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ECON 205 FINAL EXAM STUDY GUIDE EXAM #1 EXAM#2 and EXAM#3 GRADE A CA$22.63
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ECON 205 FINAL EXAM STUDY GUIDE EXAM #1 EXAM#2 and EXAM#3 GRADE A

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ECON 205 FINAL EXAM STUDY GUIDE Exam #1 1. A resource is anything that: A) can be used in production. B) you pay for. C) is in scarce supply. D) can be consumed. 2. Scarcity in economics means: A) not having sufficient resources to produce all the goods and service we want. B) the wants of p...

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  • July 19, 2019
  • 14
  • 2018/2019
  • Exam (elaborations)
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ECON 205 FINAL EXAM STUDY GUIDE

Exam #1

1. A resource is anything that:
A) can be used in production.
B) you pay for.
C) is in scarce supply.
D) can be consumed.

2. Scarcity in economics means:
A) not having sufficient resources to produce all the goods and service we want.
B) the wants of people are limited.
C) there must be poor people in rich countries.
D) economics are clearly not doing their jobs.

3. Opportunity cost is:
A) about half of the monetary cost of a product.
B) the dollar payment for a product.
C) the benefit derived from a product.
D) the value of the best alternative forgone in making any choice.

4. Margo spends $10,000 on one year’s college tuition. The opportunity cost of spending one year
in college for Margo is:
A) $10,000
B) whatever she would have purchased with the $10,000 instead.
C) whatever she would have earned had she not been in college.
D) whatever she would have purchased with the $10,000 instead and whatever she would
have earned had she not been in college.

5. We are forced to make choices because of:
A) exploitation.
B) efficiency.
C) scarcity.
D) the margin.

6. A choice made ________ is a choice whether to do a little more or a little less of something.
A) at the fringe
B) in the beginning
C) at the margin
D) after the fact

7. A production possibility frontier illustrates the ______ facing an economy that ______ only
two goods.
A) prices; sells
B) trade-offs; produces
C) trade-offs; consumes
D) shortages; produces

8. When moving along a production possibility frontier, the opportunity cost to society of getting
more of one good:

, A) is constant.
B) is measured in dollar terms.
C) is measured by the amount of the good that must be given up.
D) usually decreases.

Use the following to answer questions 9-11:
Figure: Guns and Butter



9.
(Figure: Guns and Butter) On this figure, points A, B, E, and F:
A) indicate combinations of guns and butter that society can produce using all of its
factor efficiently.
B) show that the opportunity cost of more guns increases, but that of more butter
decreases.
C) indicate that society wants butter more than it wants guns.
D) indicate constant costs for guns and increasing costs for butter.

10. (Figure: Guns and Butter) This possibility frontier is:
A) bowed out from the origin because of increasing opportunity costs.
B) bowed in toward the origin because of increasing opportunity costs.
C) bowed in toward the origin because of constant costs of guns and butter.
D) linear because of constant costs.

11. (Figure: Guns and Butter) If the economy were operating at point B, producing 16 units of
guns and 12 units of butter per period, a decision to move to point E and produce 18 units of
butter:
A) indicates you can have more butter and guns simultaneously.
B) makes it clear that this economy experiences decreasing opportunity costs.
C) involves a loss of 8 units of guns per period.
D) involves a loss of 4 units of guns per period.

12. An economy is said to have a comparative advantage in the production of one good if it:
A) can produce more of all goods than another country.
B) can produce less of all goods than another country.
C) has the highest opportunity cost for producing a particular good.
D) has the lowest opportunity cost for producing a particular good.

13. In one hour, the United States can produce 25 tons of steel or 250 automobiles. In one hour,
Japan can produce 30 tons of steel or 275 automobiles. This information implies that:
A) Japan has a comparative advantage in the production of automobiles.
B) the Unites States has an absolute advantage in the production of steel.
C) Japan has a comparative advantage in the production of both goods.
D) the United States has a comparative advantage in the production of automobiles.

14. Free trade between countries:
A) should be based on absolute advantage.
B) will allow wealthy countries to exploit less developed nations.
C) will shift the domestic production possibility frontier to the right.
D) will allow for greater levels of consumption than without trade.

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