ECON 130 Final Exam Multi Choice || A+ Graded Already.
Voluntary exchange benefits all parties if
(a) it results in a lower price than the buyer's opportunity cost of producing the
good themselves.
(b) at least one party is indifferent between trading and not trading.
(c) anyone who did not expect to gain would refuse to make the exchange.
(d) gains from trade are equally divided among those making the exchange. correct answers C
Tom and Jerry each run their own business, and both work eight hours a day.
Tom can produce six units of goods per hour while Jerry can produce four units of
the same goods per hour. Tom's
(a) productivity is greater than Jerry's.
(b) output, in a given day, is greater than Jerry's.
(c) standard of living is higher than Jerry's.
(d) All of the above are correct. correct answers D
To determine a country's comparative advantage, it is necessary to know its
(a) labour productivity.
(b) capital requirements.
(c) production trade-offs (i.e. the marginal rate of transformation.
(d) All of the above. correct answers C
Imposing a tariff on an imported good is likely to
(a) lead consumers to substitute from domestic goods to imported goods.
(b) stimulate domestic supply and reduce imports of that good.
(c) cause the equilibrium price and quantity to rise.
(d) increase the quantity demanded and reduce the equilibrium price. correct answers B
Suppose that a quota on the import of good X is introduced. This is likely to
(a) result in an increase in the quantity of goods imported.
(b) cause the equilibrium quantity to rise.
(c) cause the equilibrium price to rise.
(d) expose domestic producers to greater competition from imported goods correct answers C
Assume there are two goods - sugar and rice - and that production of both goods
exhibits decreasing returns to scale. If the production possibility frontiers (for
sugar and rice) in countries A and B are the same,
(a) specialisation does not benefit either country.
(b) the opportunity cost of producing sugar is lower in country A than in
country B.
(c) the opportunity cost of producing rice is lower in country B than in
country A.
(d) each country will necessarily produce identical quantities of sugar and rice. correct answers
A
,According to the theory of comparative advantage, specialisation and free trade
will benefit
(a) only that trading party that has both an absolute advantage and a
comparative advantage in the production of all goods.
(b) all trading parties, even when some are absolutely more efficient producers
than others.
(c) only that trading party that has an absolute advantage in the production of
all goods.
(d) only that trading party that has a comparative advantage in the production
of all goods. correct answers B
The ability of a country to produce a good at a lower relative cost than another
country is called
(a) absolute advantage.
(b) comparative advantage.
(c) diminishing returns.
(d) specialisation. correct answers B
Suppose that: China has a comparative advantage in textiles and an absolute
advantage in radios; Japan has a comparative advantage in radios and an absolute
advantage in textiles. According to this scenario
(a) Japan should export both radios and textiles.
(b) China should import both radios and textiles.
(c) China should export textiles and import radios.
(d) Japan should export textiles and import radios. correct answers C
Assume that in country A, it takes 3 hours to produce 1L of beer, and it takes 2
hours to make a cake. In country B, it takes 4 hours to produce 1L of beer, and it
takes 4 hours to make a cake.
For country A, what is the opportunity cost of the cake, in terms of beer?
(a) 1L of beer per cake.
(b) 2
3
L of beer per cake.
(c) 1
3
L of beer per 2 cakes.
(d) 1L of beer per 2
3
cake. correct answers B
Assume that in country A, it takes 3 hours to produce 1L of beer, and it takes 2
hours to make a cake. In country B, it takes 4 hours to produce 1L of beer, and it
takes 4 hours to make a cake.
, Which statement is incorrect?
(a) Country A has an absolute advantage in producing cakes.
(b) Country A has an absolute advantage in producing beer.
(c) Country A has a comparative advantage in producing cakes.
(d) Country A has a comparative advantage in producing beer. correct answers D
Assume that in country A, it takes 3 hours to produce 1L of beer, and it takes 2
hours to make a cake. In country B, it takes 4 hours to produce 1L of beer, and it
takes 4 hours to make a cake.
Which rate of exchange allows for gains from comparative advantage for both
countries?
(a) No rate of exchange would allow for gains in this example.
(b) 0.75L beer per cake.
(c) 1.5L of beer per cake.
(d) Any rate of exchange may allow for gains for both countries. correct answers B
Until 21 May 2015, KiwiSaver provided a government contribution of $1000 when
a person joins the scheme - a "kickstart". Assume: a child is enrolled at birth;
the fund earns a constant return of 5% per annum; interest is paid in arrears (i.e.
at the end of the year in which it accrues); zero fees.
If the person becomes eligible to withdraw funds at age 65, how many periods does
the "kickstart" accrue interest before they are eligible?
(a) 18.
(b) 64.
(c) 65.
(d) 66. correct answers C
Until 21 May 2015, KiwiSaver provided a government contribution of $1000 when
a person joins the scheme - a "kickstart". Assume: a child is enrolled at birth;
the fund earns a constant return of 5% per annum; interest is paid in arrears (i.e.
at the end of the year in which it accrues); zero fees.
At end of the child's first year of life (i.e. as they are about to turn 1), before
interest is paid, the child has in their account and would receive of
interest (to the nearest cent).
(a) $0, $0
(b) $1000, $5
(c) $1000, $50
(d) $1500, $102.50 correct answers C
Until 21 May 2015, KiwiSaver provided a government contribution of $1000 when
a person joins the scheme - a "kickstart". Assume: a child is enrolled at birth;
the fund earns a constant return of 5% per annum; interest is paid in arrears (i.e.
at the end of the year in which it accrues); zero fees.
