Economics Midterm Multiple Choice

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THE UNIVERSITY OF HONG KONG
School of Economics & Finance
2010 Spring Semester, First Midterm Examination
Economics: ECON1001 (J and K)
Introduction to Economic I

Version A

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February 27, 2009

A note from the instructor:

9:00-10:00a.m.

We expect students to nish all the multiple choice questions in 60 minutes,

i.e., one minute per question on average. CHOOSE THE BEST AVAILABLE ANSWER. Try not to allocate more than 2 minutes on any single MC question. Please also try to work on the apparently easier questions rst. This strategy should help you lower the risk of losing a lot of marks by getting stuck in one or two of the more dicult questions. If you are done early, try to double check your answers. To avoid disturbance to other students, NO STUDENT IS ALLOWED TO LEAVE EARLY.

Please mark the best answer to each multiple choice question on the scantron answer sheet provided. DO NOT MARK YOUR MC ANSWERS ON THIS QUESTION PAPER, NO SYMPATHY WILL BE GIVEN IF YOU FAIL TO PUT ALL YOUR MC ANSWERS ON THE SCANTRON ANSWER SHEET. On the scantron sheet, please write down your University ID number and your name, and also ll in the boxes on the upper right corner. One point will be deducted if you fail to include your name, another point for your failure to include your University ID, and another point for your failure to mark your University ID on the scantron sheet correctly. As a check for your reading of this instruction, you will be awarded 1 point if you mark E for question 50 on the scantron sheet.

Please turn o your mobile phone.
NO CHEATING PLEASE!! The one seating next to you should NOT have the same version of exam as yours. If two students sitting next to each others are found to have the same version of exam paper, they are BOTH CONSIDERED CHEATING. To help reduce the temptation to cheat, the invigilators will keep close watch of students during the exams. For students who must use the washroom during the exam, the invigilators may record their names and student IDs and take away their mobile phone during their washroom visit.

1. Which version of the exam paper do you have?
(a) version A.
(b) version B.
2. Which of the followings are NOT an example of scarcity?
(a) Tom has $8. He wants to buy comic books which cost $5 and a hamburger which costs $6. (b) William wants to spend the weekend on camping and spend the same weekend on business strategy meeting.

(c) A society wants to provide improved health care, explore the space, clean polluted lakes and rivers, and so on.
(d) None of the above
3. When deciding whether to pursue an activity further, which of the following costs and/or benets are relevant?
(a) average benet, marginal benet
(b) marginal costs, average costs
(c) marginal costs, marginal benet
(d) sunk costs, xed costs
(e) all of the above
4. Suppose the most you would be willing to pay for a used-laptop is $5000, but you buy one at eBay for $2050 (shipping is free). The economic surplus of buying the laptop at eBay is: (a) $5000
(b) $4950
(c) $3000
(d) $2950
(e) $2050
5. A rational person always chooses the actions that yield the (a) largest prot
(b) largest economic surplus
(c) largest sunk cost
(d) largest average benet
(e) largest marginal cost
6. Leonard has purchased a non-refundable and non-transferable $100 ticket to attend a Savage Garden concert on Sunday. Subsequently, he receives a grand opening invitation card from the owner of science museum. There is no expense for him to go to the museum. If he uses cost-benet analysis to choose between going to the concert...
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