ECON 1100 – Global Economics (Section 03) Exam #1 – Fall 2008 (Version C) Multiple Choice Questions (212 points each): 1. _____________ states that a society can produce a greater amount of output when individuals focus their production on those activities for which they possess a comparative advantage. a. The Production Maximization Principle b. The Principle of Comparative Advantage c. The Incentive Principle d. The Cost-Benefit Principle 2. Economic Surplus refers to a. the outcome which arises when a society is able to produce a combination of goods beyond its Production Possibilities Curve. b. a situation in which quantity supplied is greater than quantity demanded. c. the total benefits that consumers get from purchasing goods and services. d. the difference between Total Benefits and Total Costs of an activity. 3. For the Environmental Sustainability Index discussed in class, The United States had an Index Value of 53.2 (on a 100 point scale), while Germany had an Index Value of 52.5. From these values, one should reasonably infer that a. The United States is likely to face an “energy crisis” within the next decade, while Germany is not. b. both The United States and Germany are doing horrific jobs of dealing with environmental issues. c. The United States is clearly doing an exceptional job and Germany is doing a horrible job of dealing with environmental issues. d. “the long term environmental sustainability” of the economic system in The United States and of the economic system in Germany are roughly equal to each other. 4. Hotdogs are a substitute for Hamburgers. It follows that an increase in the price of Hotdogs would a. decrease Demand for Hamburgers. b. increase Demand for Hamburgers. c. increase Demand for Hotdogs. d. More than one of the above answers is correct. 5. A “Nongovernmental Organization” may exist in order to a. provide goods/services to a particular group of individuals. b. serve as a center of common interest among its members. c. lobby the government in order to influence government policy. d. All of the above answers are correct.6. Within the last week, New England Patriots quarterback Tom Brady injured his left knee, ending his 2008 season. Also during this time there was a collision between a commuter train and freight train in Los Angeles which killed 17 people (and injured 137 others). If Tom Brady is more upset about his knee injury than about the loss of life from the train accident, then it suggests that a. Tom Brady is an irrational individual. b. Tom Brady is not as good of a person as Los Angles Mayor Antonio Villaraigosa. c. Tom Brady is a self-interested individual. d. More than one of the above answers is correct. 7. The “Principal/Agent Problem” refers to a. problems that arise because of difficulties associated with getting agents (e.g., workers) to take actions that are best for principals (e.g., firms). b. inefficiencies which result from “too little trade” taking place in a market. c. the recognition that most decision makers are “self interested.” d. the negative impact that industrial production has on the environment. 8. John attended the Atlanta Falcons-Tampa Bay Buccaneers football game on Sunday, September 14, 2008. His Total Benefits from doing so were $180, while his Total Costs from doing so were $150. It follows that a. his Economic Surplus from attending the game was negative. b. his Economic Surplus from attending the game was $30. c. his Economic Surplus from attending the game was $150. d. his Economic Surplus from attending the game was $180. 9. _________ is an economic system in which the means of production are privately owned and operated for a profit. a. Communism b. Collectivism c. Capitalism d. Socialism 10. In a “free market economy” profits a. serve as a “signaling device,” directing resources to their most valued use. b. are only earned by firms that are able to sell low quality products to consumers. c. refer to the “gain” that a buyer gets from purchasing a good/service. d. None of the above answers are correct. 11. _____________ refer(s) to “the skills, education, and training which individuals in the labor force possess.” a. Produced Assets b. Natural Assets c. Human Capital d. None of the above answers are correct.12. In order for a market outcome to be efficient it is necessary that a. it is costly for consumers to find out who is selling the good in question and at what price. b. there is only one single seller of the good in question. c. production and consumption of the good does not generate any external benefits or external costs. d. More than one of the above answers is correct. 13. Most modern economies are most accurately described as a. Mixed Economies b. Pure Capitalist Economies c. Pure Communist Economies d. Pure Socialist Economies For questions 14 and 15 refer to the graph below, which illustrates the Lorenz Curves for France and Germany in 2008. 14. Based upon this graph, we can tell that in 2008 a. average incomes were higher in France than in Germany. b. there was greater income equality in France than in Germany. c. firms earned greater profits in France than in Germany. d. the French economy was “more Socialist” than the German economy. 15. Based upon the Lorenz Curves illustrated above, we can tell that a. the value of the Gini-Coefficient for France for 2008 is smaller than the value of the Gini-Coefficient for Germany for 2008. b. the value of the Gini-Coefficient for Germany for 2008 is smaller than the value of the Gini-Coefficient for France for 2008. c. the value of the Gini-Coefficient for France decreased between 1958 and 2008. d. None of the above answers are correct. Cumulative share of total income Cumulative share of total population Lorenz Curve for Germany in 2008 0 1 1 0 Lorenz Curve for France in 200816. In 2006 the Unemployment Rate in Greece was 9.6% while the Unemployment Rate in Iceland was 3.4%. These figures directly imply that a. there is greater “Economic Freedom” in Greece than in Iceland. b. prices were increasing at a faster rate in Greece than in Iceland. c. a greater number of people were out of work in Greece than in Iceland. d. the fraction of the workforce that could not find jobs was greater in Greece than in Iceland. 17.
View Full Document
Unlocking...