Voluntary exchange benefits all parties if
(a) it results in a lower price than the buyer's opportunity cost of producing the
good themselves.
(b) at least one party is indifferent between trading and not trading.
(c) anyone who did not expect to gain would refuse to make the exchange.
(d) gains from trade are equally divided among those making the exchange. correct answers C
Tom and Jerry each run their own business, and both work eight hours a day.
Tom can produce six units of goods per hour while Jerry can produce four units of
the same goods per hour. Tom's
(a) productivity is greater than Jerry's.
(b) output, in a given day, is greater than Jerry's.
(c) standard of living is higher than Jerry's.
(d) All of the above are correct. correct answers D
To determine a country's comparative advantage, it is necessary to know its
(a) labour productivity.
(b) capital requirements.
(c) production trade-offs (i.e. the marginal rate of transformation.
(d) All of the above. correct answers C
Imposing a tariff on an imported good is likely to
(a) lead consumers to substitute from domestic goods to imported goods.
(b) stimulate domestic supply and reduce imports of that good.
(c) cause the equilibrium price and quantity to rise.
(d) increase the quantity demanded and reduce the equilibrium price. correct answers B
Suppose that a quota on the import of good X is introduced. This is likely to
(a) result in an increase in the quantity of goods imported.
(b) cause the equilibrium quantity to rise.
(c) cause the equilibrium price to rise.
(d) expose domestic producers to greater competition from imported goods correct answers C
Assume there are two goods - sugar and rice - and that production of both goods
exhibits decreasing returns to scale. If the production possibility frontiers (for
sugar and rice) in countries A and B are the same,
(a) specialisation does not benefit either country.
(b) the opportunity cost of producing sugar is lower in country A than in
country B.
(c) the opportunity cost of producing rice is lower in country B than in
country A.
(d) each country will necessarily produce identical quantities of sugar and rice. correct answers
A
,According to the theory of comparative advantage, specialisation and free trade
will benefit
(a) only that trading party that has both an absolute advantage and a
comparative advantage in the production of all goods.
(b) all trading parties, even when some are absolutely more efficient producers
than others.
(c) only that trading party that has an absolute advantage in the production of
all goods.
(d) only that trading party that has a comparative advantage in the production
of all goods. correct answers B
The ability of a country to produce a good at a lower relative cost than another
country is called
(a) absolute advantage.
(b) comparative advantage.
(c) diminishing returns.
(d) specialisation. correct answers B
Suppose that: China has a comparative advantage in textiles and an absolute
advantage in radios; Japan has a comparative advantage in radios and an absolute
advantage in textiles. According to this scenario
(a) Japan should export both radios and textiles.
(b) China should import both radios and textiles.
(c) China should export textiles and import radios.
(d) Japan should export textiles and import radios. correct answers C
Assume that in country A, it takes 3 hours to produce 1L of beer, and it takes 2
hours to make a cake. In country B, it takes 4 hours to produce 1L of beer, and it
takes 4 hours to make a cake.
For country A, what is the opportunity cost of the cake, in terms of beer?
(a) 1L of beer per cake.
(b) 2
3
L of beer per cake.
(c) 1
3
L of beer per 2 cakes.
(d) 1L of beer per 2
3
cake. correct answers B
Assume that in country A, it takes 3 hours to produce 1L of beer, and it takes 2
hours to make a cake. In country B, it takes 4 hours to produce 1L of beer, and it
takes 4 hours to make a cake.
, Which statement is incorrect?
(a) Country A has an absolute advantage in producing cakes.
(b) Country A has an absolute advantage in producing beer.
(c) Country A has a comparative advantage in producing cakes.
(d) Country A has a comparative advantage in producing beer. correct answers D
Assume that in country A, it takes 3 hours to produce 1L of beer, and it takes 2
hours to make a cake. In country B, it takes 4 hours to produce 1L of beer, and it
takes 4 hours to make a cake.
Which rate of exchange allows for gains from comparative advantage for both
countries?
(a) No rate of exchange would allow for gains in this example.
(b) 0.75L beer per cake.
(c) 1.5L of beer per cake.
(d) Any rate of exchange may allow for gains for both countries. correct answers B
Until 21 May 2015, KiwiSaver provided a government contribution of $1000 when
a person joins the scheme - a "kickstart". Assume: a child is enrolled at birth;
the fund earns a constant return of 5% per annum; interest is paid in arrears (i.e.
at the end of the year in which it accrues); zero fees.
If the person becomes eligible to withdraw funds at age 65, how many periods does
the "kickstart" accrue interest before they are eligible?
(a) 18.
(b) 64.
(c) 65.
(d) 66. correct answers C
Until 21 May 2015, KiwiSaver provided a government contribution of $1000 when
a person joins the scheme - a "kickstart". Assume: a child is enrolled at birth;
the fund earns a constant return of 5% per annum; interest is paid in arrears (i.e.
at the end of the year in which it accrues); zero fees.
At end of the child's first year of life (i.e. as they are about to turn 1), before
interest is paid, the child has in their account and would receive of
interest (to the nearest cent).
(a) $0, $0
(b) $1000, $5
(c) $1000, $50
(d) $1500, $102.50 correct answers C
Until 21 May 2015, KiwiSaver provided a government contribution of $1000 when
a person joins the scheme - a "kickstart". Assume: a child is enrolled at birth;
the fund earns a constant return of 5% per annum; interest is paid in arrears (i.e.
at the end of the year in which it accrues); zero fees.
