Econ 102 - Principles of Macroeconomics » Fall 2022 » Quiz 1

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Question #1
Which of the following is not a factor of production?
A.   human capital
B.   money
C.   physical capital
D.   labor
E.   natural resources
Question #2
Which of the following is an example of a normative statement?
A.   GDP in the US in 2019 was $21 trillion.
B.   Pollution decreased by 26% between 1990 and 2019 as measured by particulate matter.
C.   The top marginal tax rate should be 45%.
D.   Inflation between 2018 and 2019 was 2%.
E.   Unemployment fell to 5% in the month of July.
F.     
Question #3
What is the total economic profit (including opportunity cost) for the entrepreneur considering starting the business described here: Pat is considering leaving their job making $100,000 a year to start a company. They expect revenue in the first year to be $200,000. They expect to pay their employees a total of $50,000. They expect COGS to be $10,000. Pat will also invest $20,000 of their own money to buy equipment. This $20,000 was in a savings account earning 5% per year in interest.
A.   $39,000
B.   $49,000
C.   $29,000
D.   $34,000
E.   $100,000
Question #4
Consider the market for kale. Assume the FDA releases a new study on the health benefits of eating kale, while at the same time the cost of farm labor falls. What will the effect on equilbirium price and quantity. It may be helpful to draw a graph here showing supply and demand.
A.   the effect on quantity is unknown and price rises
B.   the effect on quantity is unknown and price falls
C.   quantity falls and price rises
D.   quantity rises and the effect on price is unknown
E.   quantity rises and price rises
Question #5
Assume two countries, Country A and Country B can produce only two products – wheat and corn. If country A devotes all their resources to wheat they can produce 100 units per year, and if they devote all their resources to corn, they can produce 25 units per year. If country B devotes all their resources to wheat they can produce 60 units per year, and if they devote all their resources to corn, they can produce 10 units per year. Which of the following statements is true?
A.   Country B has an absolute advantage in both goods. Country A has a comparative advantage in wheat.
B.   None of these are true
C.   Country A has an absolute advantage in both goods. Country B has a comparative advantage in wheat.
D.   Country B has a comparative advantage in wheat.
E.   Country A has a comparative advantage in wheat.
Question #6
If the countries described in question #9 specialize in the goods for which they have a comparative advantage in, what is the total amount of wheat and corn they will have collectively?
A.   100 units of corn, 10 units of wheat
B.   100 units of corn, 25 units of wheat
C.   100 units of corn, 60 units of wheat
D.   60 units of corn, 10 units of wheat
E.   25 units of corn, 60 units of wheat

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