Econ 201 Exam 1

Causes of market failure include: A externalities and market power B market power and incorrect forecasts of consumer demand C externalities and foreign competition D incorrect forecasts of consumer demand and foreign competition

A

When computing the opportunity cost of attending a concert you should include: A the price you pay for the ticket and the value of your time B the price you pay for the ticket but not your time C the value of your time, but not the price of the ticket D neither the ticket price nor your time

A

Normative statements are: A prescriptive B descriptive C backward-looking D foward-looking

B

In principle, we can A ignore positive statements when choosing among various public policy alternatives B ignore normative statements when choosing among various public policy alternatives C confirm or refute positive statements by examining evidence D confirm or refute normative statements by examining evidence

C

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods A is useless, since the real world has many countries trading many goods B can be useful only in situations involving two countries and two goods C can be useful in the classroom, but useless in the real world D can be useful in helping economists understand the complex world of international trade involving many countries and many goods

D

Economic models A cannot be useful if they are based on false assumptions B were once thought to be useful, but that is no longer true C must incorporate all aspects of the economy if they are to be useful D can be useful, even if they are not realistic

D

One advantage market economies have over centrally-planned (socialist) economies is that the market economies A provide an equal distribution of goods and services to households B establish a significant role for government in the allocation of resources C solve the problem of scarcity D are more efficient

D

PPF are usually bowed outward, this is because A the more resources a society uses to produce on good, the fewer resources it has available to produce another good B it reflects the fact that the opportunity cost of producing a good decreases as more and more of that good is produced C of the effects of technological change D resources are specialized; that is, some are better at producing particular goods than other

D