Download Exam Review - Iowa State University

Leader:
Course:
Instructor:
Date:
Supplemental Instruction
Iowa State University
Shealyn
Econ 101
Peter Orazem
February 7, 2012
Exam Review
1) Write the definition to the following terms.
a) Microeconomics
b) Macroeconomics
c) Scarcity
d) Opportunity Cost
e) Market Economy
f) Command Economy
g) Principle of Increasing Opportunity Costs
h) Tariff
i) Quota
j) Technical Restriction
k) Market
l) Inferior goods
m) Normal goods
Supplemental Instruction
1060 Hixson-Lied Student Success Center  294-6624  www.si.iastate.edu
Select the best answer to each of the following questions
2) The three groups of decision makers in the economy are
a) households, business firms, and banks
b) households, business firms, and governments
c) business firms, governments, and foreign traders d) households, banks, and governments
3) The four main categories of resources are
a) labor, money, capital, and inputs b) capital, land, raw materials, and entrepreneurship
c) human capital, time, labor, and technology
d) land, labor, capital, and entrepreneurship
4) A statement that can be verified by observation is a(n)
a) positive statement b) basis of assumption c) abstraction d) normative statement
5) Which of the following is/are a normative statement(s)?
a) there should be scheduled nap time in college b) green is a better color than orange
c) you cannot successfully tickle yourself d) elephants are the only mammals that cannot jump
6) For an individual, opportunity costs
a) decrease as consumption increases b) include only the monetary costs of goods and services
c) reflect the fact that wants are unlimited d) reflect resource scarcity
7) In one week a baker can produce 1,000 cookies or 50 cakes.
The baker’s opportunity cost of an extra cookie is
a) 20 cookies b) 1/20 of a cake c) 1/50 of a cake d) 50 cakes
8) If capital is not being used efficiently, an economy cannot be operating at a point on its PPF.
a) true b) false
9) Which of the following could lead to an inward shift of the PPF?
a) increase in the cost of one good b) decrease in the utilization of resources
c) a rise in the level of technology d) law is passed that forces retirement at age 60
10) Which concept(s) can a PPF illustrate?
a) productive inefficiency b) opportunity cost c) scarcity d) law of increasing opportunity costs
11) If Steve has an absolute advantage over Roger in both sharpening pencils and making soup,
then Steve also has a comparative advantage over Roger in these activities.
a) true b) false
12) In a market economy, resources are allocated by
a) orders of authority b) absolute advantages c) prices d) PPFs
13) When households and businesses interact in product markets money
a) is flowing toward businesses b) is flowing towards households
c) is not exchanged d) is flowing to both businesses and households
14) The law of demand says that
a) the customer is always right b) price and quantity supplied are inversely related
c) price and quantity demanded are inversely related d) income and demand are directly related
15) The law of supply says that
a) supply and income are inversely related b) quantity supplied equals quantity demanded
c) price and quantity supplied are directly related d) supply follows demand
16) If a supply curve shifts rightward along a downward sloping demand curve
a) quantity supplied will increase b) quantity supplied will decrease
c) the price will increase d)quantity demanded will decrease
17) In a competitive market, when price is below the equilibrium level, the price will be driven
upwards due to
a) excess supply b) competition among suppliers c) excess demand d) technical inefficiency
18) If the market for a good is initially in equilibrium and there is a rightward shift of the
demand curve, then
a) the equilibrium price will fall b) there will be rightward movement along the supply curve
c) the supply curve will shift to the left d) the supply curve will shift to the right
19) International trade occurs whenever
a) two nations have achieved internal economic efficiency b) labor is cheaper in one country
c) one of the nations is self-sufficient d) two nations can benefit from trading with each other
20) If goods are produced abroad but consumed domestically,
a) they are imports b) there are no gains from specialization
c) they are exports d) international trade has not occurred
21) A nation should only import goods for which it has
a) lower opportunity costs than its trading partner b) absolute advantage in production
c) higher opportunity costs than its trading partner d) zero transaction costs
22) One reason why there may be a bias against free trade is that
a) those harmed by trade have a powerful incentive to lobby against it
b) people prefer domestically-produced goods to foreign-produced goods
c) the terms of trade are too low
d) the exchange rate is too high
23) The terms of trade
a) equal the equilibrium price in a competitive market
b) equals a nation’s imports minus exports
c) are equal to 1.0 in market equilibrium
d) determine how gains from international trade are distributed among countries
I will also work out problems involving trade from specialization and those that deal with PPFs
I just don’t know how to draw these graphs on a computer 