ECON 401 Practice Exam- Herold

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University of New Hampshire *

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401

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Economics

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Jan 9, 2024

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University of New Hampshire Fall 2018 Marc W. Hero Your name: September 18, 20 Economics 401. First exam Instructions: This exam covers Krugman’s modules 1-4, lectures class handouts and required readings. Each of the three parts in this exam counts equally (16 points). In Part il, please provide your calculations as we do grant partial credit. On the essay question (Part 111), | expect you to write in good English {(appropriate words, sentences and punctuation) which will be part of your grade. So please re-read what you wrote. Part 1. 16 short answers (each counts for 1 point) 1. The cost of going to college is: A) tuition and the cost of housing. B) tuition, the cost of housing, and the cost of books. C) tuition, the cost of housing, the cost of books, and forgone income. D) forgone income only. & Your elderly grandma tells you: “I haven't been taking my beloved walks because I'm concerned about falling and getting hurt. See, there is always a cost to doing something. But if you don't do anything, then there is no cost.” Your grandma does not understand the concept of: A) scarcity in economics. C) opportunity cost in economics. B) efficiency in economics. D) marginal analysis in economics. ?), When someone says resources are scarce, this suggests that: A) lower-income individuals must be especially careful about the choices they make. B) choices need to be made in order to utilize resources in the best manner possible. C) additional resources could be found if there were additional funds allocated to the effort. D) we can use resources for whatever purpose we choose. Ll If an economy has to sacrifice increasing amounts of good X for each unit of good Y produced, ' then its production possibility frontier is: A) bowed out from the origin. C) astraight line. B) bowed in toward the origin. D) avertical line.
Technological improvements will: A) leave the production possibility frontier unchanged. B) shift the production possibility frontier inward. C) shift the production possibility frontier outward. D) necessarily lead to increased unemployment. The U.S. production possibility frontier will if all computers using Microsoft operating systems contracted a virus that deleted all information on those computers. A) shiftin B) shift out C) not change D) Cannot be determined from the information provided. Abe starts exercising regularly, and after a few months discovers he can now do twice as much of everything—in a single day Abe can now make 10 hamburgers or 8 milkshakes, rather than the 5 hamburgers and 4 milkshakes he made in the past. We now know that Abe’s production possibility frontier: A) has shifted right, but his opportunity costs of making milkshakes are unchanged. B) has shifted right, but his opportunity costs of making milkshakes have decreased. C) has not changed, but his opportunity costs of making milkshakes have increased. D) has not changed, but his opportunity costs of making milkshakes have decreased. Economists generally believe that a country should specialize in the production of a good or service if: A) the production possibility frontier is larger than that of any other country. B) the production possibility frontier is smaller than that of any other country. C) the country can produce the product using fewer resources than any other country. D) the country can produce the product while forgoing fewer alternative products than any other country. If they produce only hamburgers, then in a single day Sarah can produce 10 hamburgers while Abe can produce 5 hamburgers, If they only make milkshakes, then in a single day Sarah can . produce 10 milkshakes while Abe can produce 4 milkshakes. We then know that: A) Sarah has an absolute advantage and a comparative advantage in making hamburgers. B) Sarah has an absolute advantage and a comparative advantage in making milkshakes. C) Abe has an absolute advantage and a comparative advantage in making hamburgers. D) Abe has an absolute advantage and a comparative advantage in making milkshakes. Suppose oranges and clementines are considered to be substitutes. Holding everything else constant, if the price of oranges increases, then the: . A) demand for clementines will increase. C) demand for oranges w%ll increase. B) demand for clementines will decrease. D) demand for oranges will decrease.
H . A good is inferior ift ) A) when income increases, the demand remains unchanged. B) when income increases, the demand decreases. C) when income increases, the demand increases. D) income and the demand are unrelated. {a. The primary difference betwegn a change in demand and a change in the quantity demanded is: A) achange in demand is a movement alon, i i g the demand curve and a chan, demanded is a shift in the demand curve. ge In quently B) a change. in quantity demanded is a movement along the demand curve and a change in demand is a shift in the demand curve. C) botha change in quantity demanded and a change in demand are shifts in the demand curve, only in different directions. D) both a change in quantity demanded and a change in demand are movements along the demand curve, only in different directions. 4 short questions. Please fill in the answers. 13. If machinery is very specialized (meaning it can only be used to manufacture or make one output), how will this affect comparative advantage theory’s predictions {assuming too that machinery is used in the production of the two outputs of 2 countries we are looking at? 14. Why was the vacuum cleaner jnnovated in the United States? 15. What would most likely be the geographic scope of the market for chicken eggs and why? 16. A society is described as follows: people spend % of their waking hours engaging in leisure activities; they live in a region with plenty of fruit, vegetables and fish. What major economic characteristic is absent there:
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