Quiz 1 Eco 261 Principles of Microeconomics Instructor: A.

Biswas Fall 2010 Due date: 7th September, 2010 Quiz submission policy: The quiz is due at the beginning of due dates class (that is 7th September, 2010) and late submission will not be accepted. The only exception is that if you arrive to class late and submit the quiz immediately when entering the classroom, it will be accepted. Once class ends no quiz will be accepted (even if class ends early). Quiz must be submitted during class. So, for example, quiz placed in my mailbox will not be accepted. The only exception is that if you make arrangements with us and obtain our prior permission. If you think any of the questions are ambiguous or have multiple correct answers you should justify your interpretation and defend your answers. Instructions 1. Please write your name and student-id and please staple all the pages together and submit at the beginning of due dates class for credits. Name:.. student-ID: True-false type questions: Each question worth 2 points Please indicate your answer clearly. Unclear answers will not earn credit. 1. Economics is the study of how society allocates its unlimited resources. True or False

2. With careful planning, we can usually get something that we like without having to give up something else that we like. True or False 3. All scientific models, including economic models, simplify reality in order to improve our understanding of it. True or False 4. In the circular-flow diagram, firms consume all the goods and services that they produce. True or False 5. The production possibilities frontier is a graph that shows the various combinations of outputs that the economy can possibly produce given the available factors of production and the available production technology. True or False

Multiple choice type questions: Each question worth 2 points Circle the letter (a or b or c or d) representing the best answer. Unclear answers will not earn credit. 6. a. b. c. d. 7. Economics deals primarily with the concept of scarcity. money. poverty. banking.

Which of the following phrases best captures the notion of efficiency? a. absolute fairness b. equal distribution c. minimum waste d. equitable outcome Economists, like mathematicians, physicists, and biologists, a. make use of the scientific method. b. try to address their subject with a scientists objectivity. c. devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories. d. All of the above are correct.

8.

9. In the circular-flow diagram, which of the following items flows from households to firms through the markets for the factors of production? a. goods and services b. land, labor, and capital c. dollars spent on goods and services d. wages, rent, and profit 10. The production possibilities frontier is a graph that shows the various combinations of output that an economy a. should produce. b. wants to produce. c. can produce. d. demands.

Extra Credit: 2 points Circle the letter (a or b or c or d) representing the best answer. Unclear answers will not earn extra credit. 1. Which of the following is a correct statement about production possibilities frontiers? a. An economy can produce only on the production possibilities frontier. b. An economy can produce at any point inside or outside a production possibilities frontier. c. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier. d. An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier.