Exam (elaborations)

Principles of Microeconomics (ECON 1P91) ECON1P91 Assignment 1 Answer key_2024.

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Course
ECON1P91 (ECON1P91)

Institution
Brock University ( )

1. Stan buys a 1966 Mustang, which he plans to restore and sell. He anticipates that the cost of the car and the repairs will be $15,000 and that he can sell it for $19,000. When he has spent $15,000, he discovers he needs to replace the engine, which will cost $4000. He can sell the car without...

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Uploaded on October 13, 2024
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econ1p91
econ1p91 assignment 1
econ1p91 assignment 1
principles of microeconomics econ 1p91
brock university principles of microeconomics

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1. Stan buys a 1966 Mustang, which he plans to restore and sell. He anticipates that the cost
of the car and the repairs will be $15,000 and that he can sell it for $19,000. When he has
spent $15,000, he discovers he needs to replace the engine, which will cost $4000. He
can sell the car without the new engine for $9000. What should Stan do?

a. He should complete the repairs and sell the car for $19,000.
b. He should sell the car now for $9000.
c. He should never try such an expensive project again.
d. He should be totally indifferent between finishing the project and selling the car
now.

2. Refer to figure below. Which combination is NOT possible for this economy to
produce?
a. 10 barrels and 14 bathtubs b. 20 barrels and 8 bathtubs
c. 25 barrels and 10 bathtubs d. 30 barrels and 6 bathtubs

3. Which of the following is an example of a positive statement?

a. Lower interest rates should lead to decreased savings.
b. If the minimum wage increases, the world will be a better place.
c. Inflation is more harmful to the economy than unemployment.
d. The benefits to the economy of improved equity are greater than the costs of
reduced efficiency.

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4. In economics, what does capital refer to?

a. the finances necessary for firms to produce their products
b. buildings and machines used in the production process
c. the money households use to purchase necessities
d. the value of stock market shares issued to investors

5. Refer to Table 2-1. What is the opportunity cost to Toyland of increasing the production
of dolls from 0 to 250?

a. 50 toy cars b. 100 toy cars
c. 150 toy cars d. 200 toy cars

6. On a production possibilities frontier, when is production efficient?

a. if the production point is on the frontier
b. if the production point is outside the frontier
c. if the production point is on or inside the frontier

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d. if the production point is inside the frontier

7. Refer to the above figure. What is the slope of the curve between point A and point B?

a. 5/2 b. 2/5
c. –2/5 d. –5/2

8. What markets are depicted in the simple circular-flow diagram?

a. the market for goods and services, the financial market, and the market for the
factors of production
b. the market for the factors of production and the financial market
c. the market for goods and services and the financial market
d. the market for goods and services and the market for factors of production

9. Which observation was made famous by Adam Smith in his book The Wealth of
Nations?

a. There is no such thing as a free lunch.
b. People buy more when prices are low than when prices are high.

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