ECO 301 Exam 1 questions with
complete correct solutions
According to your textbook the earth is closed with regards to energy flows - correct answer
✔✔False
according to scientist Bruce Ames, natural products like organic vegetables often contain more
carcinogenic substances than crops grown on commercial farms - correct answer ✔✔True
before the industrial revolution (about 1800), human life spans were short, and people were
also shorter - correct answer ✔✔true
scarcity rents arise when natural resources involve increasing costs to mine or farm additional
acres - correct answer ✔✔true
willingness to pay is usually greater than the willingness to accept when asking contingent value
surveys - correct answer ✔✔false
according to the law of Demand (demand curve) an increase in the price of a good will result
___ in wanting to ___ of this good
a) consumers/purchase more
b) producers/sell more
c) producers/sell less
d) consumers/purchase less - correct answer ✔✔d) consumers/purchase less
an increase in production costs of beer will result in the ___ curve for beer to shift to the __
a) demand/left
, b) demand/right
c) supply/left
d) supply/right - correct answer ✔✔c) supply/left
Suppose that a competitive market exists for copper as an industrial electrical conductor and a
substitute product fiber-optics is developed and successfully sold as a lower cost replacement
for copper. The cost of building an electrical power-grid for storing battery power would ____
and the price of copper would likely ___
a) rise/fall
b) rise/rise
c) fall/fall
d) fall/rise - correct answer ✔✔c) fall/fall
Table 1 below illustrates the monetary payoffs and probability they will be realized for three
possible outcomes of a policy.
Refer to table 1 above. The expected value payoff of this policy is
a) $40
b) $55
C) $65
D) $80
E) $180 - correct answer ✔✔C) $65
A consumer is risk neutral must choose between policy x that will pay $300 with probability 20%
and $0 with probability 80% or policy y that will pay $50 with probability 100%. If the two
policies also have the same cost, then the consumer will
a) choose policy x
b) choose policy y
c) be different between policy a and b - correct answer ✔✔a) choose policy x
complete correct solutions
According to your textbook the earth is closed with regards to energy flows - correct answer
✔✔False
according to scientist Bruce Ames, natural products like organic vegetables often contain more
carcinogenic substances than crops grown on commercial farms - correct answer ✔✔True
before the industrial revolution (about 1800), human life spans were short, and people were
also shorter - correct answer ✔✔true
scarcity rents arise when natural resources involve increasing costs to mine or farm additional
acres - correct answer ✔✔true
willingness to pay is usually greater than the willingness to accept when asking contingent value
surveys - correct answer ✔✔false
according to the law of Demand (demand curve) an increase in the price of a good will result
___ in wanting to ___ of this good
a) consumers/purchase more
b) producers/sell more
c) producers/sell less
d) consumers/purchase less - correct answer ✔✔d) consumers/purchase less
an increase in production costs of beer will result in the ___ curve for beer to shift to the __
a) demand/left
, b) demand/right
c) supply/left
d) supply/right - correct answer ✔✔c) supply/left
Suppose that a competitive market exists for copper as an industrial electrical conductor and a
substitute product fiber-optics is developed and successfully sold as a lower cost replacement
for copper. The cost of building an electrical power-grid for storing battery power would ____
and the price of copper would likely ___
a) rise/fall
b) rise/rise
c) fall/fall
d) fall/rise - correct answer ✔✔c) fall/fall
Table 1 below illustrates the monetary payoffs and probability they will be realized for three
possible outcomes of a policy.
Refer to table 1 above. The expected value payoff of this policy is
a) $40
b) $55
C) $65
D) $80
E) $180 - correct answer ✔✔C) $65
A consumer is risk neutral must choose between policy x that will pay $300 with probability 20%
and $0 with probability 80% or policy y that will pay $50 with probability 100%. If the two
policies also have the same cost, then the consumer will
a) choose policy x
b) choose policy y
c) be different between policy a and b - correct answer ✔✔a) choose policy x
