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ECN 201 Midterm (Vandana Jain Units 1,3,4,5)
Terms in this set (43)
Eden, a country, produces just two output goods: apples and snakeskin handbags. The quantities produced and the prices of the two goods in 2016 and 2017 (in $) are given below. Based on this information, which of the following statements is correct?
Nominal GDP growth rate between 2016 and 2017 was 9.1%
The following table shows the nominal GDP (in 2015 US dollars) and the population of Japan in 2013 and 2014 (source: The World Bank). Based on this information which of the following statements regarding GDP per capita is correct?
The GDP per capita fell by 6.31% between 2013 and 2014.
In order to gain from specialization, people/firms/countries should focus on the goods or services they can produce in which they have a _________
lower opportunity cost.
Which of the following is NOT one of the three key institutions of capitalism
Which of the following is NOT a reason that people and firms can increase productivity by focusing on one specific activity?
Economies of scope
The following figure shows the distribution of income across and within countries in 2014. The height of each bar represents the annual income of the population (for each decile), measured in 2005 US$, while the width of each country's bar represents its population. The red countries were the poorest countries in 1980, while the green countries were the richest in 1980. Based on this information, which of the following statements is correct?
The poorest decile in the richest countries earns more than the richest decile of the poorest countries.
Consider a world of just two individuals, Greta and Carlos, who each need both of two goods, apples and wheat, to survive. They differ in how productive they are in growing apples and wheat. Based on this information, which of the following statements is correct?
Carlos has a comparative disadvantage in producing apples.
Alan and Beatrice have broken the rules and colluded in their coursework assignment, so the examiners are going to interview them. The interviews are taking place simultaneously and there is no communication allowed between the two. The students can either deny or confess to have colluded. The raw marks without penalty are 65 for Alan and 70 for Beatrice. The examiners have decided on the following scheme: if they both deny they will still be penalised by 20 marks respectively, if one denies and the other confesses then the denying student gets zero marks while the confessing student retains their raw mark, and if they both confess, then they both get the pass mark of 40. The possible outcomes are summarised in the table below. Based on this information which of the following statements is correct?
The examiners have managed to devise a scheme in which the students will definitely confess.
Consider a laboratory experiment where participants play 10 rounds of a public goods game. In each round the subjects are given $20. In a randomly selected group of four they simultaneously and privately decide on a contribution from their $20 to a common pool of money, where each person in the group receives $0.40 for every dollar contributed, including the contributor. For example, if the other three members contribute $10 each then your payoff is $32 if you don?t contribute, or $26 if you do. The following figure shows the evolution of average contributions over the rounds when the experiment was conducted in different locations around the world. Based on this information, which of the following statements is correct?
A disappointed expectation of reciprocity may be the reason for the falling contributions over the rounds.
Consider an ultimatum game in which a Proposer offers a two-way split of $100 to two respondents. If either of the Responders accepts but not the other, that Responder and the Proposer get the split and the other Responder gets nothing. If no one accepts, no one gets anything, including the Proposer. If both Responders accept, one is chosen at random to receive the split. The following figure shows some laboratory evidence of this ultimatum game, with the proportion offered to the Responder on the horizontal axis. Based on this information, which of the following statements is correct?
When competition is introduced, the Responders may have a higher probability of accepting, as they can no longer be sure that their rejection will punish the Proposer.
Which of the following statements is correct?
A dominant strategy is the strategy that gives the player the highest payoff, irrespective of the strategies selected by other players.
In a simultaneous one-shot prisoners' dilemma game with completely self-interested players:
The players' payoffs are lower in the dominant strategy equilibrium than in some other outcomes.
When a responder rejects a positive offer in the ultimatum game, he is showing a preference for ________.
The figure shows a game tree for an ultimatum game, where the Proposer has $100 and offers a proportion of it to the Responder, who can either accept or reject the offer. If the Responder accepts, both the Proposer and the Responder keep the agreed share, while if the Responder rejects, then both receive nothing. Which of the following statements is correct?
If the Responder?s minimum acceptable offer is 21, then he attains a higher utility from rejecting than accepting the offer (80, 20).
Consider the figure showing Angela's biological survival constraint, reservation indifference curve, and the feasible frontier. In which of the following cases would the area of the economically feasible set increase? (In each case assume that all other factors remain the same).
New technology increases Angela's productivity
Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno for the use of the land. The figure shows Angela and Bruno's feasible frontier, Angela's biological survival constraint and her reservation indifference curve. Currently, if Angela does not work she receives a ration of 2.5 bushels from the government. Of the four depicted in the figure, which allocation strictly Pareto dominates Z?
(d) on curve slightly above Z (angelas reservation option)
Which of the following statements regarding bargaining power are correct?
In a dictator game, the Proposer has all the bargaining power
The figure shows Angela and Bruno's feasible frontier, Angela's biological survival constraint, and her reservation indifference curve. The total amount of grain produced is 8 bushels if Angela works for 8 hours, and 10 bushels if she works for 11 hours. From this information, we can conclude that:
Under voluntary exchange, Angela will choose not to work if she is offered 2 bushels of grain for 16 hours of free time
Anil and Bala have the choice of using either Integrated Pest Control (IPC) or Terminator (T) to solve the problem of pest insects. The table below shows their payoffs depending on their choice. The following diagram shows these possible outcomes on a graph. Based on the information above, which of the following is correct?
