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ECON 140

CH (1) - Homework

1st

Semester 2021/2022

Online Classes

لنفسه فقط للدراسة، منها بالدورة الإنتفاع حيث يحق للمسجل@ حقوق النشر محفوظة لمركز التعلم الإقتصادي.

ع بها / طباعتها ولا يجوز له بيع هذه المذكرات، أو ، تصويرها / تناقلها / التبر أو النقل أو تدريس الغبر من خلالها، للغبر

من محتوياتها بأي طريقة كانت، إلا بإذن مكتوب من إدارة المركز أو مدرس المادة بالمركز.

© Economics Learning Center Online Classes - CH 1 Homework 1st Semester 2021/2022

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BoAbbas (Homework) - CH 1 1st Semester 2021/2022

ECON 140

NAME:

Q1: Choose the one alternative that best completes the answers the question:

1. Which of the following is a positive statement?

A) state lotteries should be used to increase revenues

B) my economics class should last for two terms because it is my favorite class

C) a 10 percent increase in income leads to a 4 percent increase in the consumption of

beef.

D) the government should eliminate labor unions

2. The most fundamental economic problem is

A) security

B) scarcity.

C) health

D) the fact the United States buys more goods from foreigners than we sell to foreigners

3. Economics is best defined as the study of how people, businesses, governments, and

societies

A) choose abundance over scarcity

B) make choices to cope with scarcity.

C) use their infinite resources

D) attain wealth

4. The analysis of the behavior of individual decision-making units is the definition of

A) microeconomics.

B) positive economics

C) macroeconomics

D) normative economics

5. The question “Should movies or compact discs be produced?” is an example of

A) “what” question. B) “how” question

C) “where” question D) “for whom” question





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6. An autoworker is considered ____ and earns____.

A) labor; rent B) entrepreneurship; wages

C) labor; wages. D) capital; rent

7. The loss of the highest-valued alternative defines the concept of

A) marginal benefit

B) scarcity

C) entrepreneurship

D) opportunity cost.

8. A positive statement is

A) about what ought to be

B) about what is.

C) always true

D) one that does not use the ceteris paribus clause

9. Normative statements are statements about

A) prices

B) quantities

C) what is

D) what ought to be.

10. The Latin term “ceteris paribus” means

A) “false unless proven true”

B) “other things being equal”.

C) “after this, therefore because of this”

D) “what is true of the whole is not necessarily true of the parts”

11. The production possibilities frontier is

A) upward sloping and reflects unlimited choices

B) upward sloping and reflects tradeoffs in choices

C) downward sloping and reflects unlimited choices

D) downward sloping and reflects tradeoffs in choices.

12. Any production point outside the production possibilities frontier

A) is unattainable.

B) is associated with unused resources

C) is attainable only if prices fall

D) is attainable only if prices rise





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13. A point inside a production possibilities frontier

A) could indicate that resources are misallocated.

B) is more efficient than a point on the production possibilities frontier

C) reflects the fact that more technology needs to be developed to fully employ all

resources

D) implies that too much labor and not enough capital is being used

14. Refer to the production possibilities frontier in the figure above. Which point indicates

that resources are NOT fully utilized or are misallocated?

A) Point a

B) Point b

C) Point c.

D) Point e

15. Refer to the production possibilities frontier in the figure above. Which point is

unattainable?

A) Point a

B) Point b

C) Point c

D) Point e.

16. Refer to the production possibilities frontier in the figure above. Suppose a country is at

point a. A movement to point ____ means that the country ____.

A) d; must give up 20 million capital goods.

B) e; is not operating efficiently

C) d; gives up 10 million consumer goods

D) b; is producing at an inefficient point





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Point Production of grain (tons) Production of cars (cars)

A 0 30

B 2 28

C 4 24

D 6 18

E 8 10

F 10 0

17. The table above lists six points on the production possibilities frontier for grain and cars.

Given this information, which of the following combinations is unattainable?

A) 6 tons of grain and 18 cars

B) 4 tons of grain and 26 cars.

C) 2 tons of grain and 27 cars

D) 7 tons of grain and 10 cars

18. The table above lists six points on the production possibilities frontier for grain and cars.

From this information you can conclude that production is inefficient if this economy

produces

A) 6 tons of grain and 18 cars

B) 4 tons of grain and 26 cars

C) 2 tons of grain and 27 cars.

D) 8 tons of grain and 10 cars

19. Bahrain producers decide to produce more small cars and fewer big cars as the price of

gasoline rises. Producers are answering the _________________ question.

A) what.

B) how

C) when

D) how many

20. Marginal cost curves generally slope

A) upward because of increasing opportunity cost.

B) upward because of decreasing opportunity cost

C) downward because of increasing opportunity cost

D) downward because of decreasing opportunity cost





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21. The marginal benefit of a good or service usually

A) increases as we consume more of it

B) decreases as we consume more of it.

C) stays constant as we consume more of it

D) decreases as we consume less of it

22. When we cannot produce more of any good without giving up some other good that we

value more highly, we have achieved

A) production

B) equity

C) allocative efficiency.

D) economic growth

23. If the marginal benefit of a good exceeds its marginal cost

A) we’ve achieved efficient resource use

B) we should produce more.

C) we should produce less

D) we cannot tell if more or less should be produced

24. A key factor that leads to economic growth is

A) human capital accumulation.

B) increasing current consumption

C) avoiding the opportunity cost of investment

D) both answers A and B are correct

25. Technological progress makes the production possibilities frontier

A) shift inward toward the origin

B) become more linear and less bowed

C) shift outward from the origin.

