ECON 101 EXAMINATION
PREPARATION QUESTIONS AND
ANSWERS
Which of the following statements is normative? - Answer-Scientists should not make
normative statements.
If an economy moves from producing 10 units of milk and 4 units of cheese to producing
7 units of milk and 5 units of cheese, the opportunity cost of the fifth unit of cheese is: -
Answer-three units of milk.
Factors of production include all of the following EXCEPT _____. - Answer-money
The principle of comparative advantage suggests that if New York trades taxi parts to
Florida in exchange for oranges, then: - Answer-New York has a comparative
advantage in taxi parts, and Florida has a comparative advantage in oranges.
(Table: Pineapple and Banana Production Possibilities) Use Table: Pineapple and
Banana Production Possibilities. The table shows the maximum number of pineapples
or bananas that Laura and Lindsay can produce when each produces only one good.
The table implies that Lindsay has an absolute advantage in the production of:
Table: Pineapple and Banana Production Possibilities
Pineapples Bananas
Laura 12 8
Lindsay 5 5 - Answer-neither bananas nor pineapples.
Assume that Brazil gives up three cars for each ton of sugar cane it produces, while
Peru gives up seven cars for each ton of sugar cane it produces. Brazil has a
comparative advantage in _____ production and should specialize in _____. - Answer-
sugar cane; sugar cane
Marius and Jennifer are going to sell cupcakes and muffins at their third annual
fundraiser bake sale. In one day, Marius can make 40 cupcakes or 20 muffins, and
Jennifer can make 15 cupcakes or 15 muffins. With specialization, _____ cupcakes and
_____ muffins will be made in one day. - Answer-40; 15
In one day, Keshia can bake 10 muffins or mix 15 glasses of passion fruit juice. His
friend Alicia can bake 10 muffins or mix 10 glasses of passionfruit juice. His other friend,
, Ewan, can bake 10 muffins or mix 20 glasses of passionfruit juice. Who has the
LOWEST opportunity cost in muffin production? - Answer-Alicia
(Table: Corn and Steel) Use Table: Corn and Steel. The United States and Canada can
produce both corn and steel. The table shows the maximum annual output
combinations of corn and steel that can be produced. Based on the table:
Look in notes - Answer-the United States has a comparative advantage in corn and an
absolute advantage in corn.
Which of the following scenarios involves no opportunity cost? - Answer-All of these
scenarios have an opportunity cost.
You have a part time job that pays $8 per hour. Your manager has asked you to work
four extra hours on Friday night, but you already have plans for dinner and a movie with
a friend on Friday night. - Answer-You value the extra pay more than the Friday night
activities (in terms of marginal benefits, marginal costs, and your utility).
Which is NOT an example of a resource? - Answer-money
Which is the best definition of efficiency? - Answer-when nobody can be made better off
without making someone worse off
Which word or phrase best identifies the fundamental focus of economics? - Answer-
choice
Which of the following is the best definition of the opportunity cost of a decision? -
Answer-Benefits from the best foregone alternative.
Suppose there are only two goods produced in an economy: phones and meals. Maria
is adept at assembling electronics but has poor skills at preparing food. Mike is an
accomplished chef but is not very skilled at assembling electronics.
Currently Mike and Maria each work independently, and they each produce both meals
and phones. However, they are considering trading some of their respective output with
each other, but only if that would allow each person to become more prosperous. -
Answer-Mike and Maria will both gain only if they trade the same number of phones for
the same number of meals.
Please select the economic term that is best described by each statement.
1. People have limited resources.
2. Everything you do requires giving up something (time, money, etc.). - Answer-1.
Scarcity
PREPARATION QUESTIONS AND
ANSWERS
Which of the following statements is normative? - Answer-Scientists should not make
normative statements.
If an economy moves from producing 10 units of milk and 4 units of cheese to producing
7 units of milk and 5 units of cheese, the opportunity cost of the fifth unit of cheese is: -
Answer-three units of milk.
Factors of production include all of the following EXCEPT _____. - Answer-money
The principle of comparative advantage suggests that if New York trades taxi parts to
Florida in exchange for oranges, then: - Answer-New York has a comparative
advantage in taxi parts, and Florida has a comparative advantage in oranges.
(Table: Pineapple and Banana Production Possibilities) Use Table: Pineapple and
Banana Production Possibilities. The table shows the maximum number of pineapples
or bananas that Laura and Lindsay can produce when each produces only one good.
The table implies that Lindsay has an absolute advantage in the production of:
Table: Pineapple and Banana Production Possibilities
Pineapples Bananas
Laura 12 8
Lindsay 5 5 - Answer-neither bananas nor pineapples.
Assume that Brazil gives up three cars for each ton of sugar cane it produces, while
Peru gives up seven cars for each ton of sugar cane it produces. Brazil has a
comparative advantage in _____ production and should specialize in _____. - Answer-
sugar cane; sugar cane
Marius and Jennifer are going to sell cupcakes and muffins at their third annual
fundraiser bake sale. In one day, Marius can make 40 cupcakes or 20 muffins, and
Jennifer can make 15 cupcakes or 15 muffins. With specialization, _____ cupcakes and
_____ muffins will be made in one day. - Answer-40; 15
In one day, Keshia can bake 10 muffins or mix 15 glasses of passion fruit juice. His
friend Alicia can bake 10 muffins or mix 10 glasses of passionfruit juice. His other friend,
, Ewan, can bake 10 muffins or mix 20 glasses of passionfruit juice. Who has the
LOWEST opportunity cost in muffin production? - Answer-Alicia
(Table: Corn and Steel) Use Table: Corn and Steel. The United States and Canada can
produce both corn and steel. The table shows the maximum annual output
combinations of corn and steel that can be produced. Based on the table:
Look in notes - Answer-the United States has a comparative advantage in corn and an
absolute advantage in corn.
Which of the following scenarios involves no opportunity cost? - Answer-All of these
scenarios have an opportunity cost.
You have a part time job that pays $8 per hour. Your manager has asked you to work
four extra hours on Friday night, but you already have plans for dinner and a movie with
a friend on Friday night. - Answer-You value the extra pay more than the Friday night
activities (in terms of marginal benefits, marginal costs, and your utility).
Which is NOT an example of a resource? - Answer-money
Which is the best definition of efficiency? - Answer-when nobody can be made better off
without making someone worse off
Which word or phrase best identifies the fundamental focus of economics? - Answer-
choice
Which of the following is the best definition of the opportunity cost of a decision? -
Answer-Benefits from the best foregone alternative.
Suppose there are only two goods produced in an economy: phones and meals. Maria
is adept at assembling electronics but has poor skills at preparing food. Mike is an
accomplished chef but is not very skilled at assembling electronics.
Currently Mike and Maria each work independently, and they each produce both meals
and phones. However, they are considering trading some of their respective output with
each other, but only if that would allow each person to become more prosperous. -
Answer-Mike and Maria will both gain only if they trade the same number of phones for
the same number of meals.
Please select the economic term that is best described by each statement.
1. People have limited resources.
2. Everything you do requires giving up something (time, money, etc.). - Answer-1.
Scarcity
