Review for Midterm I

Topics: Supply and demand, Microeconomics, Elasticity Pages: 9 (1643 words) Published: June 22, 2013
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 | 8 | 10 | 5 |

_

___6.Refer to Table 3-5. The opportunity cost of 1 unit of cheese for Spain is a. | 1/2 unit of bread. |
b. | 2 hours of labor. |
c. | 2 units of bread. |
d. | 4 hours of labor. |

Table 3-6

Assume that Hilda and Carlos can switch between producing quilts and producing dresses at a constant rate.

| Hours Needed To Make 1 | Amount Produced in 90 Hours | | Quilt | Dress | Quilts | Dresses |
Hilda | 30 | 10 | 3 | 9 |
Carlos | 90 | 45 | 1 | 2 |

____7.Refer to Table 3-6. Hilda has an absolute advantage in the production of a. | both goods and a comparative advantage in the production of quilts. | b. | both goods and a comparative advantage in the production of dresses. | c. | neither good and a comparative advantage in the production of quilts. | d. | neither good and a comparative advantage in the production of dresses. |

____8.Refer to Table 3-6. Carlos has an absolute advantage in the production of a. | both goods and a comparative advantage in the production of quilts. | b. | both goods and a comparative advantage in the production of dresses. | c. | neither good and a comparative advantage in the production of quilts. | d. | neither good and a comparative advantage in the production of dresses. |

Figure 3-3

Bob’s Production Possibilities Frontier | Enid’s Production Possibilities Frontier |

____9.Refer to Figure 3-3. Bob’s opportunity cost of one burrito is a. | 3/4 taco and Enid’s opportunity cost of one burrito is 1/2 taco. | b. | 3/4 taco and Enid’s opportunity cost of one burrito is 2 tacos. | c. | 4/3 tacos and Enid’s opportunity cost of one burrito is 1/2 taco. | d. | 4/3 tacos and Enid’s opportunity cost of one burrito is 2 tacos. |

Figure 3-5

Puneet’s Production...
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