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ECON 211 Exam 3: Questions & Answers:Updated Solution

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Which of the following best describes scarce resources? (Ans- resources for which the quantity that people want exceeds the quantity that is freely available Economic reasoning implies that economic agents will make decisions: (Ans- by comparing the costs and benefits of various options Which of following statements correctly highlights the difference between micro and macro (Ans- micro deals with small parts of the economy, whereas macro deals with aggregate economic performance Which of the following statements is true of optimization (Ans- economic agents who optimize attempt to choose the best feasible option, given the information that they have A student has two options: she can either surf the web, or work parttime. Working part-time pays her $20 per hour. What is the student's opportunity cost of surfing the web for 5 hours? (Ans- $100Suppose the market for cement is such that the govt. does not interfere in price determination but plays an important role in the provision of property rights. While there are a large number of buyers and sellers, everyone conducts transactions at a common market price. Which of the following statements is true about the structure of the cement market? (Ans- the cement market is free and competitive Assume that a seller in a perfectly competitive market charges more than the equilibrium price. It is likely that the seller will: (Ans- lose almost all of his buyers The demand curve for most goods is normally: (Ans- downward sloping Which of the following factors will not cause a shift in the demand for a good? (Ans- a change in the market price of a good Which of the following is likely to lead to a right shift in the supply curve of cotton? (Ans- an increase in labor productivity due to training programsAssume that a worker in a technology firm can produce 3 circuit boards in an hour. Due to subsequent innovation, he is now able to produce 6 circuit boards per hour. Other things remaining the same, the firm's supply curve is likely to: (Ans- shift to the right ______ is the market value of the final goods and services produced within the borders of a country during a particular period of time (Ans- Gross Domestic Product Double counting occurs when: (Ans- inputs are included in the calculation of the gross domestic product Which of the following will be included in the calculation of GDP using expenditure method? (Ans- investments in machineries Which of the following will be included in the calculation of GDP using the income-based method? (Ans- health insurance provided to a worker by the employerJohn is a U.S. citizen who brought a house in Canada. This purchase will lead to a _____ (Ans- increase in the GDP of Canada

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