Econ 1034 - MIDTERM M_C

CHAPTER 1 The concept of ‘scarcity’ comes from: a) Resources are limited in supply b) Human material wants to be unlimited c) When choices are made, accounting and opportunity costs arise d) Both (a) and (b) are assumed by economists Chris has $10 in his pocket, and is considering one of three choices: (a) see the new Spider-Man movie, (b) buy two new Spider-Man edition comic books, (c) treat his friend to lunch at subways. His opportunity cost of seeing the movie is? a) $10 he must pay for the movie b) $10 to purchase two new comics c) Lunch at subways d) Both lunch and new comics e) Could be either lunch or comics In the hospital industry, which of the following would be classified as a Captial resource? a) Oil and gas used to heat a hotel b) A restaurant’s microwave ovens c) The manager of a tennis club d) Piolets employed by Air Canada e) None of the above Which of the following is a normative statement? a) There are opportunity costs associated with pollution b) The presence of pollution makes people worse off c) We should force firms to close down if they pollute d) Increasing tax rates for firms that pollute will help reduce pollution e) None of the above Suppose a professor is out at a movie before his final economics exam. He sees Karen, one of his students, at the movie. Based on this information, an economist would predict that… a) Karen’s marginal benefit of seeing the movie was greater than her marginal benefits of studying b) Karen's marginal cost of seeing the movie was greater than her marginal benefit of seeing the movie c) Karens’s marginal benefit of seeing the movie was greater than her marginal cost of seeing the movie d) Karen didn’t care about her marks or she would have been studying Ceteris Paribus means.. a) The best alternative forgone b) A statement about what ought to be c) A statement about what is

d) Everyone faces scarcity e) Other things being equal Which of the following is not a macroeconomic topic? a) The reason for a decline in the price of orange juice b) The reasons for a decline in average price c) The effects of the quantity of money on inflation d) The effect of a government budget deficit on employment e) The determination of total income Which of the following statement describes an inverse relationship? a) As the cost of production decreases, all else equal, a firm’s profits will increase b) As temperature increases during the summer, all else equal, ice cream sales will rise c) As gasoline prices increase, all else equal prices will increase d) The shorter a long-distance call, ceteris paribus, the smaller the charge on your phone An economist develops a model of the market for hotel room rentals at Best Western in Toronto: Hotel Room Rentals (R)= { Room rate (P), Location (L), Number of Beds (N), Season (S), Value of the Canadian Dollar (V) }. Which of the following statement is NOT true? a) S is an independent variable, and there’s an inverse relationship between P and R b) R is a dependent variable, and there’s a positive relationship between V and R c) V is an independent variable, and there’s an inverse relationship between P and R d) R is the only dependent variable in this model Refer to the previous question. The economist develops a theory that, as the hotel’s location (L) moves closer downtown, hotel rentals (R) will increase. According to Ceteris Paribus Assumption: a) L and R are assumed constant, but all other variables will change b) P and L will change, but all other variables are assumed constant c) L, S, N and V are assumed constant d) P, S, N and V are assumed constant CHAPTER 1 - PPF Model Questions A given production possibilities frontier (PPF) for apples and peaches shows a) All combinations of apples and peaches that can be produced with limited resources and technology b) The best quantity of apples and peaches that can be produced with limited resources and technology c) Maximum quantities of apples and peaches that can be produced with limited resources and technology d) Those quantities of apples and peaches that are most demanded by society