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Herzing University *

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Jun 14, 2024

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7.3 Midterm Exam Due Jun 8 at 11:59pm Points 60 Questions 23 Time Limit None Instructions Attempt History Attempt Time Score LATEST Attempt 1 199 minutes 58 out of 60 Score for this quiz: 58 out of 60 (Devote about 4 hrs.) Overview Instead of your regular Prepare assignment, this week you will have a chance to prove everything you have been learning so far. Many of the questions on this exam are related to examples that we have discussed in class or that you have completed as part of the Prepare materials, so take the time to go through your notes and old Prepare assignments to review everything you have been learning. Instructions Review your assignments and materials from Weeks 1 to 6. Take the Midterm Exam. This is an open-book exam, but you are highly encouraged to review the materials ahead of time to ensure you can complete your exam in a timely manner. You are not allowed to ask for help from classmates or others as you take the exam. If you have any difficulty accessing the exam or experience any other technical issues, please contact your teacher. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 1/19
Submitted Jun 4 at 5:15pm This attempt took 199 minutes. Question 1 2 / 2 pts Your Answer: Question 2 2 / 2 pts Your Answer: Provide a definition and an example of the following fundamental economic principle: Specialization Specialization is when a company or firm is focused on a specific production process, and an individual focuses on a specific skill or activity. Examples of specialization Microeconomic - This is the smallest level of specialization where an individual chooses a specific career path that suits their needs. If I am good at business, I will specialize in economics, or if I am good at maths, I will choose a related field. This individual or company-specific specialization creates highly skilled labor or high-quality products. Macroeconomic - this kind of specialization is driven by identifying demanded products, and certain countries/regions or firms take advantage of capitalizing on the demand by making that product of quality and cheaper than would-be competitors. Provide a definition and an example of the following fundamental economic principle: Comparative advantage 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 2/19
Question 3 2 / 2 pts Your Answer: Question 4 2 / 2 pts Your Answer: Comparative advantage - this is producing goods or services cheaper than those of your competitor. An example is when we compare Chinese labor costs to those of the United States. Chinese workers produce consumer goods at a lower price than those in the USA; hence, many imported goods are from China. Provide a definition and an example of the following fundamental economic principle: Supply and demand Supply and demand is the concept that prices are determined by the relationship between goods and services being supplied and goods and services being demanded. When a trend of particular products/services is in demand, the supplier will be able to sell them at a higher price because the demand will outweigh the supplies Provide a definition and an example of the following fundamental economic principle: Opportunity costs Opportunity costs - what you give up to buy what you want regarding other goods and services. For example, you spend time and money going to a movie, but you cannot spend that time at home reading a book, and you can't spend the money on something else. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 3/19
Question 5 2 / 2 pts Your Answer: Question 6 2 / 2 pts Your Answer: Provide a definition and an example of the following fundamental economic principle: Scarcity Scarcity - when product/service is limited, and you have to satisfy your want with limited resources. some examples of scarcity are land, water - they are limited and cannot be produced in mass Based on the following Pearl Market scenario below answer questions 6, 7, & 8: You go on vacation for 14 days to an island in the middle of the ocean that is known for selling beautiful pearls. On day 1 of your vacation, you buy 10 small pearls for $10 from the 100 pearls available. The next day, there is a storm that destroys the boats in the area, including the pearl divers’ boats. The day you leave, you return to the pearl market and ask to buy 1 more pearl. Pearl Market Scenario: Estimate what the price of pearls would be on the last day of your vacation. Would the price rise, decrease, or stay the same? The single pearl would cost you a lot more to purchase from the pearl vendor than the ten pearls you bought on the first day. The merchant knows you are prepared to pay a premium for the last pearl. After all, the storm has made pearls scarce. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 4/19
Question 7 4 / 4 pts Your Answer: The quantity of pearls demanded is probably not very sensitive to price fluctuations, indicating that the elasticity of demand for pearls is likely inelastic. This is because pearls are a luxury good, and even if their price increases, people will still pay more. Pearl Market Scenario: Draw 1 diagram showing the supply and demand for pearls on the island before and after the storm. On the same diagram, show the shift of the supply or demand curve to the proper location. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 5/19
Question 8 4 / 4 pts Your Answer: Pearl Market Scenario: Use your diagram and principles of supply and demand to explain your estimated price for pearls on the last day of your vacation. In the below diagram, the demand and supply curve are in equilibrium. When the price charged is $10 for 10 units of pearls, DD is the initial downward-slopping demand curve showing the inverse relationship between demand and price; SS is the initial upward-slopping supply curve showing the direct positive relationship between supply and price. 6/12/24, 9:42 PM 7.3 Midterm Exam: ECON 161-01P Microeconomics https://ensign.instructure.com/courses/20024/quizzes/278839?module_item_id=2503677 6/19
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