than one (perhaps all) of the above answers is correct. 23. If this society wanted to produce 690 Computers, then their maximum output of Beef would be A. less than 120 pounds of Beef. 24. Supposing that this society is producing efficiently, it follows that the Opportunity Cost of producing the 540th Computer is C. Both (A) and (B) are correct answers. 25. One of the six primary economic institutions is “Governments.” In most modern market economies, Government C. plays a significant role by (among other things) regulating business & industry and redistributing income. 26. In order to make “good decisions,” a “rational decision maker” should D. engage in an activity if and only if the marginal benefit of the activity is greater than the marginal cost of the activity. 27. Last weekend Dennis won $1,000 at a casino in Las Vegas, Nevada. He decided to use the money to purchase a new laptop computer from Best Buy. He was able to easily transform his winnings into a new computer since money serves as a B. medium of exchange. 28. _______________________ attempt to describe how the world should be or how the world could be improved upon (by making an explicit statement on the relative desirability of an option, based upon the values of the person making the statement). B. Normative statements (but not positive statements) 29. When Mario goes to work at “Taco Bell” in the food court at the Town Center at Cobb, he is acting as C. a member of a household, supplying labor to an enterprise. 30. The highest rates of Unionization in the world are currently found in D. None of the above answers are correct.31. When considering potential government policies, it is important to recognize that C. if a policy alters the costs and/or benefits for a decision maker, then the decision maker might
View Full Document
Unlocking...