ECON 103 FINAL EXAM QUESTIONS & ANSWERS
Suppose we have the case of negative externalities market failure . Given public choice
incentives we can infer: - Answers -Nothing can be inferred since the government can
also fail
"We can explain prices by their objective historical cost of production" Which school of
economic thought believed this view - Answers -Classical
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
unit of beer equals one unit of pretzels. Barney productivity: 20 min/beer and 15
min/pretzels & Fred productivity 25 min/beer and 35 min/pretzels. Which of the following
is TRUE? - Answers -Fred imports pretzels and exports beer
This question refers to question number 3. Suppose the government changes the price
from 1 unit of beer equals 1 unit of pretzels to 1/2 units of beer equal 1 unit of pretzels.
Which of the following is TRUE? - Answers -Barney is the short side of the market
Suppose there are two countries, the United Kingdom and France. The UK interest rate
is 19% while Frances's interest rate is 12%. Before the exchange rate adjusts, which of
the following will occur? - Answers -There will be a surplus of Francs in the UK
Suppose there are 3 industries competitive economy (X), (Y), and (Z). You notice that
marginal firms in industry X and industry Z are exiting and entering industry Y. Also,
assume all the factors of production used in X Y and Z are perfectly specialized
economic goods. Which of the following could we infer? - Answers -The prices for the
factors of production in industry Y will increase
The economic approach to solving environmental problems such as pollution and
endangered species DOES NOT require which of the following? - Answers -Tempering
personal need with caring for nature
Suppose golf ball workers in Canada can earn $15/hour, while golf ball workers in
Burma earn $2/hr on average. Assume the workers in Canada are 10 times more
productive than workers in Burma. What happens given free trade and zero transaction
costs? - Answers -Workers wage in Burma decreases to $1.50/hr
If an elasticity co-efficient is -.9 this implies: - Answers -The good is an inferior good
The theory of contestable markets implies: - Answers -Potential competition is the
same as competitors is relevant to the level of competitiveness
Suppose we have the case of negative externalities market failure . Given public choice
incentives we can infer: - Answers -Nothing can be inferred since the government can
also fail
"We can explain prices by their objective historical cost of production" Which school of
economic thought believed this view - Answers -Classical
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
unit of beer equals one unit of pretzels. Barney productivity: 20 min/beer and 15
min/pretzels & Fred productivity 25 min/beer and 35 min/pretzels. Which of the following
is TRUE? - Answers -Fred imports pretzels and exports beer
This question refers to question number 3. Suppose the government changes the price
from 1 unit of beer equals 1 unit of pretzels to 1/2 units of beer equal 1 unit of pretzels.
Which of the following is TRUE? - Answers -Barney is the short side of the market
Suppose there are two countries, the United Kingdom and France. The UK interest rate
is 19% while Frances's interest rate is 12%. Before the exchange rate adjusts, which of
the following will occur? - Answers -There will be a surplus of Francs in the UK
Suppose there are 3 industries competitive economy (X), (Y), and (Z). You notice that
marginal firms in industry X and industry Z are exiting and entering industry Y. Also,
assume all the factors of production used in X Y and Z are perfectly specialized
economic goods. Which of the following could we infer? - Answers -The prices for the
factors of production in industry Y will increase
The economic approach to solving environmental problems such as pollution and
endangered species DOES NOT require which of the following? - Answers -Tempering
personal need with caring for nature
Suppose golf ball workers in Canada can earn $15/hour, while golf ball workers in
Burma earn $2/hr on average. Assume the workers in Canada are 10 times more
productive than workers in Burma. What happens given free trade and zero transaction
costs? - Answers -Workers wage in Burma decreases to $1.50/hr
If an elasticity co-efficient is -.9 this implies: - Answers -The good is an inferior good
The theory of contestable markets implies: - Answers -Potential competition is the
same as competitors is relevant to the level of competitiveness
