Penn Econ102 Exam and homework questions

Exam and homework questions

Homework 1

1.

Which of the following best describes sunk costs?

A) Only recurring fixed costs

B) Costs associated with hiring labor each year

C) Previous costs that once made are non-recoverable

D) Only costs in the future

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2.

Which of the following illustrates the fallacy of composition?

A) Barbara likes chocolate, so all women must like chocolate

B) Big Mining Company believes all of its costs are sunk costs

C) Carol only buys cheese when it’s on sale at a discount price

D) The sun rose after the rooster crowed, so the rooster crowing must have caused the sunrise

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3.

Consider the equation Y = 14 – 2X. With Y on the vertical axis and X on the horizontal axis, the horizontal intercept of this line is

A) 14

B) – 2

C) 7

D) – (1/7)

E) – (1/2)

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4.

Consider the equation Y = 14 – 2X. With Y on the vertical axis and X on the horizontal axis, the vertical intercept of this line is

A) 14

B) – 2

C) -7

D) – (1/7)

E) – (1/2)

5.

Economics is the study of how

A) people make money.

B) preferences are determined.

C) psychology influences preferences..

D) people make choices.

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6.

Economics is concerned with choices

A) that involve the wants of individuals.

B) that involve the political goals of professional associations.

C) made by individuals only when they are consuming goods or services.

D) that involve making money.

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7.

Economics is a part of the

A) social sciences.

B) natural sciences.

C) biological sciences.

D) organizational sciences.

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8.

One topic of study for a microeconomist would be the

A) causes of inflation.

B) causes of aggregate unemployment.

C) effects of a gasoline price increase on consumer behavior.

D) effects of an increase in government spending on overall economic activity.

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9.

Macroeconomics deals with

A) aggregates within the economy.

B) specific sectors within the economy.

C) the retail industry only.

D) decisions made by firms.

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10.

A macroeconomist would study

A) the price changes at K-Mart.

B) the cost problems at several airlines.

C) the economy's unemployment level.

D) none of the above.

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11.

Which of the following is an example of an application of the ceteris paribus assumption?

A) An analysis of how price changes affect how much of a good people will purchase when all other factors are held constant

B) An analysis of how people purchase more goods when prices decline and income increases

C) After reading an article on the dangers of high-fat diets, an individual buys less red meat when prices increase

D) An analysis of how worker productivity increases when a firm invests in new machines and training programs

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12.

Professor's economics students are constructing models for how gasoline prices change. Maria's model has very realistic assumptions and is quite complex. Anna's model is less complicated and less realistic. Maria's model correctly predicts gas price increases 5% of the time. Anna's model predicts correctly 15% of the time. On the basis of usefulness or "goodness," Professor will give which student's model the higher grade and why?

A) Maria's model gets the higher grade because it is more complex.

B) Anna's model gets the higher grade because it is simpler.

C) Maria's model gets the higher grade because it is more realistic.

D) Anna's model gets the higher grade because it predicts accurately more often.

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13.

A positive relationship occurs when

A) the two variables being compared change in opposite directions, or when one goes up the other goes down.

B) a change in one of the variables causes a change in the other variable in any direction.

C) the two variables being compared change in the same direction, or when one goes up the other also goes up.

D) the two variables have no identifiable relationship with each other.

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14.

In a negative relationship,

A) one variable rises while the other falls.

B) both variables rise together.

C) both variables fall together.

D) the two variables have nothing to do with each other.

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15.

"No individual should have less than $20,000 income in the United States in 2010" is an example of

A) a normative statement.

B) a positive statement.

C) an illogical and refutable statement.

D) a truism.

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16.

Which of the following is an example of a positive economic statement?

A) In order to reduce the budget deficit, tax rates should be increased.

B) In order to increase employment, the minimum wage should be decreased.

C) If payroll taxes are raised, then the Social Security crisis will be resolved.

D) If gas prices fall, consumers should purchase more gas.

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17.

In every economic system, choices must be made because resources

A) are unlimited, but human desires and wants are limited.

B) are limited, but human desires and wants are unlimited.

C) are unlimited, and so are human desires and wants.

D) are limited, and so are human desires and wants.

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18.

Which of the following statements about economic scarcity is FALSE?

A) Scarcity occurs among the poor and the rich.

B) Scarcity only occurs if there are shortages and people wait in line to buy things.

C) Scarcity results from not having enough resources to produce all the things we want.

D) Scarcity results in the necessity to make choices.

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19.

Assume Nebraska and Virginia each have 100 acres of farmland. The following table gives hypothetical figures for yield per acre in the two states

Who has the absolute advantage in the production of wheat?

