ECON 201 Study Guide - Fall 2018, Comprehensive Midterm Notes - World Trade Organization, Wine, Virginia
12 Oct 2018
School
Department
Course
Professor
ECON 201
MIDTERM EXAM
STUDY GUIDE
Fall 2018
ECONc
Homework 1 (Chapter 1)
1. Which of the following best describes scarcity?
a. Unlimited wants exceed the limited resources available
2. Scarcity is central to the study of economics because it implies that
a. Every choice involves an opportunity cost
3. Scarcity implies that every society and every individual face trade-offs because scarcity means that
a. Human wants are greater than what available resources can produce
4. The three economic questions that every society must answer are
a. What goods will be produced, how will they be produced, and who will receive the goods?
5. Centrally planned economies allocate resources based on decisions by government, , while market
economies answer these questions through decisions made by households and firms.
6. Economists use models
a. To answer questions and analyze issues
7. Economic data is used
a. To test the models
8. Which of the following is not a step that economists use in developing a useful economic model?
a. Make a value judgement about the merits of the hypothesis
9. A primary difference between macroeconomics and microeconomics is
a. Microeconomics examines individual markets while macroeconomics examines the economy as
a whole
10. According to the FBI Bank Crime Statistics, there were more than 4,000 bank robberies in the United
States in 2015, an increase of 3.9 percent over 2014. The FBI claims that banks have made
themselves easy targets by refusing to install clear acrylic partitions, called bandit barriers, that
separate bank tellers from the public. According to a special agent with the FBI, "Bandit barriers are
a great deterrent. We've talked to guys who rob banks, and as soon as they see a bandit barrier, they
go find another bank."
Sources: U.S. Department of Justice, Federal Bureau of Investigation, "Bank Crime Statistics 2015,"
and "Bank Crime Statistics 2014"; and Richard Cowen, "FBI: Banks Are to Blame for Rise in
Robberies," NorthJersey.com, March 10, 2009. Despite this finding, many banks have been reluctant
to install these barriers. Wouldn't banks have a strong incentive to install bandit barriers to deter
robberies? Why, then, do so many banks not do so?
a. Banks have no economic incentive to install the barriers
11. The grading system is a powerful resource for teachers. In their book Effective Grading: A Tool for
Learning and Assessment, Barbara Walvoord and Virginia Anderson state that "teachers must
manage the power and complexity of the grading system" and that "teachers must consider grading
in their first deliberations about a course." Based on Barbara E. Walvoord and Virginia Johnson
Anderson, Effective Grading: A Tool for Learning and Assessment, Jossey-Bass: San Francisco, 1998,
pp. xvii-xviii.
a. The grading system used by a teacher can affect the incentives of students to learn the course
material
i. By altering the payoffs to achieving success on the various components of the course
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b. If teachers put too little weight in the grading scale on a certain part of the course, like readings
outside the textbook, students might respond by de-emphasizing that part of the course.
c. Teachers often wish that students came to class prepared having read the upcoming material. A
teacher could design the grading system to motivate students to come to class prepared
increasing the grade weight assigned to being prepared.
12. Does Bill Gates, the richest person in the world, face scarcity?
a. Yes, Bill Gates faces scarcity because his wants exceed his resources
13. The underlying reason that centrally planned economies have been less efficient seems to be that
such planned economies do not give as great incentives for hard work and innovation as market
economies do.
14. If market economies are more economically efficient than centrally planned economies, there still
might be a reason to prefer having a centrally planned economy if it is more equitable.
15. Dr. Strangelove's theory is that the price of mushrooms is determined by the activity of subatomic
particles that exist in another universe parallel to ours. When the subatomic particles are emitted in
profusion, the price of mushrooms is high. When subatomic particle emissions are low, the price of
mushrooms also is low.
a. Is it possible to test this theory? No
16. Indicate whether each of the following is primarily a microeconomic issue or a macroeconomic issue.
a. The effect of higher cigarette taxes on the quantity of cigarettes sold. This is a microeconomic
issue
b. The effect of higher income taxes on the total amount of consumer spending. This is a
macroeconomic issue
c. The reasons for the economies of East Asian countries growing faster than the economies of sub-
Saharan African countries. This is a macroeconomic issue
d. The reasons for low rates of profit in the airline industry. This is a microeconomic issue
17. The accompanying table gives the relationship between the price of custard pies and the number of
pies Jacob buys per week.
Price
($ per pie)
Quantity of pies
Week
$3.00
7
July 2
2.00
8
July 9
5.00
5
July 16
6.00
4
July 23
1.00
9
July 30
4.00
6
August 6
a. Is the relationship between the price of pies and the number of pies Jacob buys a positive
relationship or a negative relationship?
i. Negative Relationship
b. Plot the data
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Document Summary
States in 2015, an increase of 3. 9 percent over 2014. The fbi claims that banks have made themselves easy targets by refusing to install clear acrylic partitions, called bandit barriers, that separate bank tellers from the public. According to a special agent with the fbi, "bandit barriers are a great deterrent. We"ve talked to guys who rob banks, and as soon as they see a bandit barrier, they go find another bank. " Sources: u. s. department of justice, federal bureau of investigation, "bank crime statistics 2015," and "bank crime statistics 2014"; and richard cowen, "fbi: banks are to blame for rise in. Despite this finding, many banks have been reluctant to install these barriers. Why, then, do so many banks not do so: banks have no economic incentive to install the barriers, the grading system is a powerful resource for teachers. In their book effective grading: a tool for.
