BSNS 113 FINAL EXAM NEWEST 2024-2025 ACTUAL EXAM COMPLETE 250 QUESTIONS AND CORRECT
ANSWERS
Which of the following is most likely a macroeconomic topic? - (answer) The role of the Reserve Bank
in controlling inflation.
Consider the following two statements:
Humans tend to have effectively unlimited wants for goods and services.
Humans should limit their consumption for the sake of the environment.
Which of the following is true? - (answer) (i) is a positive statement and (ii) a normative statement.
Suppose that to sit an exam you had to take three hours off from your tele-marketing job that you do
from home. The job pays $30 per hour. As well, because you live on the other side of town, you had to
pay $10 in total for buses to get to the exam and back. You had to bring a pencil, which you already
owned. What is the opportunity cost to you of sitting this exam? - (answer) $100 plus a few cents for
the 'wear-and-tear' to your pencil.
After leaving high school, Sandra considered three options for what to do next, listed in order of
preference:
(1) attend Otago University,
(2) work at Speights brewery in Dunedin, or
(3) attend Auckland University.
Sandra's opportunity cost of attending Otago Uni is the - (answer) direct cost of attending Otago Uni
(fees, books, etc.) plus the income and work experience she could have earned at the brewery.
You paid $100 for a ticket (which is non-refundable) to go to a concert on Saturday night. Your boss calls
Saturday afternoon to see if you're willing to work for three hours that night. She'll pay you $20 per hour
instead of your usual $10. What is your opportunity cost if you choose to go to the concert? - (answer)
$60
Imagine a country where it is not yet compulsory to wear seat belts in cars. If wearing seat belts was
made compulsory, this is likely to - (answer) lead to more injuries to cyclists
The slope of the production possibilities frontier (PPF) - (answer) should be interpreted as the
opportunity cost of a one unit increase in production of the good measured on the horizontal axis.
,BSNS 113 FINAL EXAM NEWEST 2024-2025 ACTUAL EXAM COMPLETE 250 QUESTIONS AND CORRECT
ANSWERS
What effect did the destructive earthquake that hit Christchurch in 2011 likely have on New Zealand's
PPF? - (answer) It shifted the PPF inward.
Refer to Figure 1. Which of the points on the diagram represent technically feasible combinations of
goods and services producible in New Zealand? - (answer) A, B and C only
Refer to Figure 1 in the previous question. Which of the points on the diagram represent combinations of
goods and services that require technically efficient production methods? - (answer) A and B
There are 'gains from trade' because the productivity of resources varies - (answer) due to all of the
types of variation in answers (1), (2), and (3) above.
- geographically, with the scale of production, across resources units of the same type (e.g. labour).
Economies of scale refers to - (answer) the decrease in minimum average production cost as the firm
expands capacity to increase output per time period.
Consider a production process that benefits from economies of scale. Suppose that the price of labour
(the wage rate) increases. In that case, the long-run average production cost curve will - (answer) shift
up, but possibly by less than the change in the wage rate times the number of labour hours because the
firm will have time to substitute other inputs, e.g., automation, for higher-cost labour.
Refer to Figure 1. The opportunity cost of producing each tonne of beef in Peru is - (answer) 3 tonnes
of fruit.
Refer to Figure 1. Argentina has an absolute advantage in production of - (answer) both fruit and beef.
Refer to Figure 1. Assuming trade between the countries, Peru is likely to export - (answer) fruit
Refer to Figure 1. Suppose the cattle breeders in Argentina selectively breed cattle that process grass
more efficiently; these new cattle put on more muscle (i.e. beef) while eating the same amount of grass.
As a result, Argentina's PPF - (answer) pivots outward so that it gets flatter (i.e. the slope decreases).
, BSNS 113 FINAL EXAM NEWEST 2024-2025 ACTUAL EXAM COMPLETE 250 QUESTIONS AND CORRECT
ANSWERS
Refer to Table 1. Note that the numbers in the table refer to the number of hours to produce one unit of
food or clothes.
Given this, which of the following statements about absolute advantage is true? - (answer) Australia
has an absolute advantage in the production of both food and clothes.
Refer to Table 1. The opportunity cost of each unit of clothes in Australia is - (answer) 2/3 of a unit of
food.
Refer to Table 1. Which of the following statements about comparative advantage is true? - (answer)
Australia has a comparative advantage in the production of food while Cambodia has a comparative
advantage in the production of clothes.
Refer to Table 1. Prices of clothes can be stated in terms of units of food (i.e., the 'terms of trade'). What
is the range of prices of clothes for which both countries could gain from trade? - (answer) The price
must be greater than 1/2 but less than 2/3 units of food.
According to the graph shown in the lecture slides, over the last several decades NZ's merchandise terms
of trade index has generally trended - (answer) upward, meaning that NZ's ability to purchase imports
has generally increased.
In our analysis of a market economy, a market - (answer) consists of all of the people, i.e., potential
buyers and sellers, whose interactions determine the market price.
According to the 'horizontal' interpretation, the demand curve - (answer) shows for every price the
quantity demanded by the consumers in the market.
In a competitive market, if the price of a good is below the equilibrium price, then - (answer) suppliers,
dissatisfied that they're missing some sales, increase production and price.
While at the supermarket you notice that some day-old bakery products are on sale at a reduced price.