D) become less linear and more bowed

26. All economic questions are about

A) how to make money

B) what to produce

C) how to cope with scarcity.

D) how to satisfy all our wants





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27. The most fundamental economic problem is

A) security

B) scarcity.

C) health

D) the fact the United States buys more goods from foreigners than we sell to foreigners

28. Scarcity requires that people must

A) cooperate

B) compete

C) trade

D) make choices.

29. In every economic system, choices must be made because resources are ________ and

our wants are ________

A) unlimited; limited

B) limited; unlimited.

C) unlimited; unlimited

D) limited; limited

30. Economics is the study of

A) the distribution of surplus goods to those in need

B) affluence in a morally bankrupt world

C) the choices we make because of scarcity.

D) ways to reduce wants to eliminate the problem of scarcity

31. The study of the choices made by individuals is part of the definition of

A) Microeconomics.

B) positive economics

C) macroeconomics

D) normative economics

32. The branch of economics that deals with the analysis of the whole economy is called

A) macroeconomics.

B) marginal analysis

C) microeconomics

D) metroanalysis





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33. Macroeconomics differs from microeconomics in that:

A) macroeconomics studies the decisions of individuals

B) microeconomics looks at the economy as a whole

C) macroeconomics studies the behavior of government while microeconomics looks at

private corporations

D) macroeconomics focuses on the national economy and the global economy.

34. When an economy produces more houses and fewer typewriters, it is answering the

________ question.

A) "what".

B) "how"

C) "where"

D) "for whom"

35. When a firm decides to produce more electric cars and fewer gas guzzlers, it is most

directly answering the ________ question.

A) "how"

B) "scarcity"

C) "what".

D) "for whom"

36. When a textile company keeps track of its inventory using a computer and its competitor

uses a spreadsheet and pencil, they are both answering the ________ question.

A) "what"

B) "how".

C) "for whom"

D) "where"

37. The fact that people with higher incomes get to consume more goods and services

addresses the ________ question.

A) "for whom".

B) "when"

C) "where"

D) "how"

38. What are the four categories into which factors of production are grouped?

A) profit, wages, rent, and interest

B) land, labor, capital, and entrepreneurship.

C) capital, human capital, land, and labor

D) entrepreneurship, profit, labor, and wages





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39. Entrepreneurs do all of the following EXCEPT

A) organize labor, land, and capital

B) come up with new ideas about what and how to produce

C) bear risk from business decisions

D) own all the other resources used in the production process.

40. Which of the following is NOT an investment in human capital?

A) a medical student's internship

B) a student's purchase of a personal computer.

C) a mechanic attends a training workshop on a new type of engine

D) Johnny learns how to read

41. A person goes to college to become an engineer. This is an example of an

A) investment in physical capital

B) investment in human capital.

C) increase in entrepreneurship

D) increase in labor

42. Opportunity cost is best defined as

A) how much money is paid for something

B) how much money is paid for something, taking inflation into account

C) the highest-valued alternative that is given up to get something.

D) all the alternatives that are given up to get something

43. The benefit that arises from an increase in an activity is called

A) the marginal benefit. B) the marginal cost

C) opportunity cost D) an incentive

44. A cost due to an increase in activity is called

A) an incentive loss

B) a marginal cost.

C) a negative marginal benefit

D) the total cost





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Q2: The following table shows the production possibilities schedule for TWO goods:

Possibilities Good 1

(Burger)

Good 2

(Pizza)

Opportunity

cost

MB

A 0 100 -

B 1 90 30

C 2 75 25

D 3 55 20

E 4 30 10

F 5 0 0

1. Which of the following production possibilities are: attainable & efficient, attainable

but inefficient, unattainable?

Possibilities The answer

X 2 Burger with 65 Pizza

Y 4 Burger with 35 Pizza

Z 3 Burger with 55 Pizza

2. Calculate the opportunity cost of producing an additional unit of Burger. (Fill the

column above)

3. The above table shows the Marginal Benefit (MB) of an additional unit consumption of

Burger. Determine the point at which the economy is at Allocative efficient, Why?

4. What is the opportunity cost of producing the first 30 Pizza?

5. What is the opportunity cost if we increase production of Pizza from 55 to 90?

6. What is the opportunity cost of producing the first 1 Burger?





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7. What is the opportunity cost if we increase production of Burger from 2 to 4?

8. Is this PPF bows outward (concave), bows inward (convex), or street-line? Why?

9. Make a graph to draw the general form of the PPF assuming Burger in the Horizontal

axis, while Pizza in the Vertical axis.

10. Add in your graph above the points for the possibilities (X) and (Y).

11. How can the economy reach point (Y)?





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Q3: Using this Table, answer the below questions:

1. What is the marginal benefit and the marginal cost of the 25th car?

2. Should the 25th car be produced? Should the 75th be produced? Why or why not?

3. What is the Allocative efficiency quantity of cars? Why?

4. Draw the Marginal Benefit & Marginal Cost curves based on the table above?

Car per day

(Q) MB MC

0 4 0

25 3 1

50 2 2

75 1 3

100 0 4





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Q4: From the following table above, Y is measured along the y-axis and X along the x-axis.

Point X Y Slope =change Y/change X

a 100 50

b 200 75

c 300 100

d 400 100

e 500 75

f 600 50

1. Calculate the slope between each two points.

2. What is the relation between X and Y? show the relation graphically





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