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General Direction: Write All Your Answers in Separate Sheet of Paper

This document provides an example preparatory assessment for a basic microeconomics course. It contains 4 questions that assess different microeconomic concepts. Question 1 asks students to classify topics as relating to microeconomics or macroeconomics. Question 2 asks students to classify statements as positive or normative. Question 3 asks students to identify parts of the circular flow model for different economic activities. Question 4 provides an example economy and asks students to calculate production possibilities, graph the production possibilities frontier, and analyze efficiency. The document aims to prepare students for assessments of foundational microeconomic concepts.

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Roey Mijares
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95 views1 page

General Direction: Write All Your Answers in Separate Sheet of Paper

This document provides an example preparatory assessment for a basic microeconomics course. It contains 4 questions that assess different microeconomic concepts. Question 1 asks students to classify topics as relating to microeconomics or macroeconomics. Question 2 asks students to classify statements as positive or normative. Question 3 asks students to identify parts of the circular flow model for different economic activities. Question 4 provides an example economy and asks students to calculate production possibilities, graph the production possibilities frontier, and analyze efficiency. The document aims to prepare students for assessments of foundational microeconomic concepts.

Uploaded by

Roey Mijares
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Fin1130 (Basic Microeconomics)

First Semester, AY 2021-2022

Preparatory Assessment Activity 2


General Direction: Write all your answers in separate sheet of paper.
1. Classify the following topics as relating to microeconomics or macroeconomics.
a. A family’s decision about how much income to save
b. The effect of government regulations on auto emissions
c. The impact of higher national saving on economic growth
d. A firm’s decision about how many workers to hire
e. The relationship between the inflation rate and changes in the quantity of money

2. Classify each of the following statements as positive or normative. Explain.


a. Society faces a short-run trade-off between inflation and unemployment.
b. A reduction in the rate of money growth will reduce the rate of inflation.
c. The Federal Reserve should reduce the rate of money growth.
d. Society ought to require welfare recipients to look for jobs.
e. Lower tax rates encourage more work and more saving

3. Draw a circular-flow diagram. Identify the parts of the model that correspond to the flow
of goods and services and the flow of dollars for each of the following activities.
a. Selena pays a storekeeper $1 for a quart of milk.
b. Stuart earns $8 per hour working at a fast-food restaurant.
c. Shanna spends $40 to get a haircut.
d. Salma earns $20,000 from her 10 percent ownership of Acme Industrial.

4. An economy consists of three workers: Larry, Moe, and Curly. Each works 10 hours a day
and can produce two services: mowing lawns and washing cars. In an hour, Larry can
either mow one lawn or wash one car; Moe can either mow one lawn or wash two cars;
and Curly can either mow two lawns or wash one car.
a. Calculate how much of each service is produced under the following circumstances,
which we label A, B, C, and D:
• All three spend all their time mowing lawns. (A)
• All three spend all their time washing cars. (B)
• All three spend half their time on each activity. (C)
• Larry spends half his time on each activity, while Moe only washes cars and Curly
only mows lawns. (D)
b. Graph the production possibilities frontier for this economy. Using your answers to part
a, identify points A, B, C, and D on your graph.
c. Explain why the production possibilities frontier has the shape it does.
d. Are any of the allocations calculated in part a inefficient? Explain.

God bless!

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