Why might that be? - (answer) The quantity supplied at the original price was larger than quantity
demanded. (surplus)
ANSWERS
Which of the following is most likely a macroeconomic topic? - (answer) The role of the Reserve Bank
in controlling inflation.
Consider the following two statements:
Humans tend to have effectively unlimited wants for goods and services.
Humans should limit their consumption for the sake of the environment.
Which of the following is true? - (answer) (i) is a positive statement and (ii) a normative statement.
Suppose that to sit an exam you had to take three hours off from your tele-marketing job that you do
from home. The job pays $30 per hour. As well, because you live on the other side of town, you had to
pay $10 in total for buses to get to the exam and back. You had to bring a pencil, which you already
owned. What is the opportunity cost to you of sitting this exam? - (answer) $100 plus a few cents for
the 'wear-and-tear' to your pencil.
After leaving high school, Sandra considered three options for what to do next, listed in order of
preference:
(1) attend Otago University,
(2) work at Speights brewery in Dunedin, or
(3) attend Auckland University.
Sandra's opportunity cost of attending Otago Uni is the - (answer) direct cost of attending Otago Uni
(fees, books, etc.) plus the income and work experience she could have earned at the brewery.
You paid $100 for a ticket (which is non-refundable) to go to a concert on Saturday night. Your boss calls
Saturday afternoon to see if you're willing to work for three hours that night. She'll pay you $20 per hour
instead of your usual $10. What is your opportunity cost if you choose to go to the concert? - (answer)
$60
Imagine a country where it is not yet compulsory to wear seat belts in cars. If wearing seat belts was
made compulsory, this is likely to - (answer) lead to more injuries to cyclists
The slope of the production possibilities frontier (PPF) - (answer) should be interpreted as the
opportunity cost of a one unit increase in production of the good measured on the horizontal axis.
,BSNS 113 FINAL EXAM NEWEST 2024-2025 ACTUAL EXAM COMPLETE 250 QUESTIONS AND CORRECT
ANSWERS
What effect did the destructive earthquake that hit Christchurch in 2011 likely have on New Zealand's
PPF? - (answer) It shifted the PPF inward.
Refer to Figure 1. Which of the points on the diagram represent technically feasible combinations of
goods and services producible in New Zealand? - (answer) A, B and C only
Refer to Figure 1 in the previous question. Which of the points on the diagram represent combinations of
goods and services that require technically efficient production methods? - (answer) A and B
There are 'gains from trade' because the productivity of resources varies - (answer) due to all of the
types of variation in answers (1), (2), and (3) above.
- geographically, with the scale of production, across resources units of the same type (e.g. labour).
Economies of scale refers to - (answer) the decrease in minimum average production cost as the firm
expands capacity to increase output per time period.
Consider a production process that benefits from economies of scale. Suppose that the price of labour
(the wage rate) increases. In that case, the long-run average production cost curve will - (answer) shift
up, but possibly by less than the change in the wage rate times the number of labour hours because the
firm will have time to substitute other inputs, e.g., automation, for higher-cost labour.
Refer to Figure 1. The opportunity cost of producing each tonne of beef in Peru is - (answer) 3 tonnes
of fruit.
Refer to Figure 1. Argentina has an absolute advantage in production of - (answer) both fruit and beef.
Refer to Figure 1. Assuming trade between the countries, Peru is likely to export - (answer) fruit
Refer to Figure 1. Suppose the cattle breeders in Argentina selectively breed cattle that process grass
more efficiently; these new cattle put on more muscle (i.e. beef) while eating the same amount of grass.
As a result, Argentina's PPF - (answer) pivots outward so that it gets flatter (i.e. the slope decreases).
, BSNS 113 FINAL EXAM NEWEST 2024-2025 ACTUAL EXAM COMPLETE 250 QUESTIONS AND CORRECT
ANSWERS
Refer to Table 1. Note that the numbers in the table refer to the number of hours to produce one unit of
food or clothes.
Given this, which of the following statements about absolute advantage is true? - (answer) Australia
has an absolute advantage in the production of both food and clothes.
Refer to Table 1. The opportunity cost of each unit of clothes in Australia is - (answer) 2/3 of a unit of
food.
Refer to Table 1. Which of the following statements about comparative advantage is true? - (answer)
Australia has a comparative advantage in the production of food while Cambodia has a comparative
advantage in the production of clothes.
Refer to Table 1. Prices of clothes can be stated in terms of units of food (i.e., the 'terms of trade'). What
is the range of prices of clothes for which both countries could gain from trade? - (answer) The price
must be greater than 1/2 but less than 2/3 units of food.
According to the graph shown in the lecture slides, over the last several decades NZ's merchandise terms
of trade index has generally trended - (answer) upward, meaning that NZ's ability to purchase imports
has generally increased.
In our analysis of a market economy, a market - (answer) consists of all of the people, i.e., potential
buyers and sellers, whose interactions determine the market price.
According to the 'horizontal' interpretation, the demand curve - (answer) shows for every price the
quantity demanded by the consumers in the market.
In a competitive market, if the price of a good is below the equilibrium price, then - (answer) suppliers,
dissatisfied that they're missing some sales, increase production and price.
While at the supermarket you notice that some day-old bakery products are on sale at a reduced price.
Why might that be? - (answer) The quantity supplied at the original price was larger than quantity
demanded. (surplus)
