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Quiz 1 in Principles of Microeconomics (Econ 2) from Drake University, Summer 2007 - Prof., Quizzes of Microeconomics

Drake UniversityMicroeconomics
Prof. William M. Boal

A quiz in principles of microeconomics (econ 2) from drake university, summer 2007. The quiz covers various topics such as rational choice, production and trade, economic capital, production functions, and comparative advantage. It includes multiple-choice questions and problems that require calculating percent changes, areas, and production functions.

Typology: Quizzes

Pre 2010

Uploaded on 07/30/2009

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Principles of Microeconomics (Econ 2) Signature:
Drake University, Summer 2007
William M. Boal Printed name:
QUIZ #1 VERSION A
“Introduction, Math Review, Production and Trade”
June 7, 2007
INSTRUCTIONS: This quiz is closed-book, closed-notes. Simple calculators are permitted, but graphing calculators or
calculators with alphabetical keyboards are NOT permitted. Numerical answers, if rounded, must be correct to at least 3
significant digits. Point values for each question are noted in brackets. Maximum total points are 100.
I. Multiple choice: Circle the one best answer to each question. [2 pts each: 18 pts total]
(1) In economics, to be rational means to
a. use mathematics for decision-making.
b. do the best one can with what one has.
c. maximize one’s income.
d. live for the future.
(2) Rational choice implies pursuing an activity up to the
point where the opportunity cost of the last unit is
a. about to fall below its benefit.
b. about to exceed its benefit.
c. much less than its benefit.
d. much more than its benefit.
(3) Which of the following is a positive statement?
a. “The state government should cut property
taxes.”
b. “The federal government needs to do more
about global warming.”
c. "An increase in the gasoline tax would reduce
gasoline consumption."
d. “The government ought to pay for health
insurance for people who cannot afford it.”
(4) In the graph below, variables X and Y have
a. a positive relationship.
b. a negative relationship.
c. no relationship.
d. a positive relationship or a negative relationship,
depending on the value of X.
Y
X
pf3
pf4
pf5

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Download Quiz 1 in Principles of Microeconomics (Econ 2) from Drake University, Summer 2007 - Prof. and more Quizzes Microeconomics in PDF only on Docsity!

Principles of Microeconomics (Econ 2) Signature: Drake University, Summer 2007 William M. Boal Printed name:

QUIZ #1 VERSION A

“Introduction, Math Review, Production and Trade”

June 7, 2007

INSTRUCTIONS: This quiz is closed-book, closed-notes. Simple calculators are permitted, but graphing calculators or calculators with alphabetical keyboards are NOT permitted. Numerical answers, if rounded, must be correct to at least 3 significant digits. Point values for each question are noted in brackets. Maximum total points are 100. I. Multiple choice: Circle the one best answer to each question. [2 pts each: 18 pts total] (1) In economics, to be rational means to a. use mathematics for decision-making. b. do the best one can with what one has. c. maximize one’s income. d. live for the future. (2) Rational choice implies pursuing an activity up to the point where the opportunity cost of the last unit is a. about to fall below its benefit. b. about to exceed its benefit. c. much less than its benefit. d. much more than its benefit. (3) Which of the following is a positive statement? a. “The state government should cut property taxes.” b. “The federal government needs to do more about global warming.” c. "An increase in the gasoline tax would reduce gasoline consumption." d. “The government ought to pay for health insurance for people who cannot afford it.” (4) In the graph below, variables X and Y have a. a positive relationship. b. a negative relationship. c. no relationship. d. a positive relationship or a negative relationship, depending on the value of X.

Y

X

Drake University, Summer 2007 Page 2 of 7 (5) "Economic capital" includes a. savings in bank accounts. b. shares of stock in private corporations. c. machinery, buildings, and computers. d. all of the above. (6) Is the production function below characterized by diminishing returns to labor input? a. Yes, for all levels of labor input. b. No, not for any levels of labor input. c. Yes, but only after 100 hours of labor. d. Yes, but only before 100 hours of labor. (7) Consider the production possibility curve shown below. As more of either good is produced, its opportunity cost a. decreases. b. increases. c. first increases, then decreases. d. remains constant.

100 Hours of labor

Concrete poured

Manufactured

goods

Agricultural goods

Drake University, Summer 2007 Page 4 of 7 (4) [Percent change of product: 4 pts] The amount of money that a consumer spends on a good equals the price of the good times the quantity purchased. Suppose the price of peaches falls by 3 percent and the quantity purchased rises by 4 percent. a. Does the amount of money spent on peaches increase or decrease?

b. By approximately how much? %

(5) [Percent change of ratio: 4 pts] Per-capita income equals the total income in a country divided by population. Suppose the total income rises by 4 percent and population rises by 1 percent. a. Does per-capita income increase or decrease?

b. By approximately how much? %

(6) [Area: 6 pts] Consider the graph below. 0 1 2 3 4 5 6 7 8 0 1 2 3 4 5 6 7 8 9 10

B

A

C

a. Compute the area of triangle A. b. Compute the area of rectangle B. c. Compute the area of trapezoid C.

Drake University, Summer 2007 Page 5 of 7 (7) [Production functions: 14 pts] A work crew plants flowers, with the following hourly production function. Number of workers Number of flowers planted Average Product Marginal Product 0 workers 0 flowers flowers per worker 3 workers 30 flowers flowers per worker flowers per worker 6 workers 54 flowers flowers per worker flowers per worker 9 workers 72 flowers flowers per worker a. [6 pts] Compute the work crew’s average product (AP) with 3, 6, or 9 workers, and place your answers in the unshaded cells of the third column above. b. [6 pts] Compute the work crew’s marginal product (MP) when labor input increases from 0 to 3 workers, from 3 to 6 workers, or from 6 to 9 workers and place your answers in the unshaded cells of the fourth column above. c. [2 pts] Is the work crew's production function characterized by diminishing returns to their labor input? Answer “yes” or “no.” (8) [Production possibility curves: 12 pts] The graph below shows a country’s production possibility curve. Currently, the country is at point A, where the slope of the production possibility curve is -4. a. Suppose this country wants to produce 20 more units of education. Will this require the country to increase or decrease production of other goods? b. By how much? units of other goods c. Alternatively, suppose this country wants to produce 20 more units of other goods. Will this require the country to increase or decrease production of education? d. By how much? units of education e. What is this country’s opportunity cost of a unit of education? units of other goods f. What is this country’s opportunity cost of a unit of other goods? units of education

Education

Other goods

A

Drake University, Summer 2007 Page 7 of 7 III. Critical thinking: Write a one-paragraph essay answering one question below (your choice). Full credit requires correct economic reasoning, legible writing, good grammar including complete sentences, and accurate spelling. [6 pts] (1) Consider the following statement. "Every trade has a winner and a loser." Do you agree or disagree? Justify your answer with an example. (2) Describe a production process with which you are familiar, either as a business owner, as an employee, or just doing unpaid work at home. What is the output of the production process? Give an example of a labor input used in the process. Give an example a capital input used in the process. Give an example of a materials input used in the process. Which question are you answering, (1) or (2)? _________. Please write your answer below, continuing on the back if necessary. [end of quiz]