Review for Midterm I

California State University –Fullerton
Econ 201- Review for Midterm I
Dr. El Hag- Spring 2010

Multiple Choice
Identify the choice that best completes the statement or answers the question.

____1.The slope of a line that passes through the points (10, 15) and (20, 7) is a. | -5/4. | b. | -4/5. | c. | 4/5. | d. | 5/4. |

____2.If Shawn can produce more donuts in one day than Sue can produce in one day, then a. | Shawn has a comparative advantage in the production of donuts. | b. | Sue has a comparative advantage in the production of donuts. | c. | Shawn has an absolute advantage in the production of donuts. | d. | Sue has an absolute advantage in the production of donuts. |

____3.Which of the following statements is not correct? a. | Trade allows for specialization. | b. | Trade has the potential to benefit all nations. | c. | Trade allows nations to consume outside of their production possibilities curves. | d. | Absolute advantage is the driving force of specialization. |

____4.If sellers do not adjust their quantities supplied at all in response to a change in price, a. | advances in technology must be prevalent. | b. | the time period under consideration must be very long. | c. | supply is perfectly elastic. | d. | supply is perfectly inelastic. |

____5.Economists generally support a. | trade restrictions. | b. | government management of trade. | c. | export subsidies. | d. | free international trade. |

Table 3-5

Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.

| Labor Hours Needed to Make 1 Unit of | Number of Units Produced in 40 Hours | | Cheese | Bread | Cheese | Bread | England | 1 | 4 | 40 | 10 | Spain | 4 |