Download Principles of Microeconomics Quiz #1 - Drake University, Summer 2001 - Prof. William M. Bo and more Quizzes Microeconomics in PDF only on Docsity!
Principles of Microeconomics Signature: (Econ 002) Printed name: Drake University, Summer 2001 William M. Boal ID number:
QUIZ
“Introduction; Math Review; Production and Trade”
INSTRUCTIONS: This exam is closed-book, closed-notes, but calculators are 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. [4 pts each: 20 pts total]
(1) The common feature of all kinds of economic models is a. that every exchange has a winner and a loser. b. money is the most important thing in life. c. the assumption that individuals make the best use they can of limited resources. d. free competition.
(2) Economists focus on how people’s behavior is affected by their a. traditions. b. values and tastes. c. information. d. circumstances.
(3) Rational behavior implies doing something up to the point where the opportunity cost of the last unit done a. is much less than its benefit. b. is much more than its benefit. c. begins to fall below its benefit. d. begins to exceed its benefit.
(4) According to the production function shown below, as more labor is applied, the marginal product of labor a. decreases. b. increases. c. first increases, then decreases. d. remains constant.
(5) In the production possibility curve shown below, as more of either good is produced, its opportunity cost e. decreases. f. increases. g. first increases, then decreases. h. remains constant.
education
Consumer goods p.p.curve
Number of workers
Number of packages shipped
Drake University, Summer 2001 Page 2 of 3
II. Problems: Insert your answer to each question below in the box provided. Feel free to use the margins for
scratch workonly the answers in the boxes will be graded. Work carefullypartial credit is not normally given for questions in this section.
(1) [Midpoint formula for percent change: 15 pts] Suppose the population of a city grew from 1 million in 1950 to 5 million in 2000.
a. Compute the percent change in population using 1950’s population as a base.
b. Compute the percent change in population using 2000’s population as a base.
c. Compute the percent change in population using the midpoint formula. %
(2) [Production functions: 26 pts] Melissa services computers, with the production function shown in the first two columns below. Hours worked Number of computers serviced
Average Product Marginal Product
computers per hour
2 6 computers
per hour computers per hour
4 8 computers
per hour computers per hour
6 9 computers
per hour
a. [9 pts] Compute Melissa’s average product (AP) when she works 2, 4, or 6 hours, and place your answers in the unshaded cells of the third column above. b. [9 pts] Compute Melissa’s marginal product (MP) when she increases her labor input from 0 to 2 hours, from 2 to 4 hours, or from 4 to 6 hours and place your answers in the unshaded cells of the fourth column above. c. [8 pts] Is Melissa’s production function characterized by diminishing returns to her labor input? Answer “yes” or “no” and explain your reasoning below.
Drake University, Summer 2001 Page 4 of 3
a. [5 pts] Northland's opportunity cost of a unit of agricultural goods is how many units of manufactured goods?
units of manufactured goods b. [5 pts] Southland’s opportunity cost of a unit of agricultural goods is how many units of manufactured goods?
units of manufactured goods c. [5 pts] Northland's opportunity cost of a unit of manufactured goods is how many units of agricultural goods?
units of agricultural goods d. [5 pts] Southland’s opportunity cost of a unit of manufactured goods is how many units of agricultural goods?
units of agricultural goods e. [5 pts] Which country has a comparative advantage in agricultural goods?
f. [5 pts] Which country has a comparative advantage in manufactured goods?
g. [9 pts] Fill in the blanks: Both countries can have combinations of goods outside their individual production possibility curves if ___________________________ produces one unit of agricultural goods for___________________________, which produces ______________ unit(s) of manufactured goods in return.
[end of quiz]
