AED Economics 200
Principles of Food and Resource Economics
Spring 2004
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First Midterm Examination from 2004
Write your name in the upper right-hand corner of this page. The answer to
each question should be circled clearly. |
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1. Choice is fundamentally a consequence of a. living in a world where there are both goods and bads. b. how wealthy one is. c. scarcity.
d.
opportunity cost. 2. The opportunity cost of attending college is a. the money one spends on college tuition, books, and so forth. b. the highest valued alternative one forfeits to attend college. c. the least valued alternative one forfeits to attend college.
d.
equal to the salary one will earn when one graduates from college. 3. The condition in an economy that makes a “rationing device” a necessity is the fact that a. the economy is organized around free markets. b. the economy is centrally planned by the government. c. scarcity exists.
d.
there are fewer types of goods than there are people in the economy. 4. Scarcity means a. wants are greater than the limited resources available to satisfy these wants. b. wants are less than the limited resources available to satisfy these wants. c. resources are infinite. d. wants are limited.
e.
both c and d 5. Which of the following is an example of the fallacy of composition? a. Juan washed his car in the morning and it rained in the afternoon, which means Juan’s washing his car caused it to rain. b. Ted gets home from work faster by driving through the city streets at 5:00 p.m. rather than taking the freeway, which means that everyone will get home faster by driving through the city streets at 5:00 p.m. rather than taking the freeway. c. Maria hit her head on the cabinet door and now has a lump on her head at the point of impact, which means the blow to the head caused the lump. d. Joan wished her brother bad luck during an argument last night and he wrecked his car today, which means Joan’s wishing her brother bad luck caused him to wreck his car.
6.
What does it mean if a person makes a “decision at the margin”? a. The person compares additional benefits and additional costs when deciding what to do. b. The person weighs the good against the bad and then decides what to do. c. The person is more likely to say yes than to say no. d. The person compares marginal benefits and total costs and then decides what to do.
e.
The person makes a decision based on a condition.
7. Both country 1 and country 2 are located on their respective PPF, but country 1 produces twice the output that country 2 produces. It follows that a. country 1’s PPF lies further to the right than country 2’s PPF. b. country 1 has a smaller population than country 2. c. country 1 has a bigger population than country 2. d. country 1 practices capitalism and country 2 practices socialism.
e.
none of the above 8. If the price a buyer pays for a good is $40 and the maximum price she would be willing and able to pay is $43, then __________ is __________. a. producers’ surplus; $83 b. consumers’ surplus; $83 c. consumers’ surplus; $3 d. producers’ surplus; $3
e.
consumers’ surplus; $40 9. Points inside (or below) the PPF are a. unattainable. b. attainable and efficient. c. attainable but inefficient.
d.
attainable and neither efficient nor inefficient. 10. Consider two points on the PPF: point A, at which there are 50 oranges and 100 apricots, and point B, at which there are 51 oranges and 98 apricots. If the economy is currently at point B, the opportunity cost of moving to point A is a. 2 apricots. b. 1 orange. c. 98 apricots.
d.
3 oranges. 11. Consider two straight-line PPFs. They have the same vertical intercept, but curve I is flatter than curve II. The opportunity cost of producing the good on the horizontal axis a. is greater along curve I. b. is greater along curve II. c. is the same along both curves.
d.
cannot be compared for the two curves without more information. 12. Which of the following is an illustration of the law of increasing opportunity costs? a. As more cars are produced, the opportunity cost of each additional car is greater than for the preceding unit. b. As more cars are produced, the opportunity cost of each additional car is less than for the preceding unit. c. As more cars are produced, the opportunity cost of each additional car is the same as for the preceding unit. d. People pay higher prices for cars the higher the costs of producing cars.
13. Economic growth causes the PPF to a. shift inward. b. shift outward. c. remain constant. d. go from a straight line to a curve.
14. In the United States, farming today is __________ productive compared to ninety years ago, resulting in there being __________ farmers today than at the turn of the century. a. about as; fewer b. about as; more c. much more; fewer
d.
much more; more 15. Technological __________ in American agriculture has __________ other types of employment. a. improvement; drawn labor away from b. improvement; released labor to go to c. stagnation; drawn labor away from
d.
stagnation; released labor to go to 16. In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, John can produce either 8 loaves of bread or 8 pounds of butter. The opportunity cost of producing 1 pound of butter is a. 1/3 hour for Andy and 1 hour for John. b. 1 hour for Andy and 1 hour for John. c. 3 loaves of bread for Andy and 1 loaf of bread for John. d. 1/3 loaves of bread for Andy and 1 loaf of bread for John.
e.
none of the above 17. If the law of increasing opportunity costs is operable, and currently the opportunity cost of producing the 101st unit of good X is 5Y, then the opportunity cost of producing the 201st unit of good is X is likely to be a. less than 5Y. b. more than 1/5Y but less than 5Y. c. more than 5Y d. less than 1/5Y but more than zero.
e.
none of the above 18. At a price of $15, Marta buys 3 CD’s per month. When the price increases to $20, Marta buys 2 CD’s per month. Leah says that Marta’s demand for CD’s has decreased. Is Leah correct? a. Yes, Leah is correct. b. No, Leah is incorrect. Marta’s demand has increased. c. No, Leah is incorrect. Marta’s quantity demanded has decreased, but her demand has stayed the same. d. No, Leah is incorrect. Marta’s quantity demanded has increased, but her demand has stayed the same. e. No, Leah is incorrect. Marta’s quantity demanded has decreased and her demand has increased.
19. If an increase in income results in an increase in the demand for chicken, then chicken is a. a neutral good. b. a luxury good. c. a normal good.
d.
an inferior good. 20. A decrease in the number of buyers in an area will result in a a. movement up the demand curve. b. movement down the demand curve. c. leftward shift in the demand curve.
d.
rightward shift in the demand curve. 21. As the price of good X rises, the demand for good Y falls. Therefore, goods X and Y are a. substitutes. b. normal goods. c. complements. d. inferior goods.
e.
none of the above 22. An advance in technology causes a. a rightward shift in the supply curve. b. a leftward shift in the supply curve. c. the supply curve to go from upward sloping to vertical.
d.
the supply curve to go from vertical to upward sloping. 23. At a price for which quantity demanded exceeds quantity supplied, a __________ is experienced, which pushes the price __________ toward its equilibrium value. a. surplus; downward b. surplus; upward c. shortage; downward
d.
shortage; upward 24. If demand falls by a greater amount than supply falls, then equilibrium price __________ and equilibrium quantity __________. a. rises; rises b. rises; falls c. falls; rises d. falls; falls |
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Exhibit 4.4 wouldn't reproduce for this web page - sorry
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