(T, T) is the only Pareto inefficient outcome.
The figure below shows Angela and Bruno's feasible frontier, Angela's biological survival constraint, and her reservation indifference curve, when Angela would accept any offers strictly better than her reservation position of no work and 2 bushels of survival rations from the government. Now consider the case where Angela cares about the fairness of distribution, such that she can reject an offer that she considers unfair and choose not to work. In such a case Bruno will also receive no income. Then, compared to the reservation indifference curve depicted above, Angela's new reservation indifference curve is:
Steeper and goes through Z.
You are given the following graph of Gini coefficients over the past three centuries for Britain, the United States, and the Netherlands. The information in the figure suggests that:
Over time, capitalist economies can become less as well as more equal.
Between 1980 and 2014, the gini coeficient has __________ within most countries.
A ________ is a way of connecting people who may mutually benefit by exchanging goods or services through a process of buying and selling.
If real GDP per capita grows from $10,000 to to $10,500, then the growth rate is:
When the textbook refers to "history's hockey stick", it is referring to:
The increase in growth of real GDP per capita that many countries have experienced at some point after the 19th century
Most economists agree that one cost of the rapid economic growth of the last 200 years has been the increase in _____________ such as CO2 which is correlated with increased __________________.
pollution; global temperatures
The figure depicts the annual number of hours worked against GDP per capita in the US, France, and the Netherlands between 1870 and 2000. Which of the following is true?
The Great Depression in 1929 had the effect of reducing both hours worked and output in both the US and France.
The figure shows a student's production function with the final grade (the output) related to the number of hours spent studying (the input). Which of the following statements regarding the average product of labour (APL) is correct?
The APL is decreasing beyond 15 hours of study.
The figure shows the indifference curves of a student for the two goods? free time and final grade. Based on this information, which of the following statements is correct?
At A, the student is willing to give up 34 grade points for five extra hours of free time.
If a worker earns $20 per hour and can work up to 16 hours a day, then the slope of the daily budget constraint is -$____ and the vertical intercept is $____.
The following diagram is the feasible set of a student, showing the combinations of her final grade and the hours of free time per day. Based on this information, we can say that:
The marginal rate of transformation at A is 3, meaning that the student can "transform" one hour of free time into 3 extra points on her grade.
In a simultaneous one-shot prisoners' dilemma game:
The players' payoffs are lower in the dominant strategy equilibrium than in some other outcomes.
The problem in providing __________ is that some people may choose to __________ by consuming the good but not paying for it.
public goods; free ride
In a simultaneous one-shot game:
A player chooses an action taking into account the possible actions that other players can take.
Figure 4.10 depicts the average number of late-coming parents per week in day-care centres, where a fine was introduced in some centres and not in others. The fines were eventually abolished, as indicated on the graph. Based on this information, which of the following statements is correct?
The graph suggests that the experiment may have permanently increased the parents' tendency to be late
Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno for the use of the land. Angela and Bruno's feasible frontier is downward sloping and concave, while Angela's biological survival constraint is downward sloping and convex (as shown in the figure). If Bruno has all the bargaining power, which of the following statements is correct?
When the MRT of work hours into grain output is greater than the MRS of work hours into subsistence requirements, then Bruno should decrease Angela's free time.
Consider the following figure, showing Angela's biological survival constrant, reservation indifference curve, and the feasible frontier. In which of the following cases would the area of the economically feasible set increase? (In each case assume that all other factors remain the same).
New technology increases Angela's productivity.
You are given the following table for a students production function with the final grade (the output) related to the number of hours spent studying (the input). Which of the following options correctly fills in a missing number?
The following is a plot of GDP per capita against average annual hours of free time per worker in different countries. Which of the following statements is correct?
Workers in the US and Turkey enjoy a similar amount of free time despite the huge disparity of income.
Consider an individual's indifference curves for the consumption of two goods (things you would like to have more of). In this case, which of the following statements are true?
The indifference curves are downward-sloping.
The figure shows a student's feasible frontier and her indifference curves for final exam marks and the hours of free time per day. The table also gives the marginal rate of substitution (MRS) and the marginal rate of transformation (MRT) for the points shown in the figure. Based on this information, which of the following statements is correct?
At A, one hour of free time is equivalent in value to 3 grade points. However, 1 extra hour of studying leads to 20 extra grade points. She should therefore study more.
The figure shows a student's feasible frontier and her indifference curves for her final exam grade and the hours of free time per day. Based on this information, which of the following statements is correct?
Any points above IC3 are strictly preferred to a student's final choice but are unattainable.
The following diagram is the feasible set of a student, showing the combination of her final grade and the hours of free time per day. Based on this information, we can say that.
The marginal rate of transformation increases with higher number of free hours.
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