Exam Code: 104 - University of Alberta

1. What do economists mean when they state that a good is scarce?a. There is a shortage of the good at the current price.b. It is impossible to expand the availability of the good.c. People will want to buy more of the good regardless of the price.d. Our wants exceed our limited resources.22. The branch of economics that studies the aggregate decisions of all households and firms is called:a. positive economics.b. normative economics.c. microeconomics.d. macroeconomics.3. “When one hockey team spends a large sum of money acquiring better players, it is better off. If all teams dothe same thing, all of them are better off.”These statements demonstrate:a. the fallacy of composition.b. confusing correlation with causation.c. a misunderstanding of the direction of causation.d. the ceteris pairbus condition.4. Which of the following is motivated by an efficiency concern?a. In December 2006, the Bush administration restarted a short term housing assistance program for victimsof Hurricane Katrina.b. Each year, the University of Notre-Dame conducts a lottery to parcel out the 30,000 seats available tocontributors, former athletes and parents in the 80,000 seat stadium.c. The United Network for Organ Sharing advocates a system of rationing scarce kidneys that would favouryoung patients over old in an effort to wring more life out of donated organs.d. The U. S. federal government’s housing choice voucher program assists very low income families, theelderly, and the disabled to afford decent, safe, and sanitary housing in the private market.5. Ken Cleanairsystems paid $300 to take a course on flower arranging. The course meets 30 times, for onehour a class, over a four month period. Instead of attending class, Ken could either flip hamburgers for $8 anhour or wait tables $6 per hour. The opportunity cost of attending each class sessiona. $300.b. $8.c. $6.d. $14.e. $240.6. Suppose that the economy of Elbe is operating at some point inside of the PPF. One possible explanation isa. the Elbian economy has very poor technology.b. resources are being used inefficiently.c. the Elbian economy has very few resources.d. the Elbian economy is operating at maximum efficiency.Refer to the table below when answering the next question concerning the production possibilities data forAnviliania.A B C D EKaldors 0 4 8 12 16Lupines 60 54 42 24 07. Suppose that Freedonia is currently producing combination B. What is the opportunity cost of 1 moreKaldor?