Econ Final

  1. The distinction between normative and positive economic theory is:
    Normative theory deals with ethics, positive theory deals with causation.
  2. Which of the following is not true?
    The supply curve is based on objective costs of production while the demand curve is determined by subjective marginal utility.
  3. The primary reason economists invoke the six assumptions of the perfect competition mode:
    To turn scatter diagrams into continuous graphs with one market price.
  4. Suppose you win a guaranteed $1 million dollar lottery ticket payable over 5 years. You go to the bank to cash it in, but only receive $600,000. This occurs because:
    None of the above is true
  5. Which of the following is true?
    It is logically impossible to have a comparative advantage it the production of all economic goods.
  6. In a competitive free market (absent force or fraud), income is determined by:
    Serving other people's needs better than other people's competitors.
  7. Suppose you earn $2,000 per month. You spend about $200 per month on food and $1000 per month on rental apartment housing. Ceteris paribus, which of the following can we infer with respect to elasticity?
    The price elasticity of demand for food is less than apartments.
  8. Which of the following is an implication of the perfet price competition model in the long-run general equilibrium.
    No firm earns economic profit.
  9. What is not true with respect to values and prices?
  10. Which of the following is not true?
    Export restrictions are generally effective in a world market
  11. Suppose we have the case of negative externalities market failure. Given public choice incentives we can infer:
    Nothing can be inferred since government can also fail.
  12. "We can explain prices by their objective historical cost of production." Which school of economic thought believed this view?
    None of the above held this view.
  13. Suppose we have Fred and Barney. Each wants one unit of each good beer and pretzels. Below is their underlying productivity for each good in terms of time. The price is one unit of beer equals one unit of pretzels. Which of the following is true?
    Fred imports pretzels and exports beer.
  14. Suppose the government changes the price to 1/2 units of beer equal 1 unit of pretzels. Which of the following is true?
    Barney is the short-side of the market.
  15. Suppose there are two countries, the United Kingdom and France. The UK interest rate is 19 % while France's interest rate if 12%. Before the exchange
  16. (X)(Y)(Z) Which of the following could we infer?
    The prices for the factors of production in industry (Y) will increase.
  17. The economic approach to solving environmental problems such as pollution and endangered species does not require which of the following?
    Tempering personal need with more caring nature
  18. Which of the following causes a shift of a short-run average total cost curve?
    A change in technology
  19. Which of the following is an effective way to foreclose free markets (monopolize the market) ?
    Use the political process to prohibit free entry into the industry
  20. GOLF BALL WORKERS What happens given free trade and zero transaction costs?
    Workers in the Burma wages decrease to $1.50 per hour
  21. If elasticity coefficient is -.9, this implies:
    The good is an inferior good
  22. Which of the following is not an assumption or implication of public goods theory?
    One person's consumption of the good leaves less of the good for others to consume
  23. The theory of contestable markets implies:
    Potential competition is the same as actual competition when sunk costs are zero.
  24. company XYZ Which of the following is true?
    The general rate of return on investment is less than 7.5%.
  25. What is not true about choices in private and political markets?
    In the private market consumers have access to expensive return policies, while in political market recall policies are inexpensive
  26. What is true in respect to the two economic theories of the firm?
    The Caose Theory of the firm examines the costs and benefits associated with using the price system, while the Alchian-Demsetz theory examines the production prisoner's dilemma.
  27. Suppose two people Chuckie and Angelica. Below are their value scales. They want to trade. Which of the following is true?
    The marginal utility of the second trade for Angelica is the ball
  28. Which of the following is true?
    This is another trick question, none of the above is true.
  29. Which of the following is true?
    Eugene Bohm Bawerk proved that economic goods through time are different economic goods
  30. If all advertising were prohibited by law, what would occur?
    All of the above (dead weight losses, Prices ^ , Consumers wouldn't know their alternatives, less competition)
  31. Suppose we are in the auction market for cars. What are the limits of price formation?
    Between $ 4201 and $ 4250
  32. ......... .......... Economists rejected subjective value theory because:
    They did not understand that value is marginal
  33. Which of the following is true?
    The laws of derived demand define the casual relationship between the demand for final consumer goods and higher order producer goods.
Card Set
Econ Final
Econ 103 Final Exam