ECON 2110 Practice Exam 1 Questions And Answers

ECON 2110 Practice Exam 1 Questions
And Answers
Aqfriendqofqyoursqinvestsqhisqlifesavingsqinqaqyachtqevenqthoughqheqhasqneverqsailed,qcan'tq
swim,qandqhatesqbeingqoutqonqtheqwater.qYouqtryqtoqtalkqhimqoutqofqit,qbutqheqwon'tqlisten.qHi
sqpurchaseqofqtheqyacht:q-qCORRECTqqANSWER-makesqhimqbetterqoff

Aqsellerqwillqbeqwillingqtoqsellqaqproductqonlyqifq-qCORRECTqqANSWER-
theqpriceqreceivedqisqatqleastqasqgreatqasqtheqcostqofqproduction

Afterqgraduatingqfromqhighqschool,qsteveqhadqthreeqchoices,qlistenqinqorderqofqpreference:q(
1)qmatriculateqatqClemson,q(2)qworkqinqaqprintedqcircuitqboardqfactory,qorq(3)qattendqaqrivalqc
ollege.qHisqopportunityqcostqofqgoingqtoqClemsonqincludes:q-qCORRECTqqANSWER-
theqincomeqheqcouldqhaveqearnedqatqtheqprintedqcircuitqboardqfactoryqandqtheqdirectqcostqofq
attendingqclemson

Atqtheqintersectionqofqtheqsupplyqcurveqandqtheqdemandqcurve:q-qCORRECTqqANSWER-
theqquantityqsuppliedqequalsqtheqquantityqdemanded,qnoqbuyerqwhoqisqwillingqtoqpayqtheqm
arketqpriceqgoesqwithout,qnoqsellerqwhoqisqwillingqtoqsellqatqtheqmarketqpriceqisqunableqtoqdoq
so.

AustriaqandqAlbaniaqeachqproduceqteaqchestsqandqviolins.qInqaqday,qanqAustrianqworkerqca
nqproduceq400qteaqchestsqviolins.qInqaqday,qanqAlbanianqworkerqcanqproduceq100qteaqchest
sqorq1qviolin.qAqtradeqthatqwouldqmakeqbothqcountriesqbetterqoffqis:q-qCORRECTqqANSWER-
1qviolinqforq150qteaqchests

AustriaqandqAlbaniaqeachqproduceqteaqchestsqandqviolins.qInqaqday,qanqAustrianqworkerqca
nqproduceq400qteaqchestsqviolins.qInqaqday,qanqAlbanianqworkerqcanqproduceq100qteaqchest
sqorq1qviolin.qWhatqisqtheqcostqofqproducingqaqteaqchestqinqAlbania?q-
qCORRECTqqANSWER-1/100qofqaqviolin




AustriaqandqAlbaniaqeachqproduceqteaqchestsqandqviolins.qInqaqday,qanqAustrianqworkerqca
nqproduceq400qteaqchestsqviolins.qInqaqday,qanqAlbanianqworkerqcanqproduceq100qteaqchest

, sqorq1qviolin.qWhichqofqtheqfollowingqisqtrue?q-qCORRECTqqANSWER-
AustriaqhasqtheqcomparativeqadvantageqinqteaqchestsqandqAlbaniaqhasqtheqcomparativeqad
vantageqinqviolins.

BillqGatesqdroppedqoutqofqcollegeqandqfoundedqMicrosoft.qHisqopportunityqcostqofqcontinuin
gqtoqattendqcollegeqwasq-qCORRECTqqANSWER-
tuition,qtheqcostqofqbooks,qandqtheqincomeqfromqhisqMicrosoftqpursuits

Caitlinqwouldqbeqwillingqtoqpayq$50qtoqseeqLesqMiserables,qbutqbuysqaqticketqforqonlyq$30.qC
aitlinqvaluesqtheqperformanceqatq_____qandqherqconsumerqsurplusqisq______.q-
qCORRECTqqANSWER-$50,$20




Divisionqofqknowledgeqrefersqto:q-qCORRECTqqANSWER-
peopleqlearningqdifferentqtasksqinqwhichqtheyqspecialize

Howqdoqbuyersqandqsellersqcoordinateqtheirqdesires?q-qCORRECTqqANSWER-
Throughqtheirqindependentqeffectqonqprices

Ifqaqbuyerqvaluesqaqproductqatq$28qandqaqseller'sqopportunityqcostqofqprovidingqtheqproductqi
sq$12,qtheqgainsqfromqtrade:q-qCORRECTqqANSWER-areq$16

IfqdemandqisqQdq=q90-PqandqsupplyqisqQs=P-30,qtotalqsurplusqisq-qCORRECTqqANSWER-
900

Ifqeachqofqusqhadqtoqgrowqourqownqfood:q-qCORRECTqqANSWER-
civilizationqwouldqcollapseqandqbillionsqofqpeopleqwouldqstarve

IfqJasonqsellsqaqrifleqforq$125qandqhisqproducerqsurplusqisq$75,qhisqcostqmustqhaveqbeenq-
qCORRECTqqANSWER-$50




Ifqpeopleqareq"rational"qinqtheqeconomicqsense,qtheyq-qCORRECTqqANSWER-
noneqofqtheqabove

Ifqsellersqwantqtoqsellqmoreqproductsqthanqbuyersqareqwillingqtoqpurchase,qweqknowqthatq-
qCORRECTqqANSWER-theqcurrentqpriceqisqgreaterqthanqtheqequilibriumqprice




Ifqweqasqaqcountryqdecidedqtoqdedicateqmoreqresourcesqtoqmakingqmeatqsafe,q-
qCORRECTqqANSWER-thereqwillqbeqlessqleftqoverqtoqdoqotherqdesirableqthings




Ifqyouqbuyqaqmotorcycleqforq$1,000qandqthenqdiscoverqthatqyouqhateqridingqitqandqwillqneverqr
ideqitqagain,qtheqbestqthingqtoqdoqis:q-qCORRECTqqANSWER-
sellqtheqmotorcycleqforqtheqbestqofferqyouqcanqget

Ifqyouqdecideqtoqgoqtoqaqmovieqthisqeveningqratherqthanqstudyqecon,qyouqtherebyqdemonstra
teqthatq-qCORRECTqqANSWER-