ECON 1100 – Global Economics (Section 08) Exam #1 – Spring 2010 (Version B) 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. “What mix of goods/services should we produce?” b. “Which productive resources should be used to produce which goods/services?” c. “How can we guarantee that all individuals in society have relatively equal levels of income?” d. None of the above answers are correct (since each choice is one of the “Three Basic Economic Questions”). 2. A “Rational Decision Maker” should a. 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. b. take every action for which there is a positive Marginal Benefit. c. not take any action for which there is a positive Marginal Cost. d. More than one of the above answers is correct. 3. The Gini-Coefficient provides a quantitative measure of a. the rate at which prices are increasing in an economy over time. b. the rate at which a society is depleting its natural resources. c. the degree of income equality/inequality within a society. d. the level of crime in a society. 4. When considering potential government policies, it is important to recognize that a. most individuals in a modern society care only about themselves (and do not care at all about the well-being of other people). b. voluntary trade generally makes buyers better off but sellers worse off. c. people never behave “rationally.” d. 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. Cost-Benefit Principle b. Incentive Principle c. Principle of Comparative Advantage d. Principle of Absolute Advantage6. Socialism refers to an economic system in which a. the means of production are privately owned and operated for a profit. b. the means of production are owned by the government. c. the means of production are collectively owned by all of the people in the society (without intervention by the government). d. all the gains from economic activity are distributed equally among all of the people in the society. 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 a. fewer people to attend private High Schools. b. more people to attend private High Schools. c. more people to drop out of school before getting a High School diploma. d. More than one of the above answers is correct. 8. _____________ is/are “the skills, education, and training which individuals in the labor force possess.” a. Human Capital b. Labor Organizations c. Natural Assets d. Produced Assets 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 a Comparative Advantage in the production of both Raincoats and Shirts. b. Ed has an Absolute Advantage in the production of Raincoats. c. Ed has an Absolute Advantage in the production of Shirts. d. More than one of the above answers is correct. 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. Under “Indicative Planning” a. the rational actions of individual, self-interested decision-makers give rise to a set of outcomes, which indirectly determines how economic resources are used. b. the government directly controls all economic activity, and nearly all production takes place in government owned enterprises. c. the government relies upon the voluntary response of the private sector to a set of guidelines jointly formulated by government, industry, and labor. d. None of the above answers are correct.12. Company Unions a. consist of members who are employed by a single enterprise, irrespective of the task they perform within the enterprise. b. consist of members who perform similar jobs or tasks, regardless of what enterprise they are employed by. c. are the predominant union structure in Japan. d. More than one of the above answers is correct. For Questions 13 though 15, consider a society facing the Production Possibilities Curve illustrated below: 13. Which of the following output combinations is “unattainable” or “not feasible”? a. “A” (150 Tanks and 375 bushels of Wheat). b. “B” (300 Tanks and 500 bushels of Wheat). c. “C” (210 Tanks and 1,000 bushels of Wheat). d. More than one of the above answers is correct. 14. If this society wanted to produce 900 bushels of Wheat, then their maximum possible output of Tanks would be __________ units. a. exactly zero b. less than 160 c. greater than 160 but less than 210 d. None of the above answers are correct. 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.” a. less than b. exactly equal to c. greater than d. None of the above answers are correct (since the graph does not convey enough information to be able to make this comparison). Wheat Tanks B A D 0 150 210 300 1,000 500 375 0 1,350 C 800 160 E 1,290 6016. _____________ is the subfield of economics that compares the structure and performance of different types of economic organization. a. Structural Econometrics b. Comparative Economic Systems c. International Trade d. Industrial Organization 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 a. it was
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