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ECON 1000 (Fall 2016 – Section 03)
Exam #1A – Answer Key
1.
I am taking ______________ of the exam.
A.
Version A
2.
One of the principle functions of money is that it serves as a “medium of exchange.” This role
could be described by recognizing that money is
A.
an asset used as payment when purchasing goods and services.
3.
When interpreting a Production Possibilities Frontier, which of the following statements is true?
D.
More than one (perhaps all) of the above answers is correct. [“B” and “C” are correct]
4.
Consider the costs of complying with bureaucratic regulations to economic decision makers in
Singapore, South Africa, and Venezuela. According to the results of the “Ease of Doing
Business” study, of these three countries, such costs are:
B.
lowest in Singapore and highest in Venezuela.
5.
The Preliminary Circular Flow Diagram illustrates
C.
the movement of economic resources (i.e., factors of production and finished
goods/services) between households and firms.
6.
The Incentive Principle states that
B.
if the marginal benefit of an activity increases, then a rational person will engage in more
of the activity.
7.
The “Law of Demand” implies that
B.
demand curves should be “downward sloping.”
8.
Which of the following statements is a “Positive Statement”?
D.
Both “A” and “B” are “Positive Statements.”
9.
Which of the following countries has an economic system that is closest to “pure Capitalism”?
D.
New Zealand.
10.
Privately owned enterprises in a free market economy have a primary goal of
B.
earning as large of a profit as possible.
11.
Which of the following could NOT result in a “Change in Demand” for donuts?
D.
A decrease in the price of donuts.
12.
Amy’s Marginal Benefit from consuming coffee is
B.
positive for her first 4 cups of coffee (but negative beyond 4 cups of coffee).
13.
Amy works in an office where she can drink as much coffee as she likes for free (i.e., her total
costs and marginal costs of consuming coffee are zero for all levels of consumption). In order to
maximize her total economic surplus she should consume _____ cups of coffee per day.
B.
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14.
Between August 2014 and August 2016 there was a decrease in equilibrium price and an increase
in equilibrium quantity traded of pens. This change in the market equilibrium outcome would
result from
C.
an increase in Supply.
15.
In the opening paragraph of the textbook it was noted that Mike Ditka has suggested that football
related injuries could likely be reduced by have participants play without helmets (or at least
without facemasks on their helmets). His underlying argument
A.
relies heavily upon the Incentive Principle.
16.
“Voluntary Trade” generally makes buyers ______________ and makes sellers ______________.
A.
better off; better off.
17.
____________ has an Absolute Advantage in the production of rice, and ____________ has an
Absolute Advantage in the production of shirts.
A.
Alex; Alex
18.
Alex’s Opportunity Cost for producing a shirt is _____ units of rice.
C.
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19.
Suppose that Alex and Bob have decided to maximize their joint output through “specialization in
production.” Further, they want to produce a total of 6 shirts each day. It follows that
C.
Alex should make 2 shirts and Bob should make 4 shirts.
20.
Consider the following two statements. Statement 1: “Cash payments increase the welfare of
recipients to a greater degree than do transfers-in-kind of equal cash value.” Statement 2: “Tariffs
and import quotas usually reduce the general welfare of society.” Most economists would
C.
agree with both Statement 1 and Statement 2.
21.
Which markets are represented in the Basic Circular Flow Diagram?
C.
Markets for “Goods and Services” and markets for “Factors of Production.”
22.
In this market there would be _______________________ at a price of $20.
B.
“excess demand”
23.
In equilibrium, ________ units would be traded each at a price of ________.
B.
500; $40.
24.
Focusing on the “400th unit,” the Buyer’s Reservation Price for this unit is _____ and the Seller’s
Reservation Price for this unit is _____.
C.
$48; $32.
25.
One of the three primary types of “economic incentives” is “coercion,” which could be described
as
D.
the use or threat of force or incarceration to obtain compliance.
26.
In the writings of Karl Marx, the “bourgeoisie” referred to the _______________ and the
“proletariat” referred to the _______________.
C.
business owners; working class.
27.
Ralphie got a Red Ryder BB Gun for Christmas last year. He has decided to sell this item to
Grover for $40 in order to have some money to buy a new baseball glove. When selling his BB
Gun to Grover, Ralphie is exercising which of the following sub-dimension of property rights?
B.
The right to transfer.
28.
Based upon the research findings discussed by Dr. Kaitlyn Harger during her guest lecture, the
opening of a new professional sports facility will likely
C.
not have any impact (positive or negative) on the number of new businesses in the area.
29.
Demand for “Good Y” increases as a result of an increase in consumer income. This observation
implies that “Good Y” is
C.
a normal good.
30.
The set of rules and methods put in place by a society to answer (directly or indirectly) the three
fundamental economic questions of “What to produce?,” “How to produce it?,” and “For whom
to produce it?” can be described as
A.
an economic system.
31.
_________________ refers to the natural and undirected emergence of order out of chaos.
D.
Spontaneous Order
32.
Economics is
A.
the social science that studies decision making in the face of scarcity and the resulting
impact of such decisions on both society as a whole and on the individual members
therein.
33.
Socialism is defined as an economic system in which
A.
the means of production are owned by the government.