A) Nebraska

B) Virginia

C) Both of the above

D) None of the above

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20.

Who has the absolute advantage in the production of cotton?

A) Nebraska

B) Virginia

C) Both of the above

D) None of the above

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21.

Who has the comparative advantage in the production of wheat?

A) Nebraska

B) Virginia

C) Both of the above

D) None of the above

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22.

Who has the comparative advantage in the production of cotton?

A) Nebraska

B) Virginia

C) Both of the above

D) None of the above

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23.

Suppose the two states decide that they want to produce 590 units of wheat together (not 590 units of wheat each). What is the maximum amount of cotton that they could produce?

A) 700 units of cotton

B) 630 units of cotton

C) 200 units of cotton

D) 90 units of cotton

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24.

Draw the PPF for

, putting wheat on the vertical axis and cotton on the horizontal axis. What is the vertical intercept of Nebraska’s PPF?

A) 900

B) 700

C) 500

D) 200

25.

Draw the PPF for Nebraska, putting wheat on the vertical axis and cotton on the horizontal axis. What is the horizontal intercept of Nebraska’s PPF?

A) 900

B) 700

C) 500

D) 200

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26.

Draw the PPF for Virginia, putting wheat on the vertical axis and cotton on the horizontal axis. What is the vertical intercept of Virginia’s PPF?

A) 900

B) 700

C) 500

D) 200

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27.

Draw the PPF for Virginia, putting wheat on the vertical axis and cotton on the horizontal axis. What is the horizontal intercept of Virginia’s PPF?

A) 900

B) 700

C) 500

D) 200

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28.

The combined PPF for Nebraska and Virginia is shown in the picture above. What is the value of vertical intercept, Y?

A) 1800

B) 1400

C) 1000

D) 400

E) 1600

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29.

The combined PPF for Nebraska and Virginia is shown in the picture above. What is the value of horizontal intercept, X?

A) 1800

B) 900

C) 500

D) 1200

E) 1400

30.

The combined PPF for Nebraska and Virginia is shown in the picture above. What is the amount of wheat being produced at point Z?

A) 300

B) 400

C) 500

D) 600

E) 700

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31.

The combined PPF for Nebraska and Virginia is shown in the picture above. What is the amount of cotton being produced at point Z?

A) 300

B) 400

C) 450

D) 600

E) 700

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32.

The combined PPF for Nebraska and Virginia is shown in the picture above. What is the slope of the PPF between points Y and Z?

A) – (7/9)

B) – (9/7)

C) – (2/5)

D) – (5/2)

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33.

The combined PPF for Nebraska and Virginia is shown in the picture above. What is the slope of the PPF between points Z and X?

A) – (7/9)

B) – (9/7)

C) – (2/5)

D) – (5/2)

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34.

You own The Wedding Crasher on DVD. The opportunity cost of watching this DVD for the fourth time

A) is zero, since you own it.

B) is one-fourth the cost of the DVD, as this is the fourth time you have watched it.

C) is the value of the alternative use of the time you spend watching the DVD.

D) must be the same as the opportunity cost of watching it the first time.

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35.

If you own a condo and you decide to lease it to your cousin,

A) there is NOT an opportunity cost of leasing the condo because you own it.

B) there IS an opportunity cost of leasing the condo because you could have chosen to live in it.

C) there is NOT an opportunity cost of leasing the condo because you collect rent from your cousin.

D) there IS an opportunity cost of leasing the condo because you have already made payments on it

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36.

If your tuition is $2,000 this semester, your books cost $400, you can only work 10 rather than 40 hours per week during the 15 weeks you are taking classes and you make $12 per hour, and your room and board is $4,000 this semester (same as if not attending college), then your opportunity cost of attending college this semester is

A) $2,400.

B) $2,760.

C) $7,800.

D) $11,800.

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37.

Video Question. Watch the following video (made by Dave Brown from Penn State Economics). Link here: https://www.youtube.com/watch?v=8DW9ENfRon0. What is true, according to the video?

A) Many people consume gasoline, so gas prices are a Macroeconomics topic.

B) Gasoline is just one good, so gas prices are a Microeconomics topic.

C) If you lose your job, we can discuss how your life is affected in Macroeconomics.

D) The overall unemployment rate is discussed in Microeconomics.

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38.

Video Question. Watch the following video (made by Dave Brown from Penn State Economics). Link here: https://www.youtube.com/watch?v=ODYE_KaLjA0. According to the video, what is true about the phrase “Rich people should pay more taxes?”

A) The statement is positive since most people agree with it

B) The statement is positive since rich people don’t pay enough taxes

C) The statement is normative because some people disagree with it

D) The statement is normative because it is an opinion statement that can’t be tested

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