Eco 001

Instructions:

• This is a 120-minute examination.

• Write all answers in the blue books provided. Show all work. Use diagrams where appropriate and label all diagrams carefully.

• Write your name and your Recitation Instructor's name in every blue book that you use.

• This exam is given under the rules of Penn's Honor system.

• All blue books, blank or filled, must be handed in at the end of this exam. No blue books may be taken from the room.

• The use of Programmable Calculators is in violation of Departmental rule. It is strictly forbidden!

Check: The Exam has 3 parts.

Part 1 consists of 12 multiple-choice questions. Please write you answers in blue book 1.

Part 2 consists of 1 short answer question. Please use bluebook 1 for this question.

Part 3 consists of 2 short answer questions. Please use blue book 2 for Q2 & Q3.

Part I: Multiple Choice Questions (3 points each/36 points total):

1. Adam paid $5 to enter a raffle and won a ticket to a Phillies playoff game. Unfortunately, the game is scheduled for the same evening as Penn Soccer Teams game. Adam can see the Soccer team for free and values it at $25. The resale value of the Philly ticket is $25 and he values that game at $40. What is the opportunity cost of going to the Philly’s game?

a. $65

b. $60

c. $50

d. $55

2.

Apples Bananas

George 6/hr 12/hr

Frank 4/hr 6/hr

According to the table above, which of the following statements is/are true?

a. George has the absolute advantage in apples, Frank has the absolute advantage in bananas

b. George has the absolute advantage in apples, Frank has the comparative advantage in bananas

c. George has the absolute advantage in apples, Frank has the comparative advantage in apples

d. George has the comparative advantage in apples, Frank has the comparative advantage in bananas

3. Two drivers – Tom and Jerry – each drive up to a gas station. Before looking at the price, each places an order. Tom says, “I’d like 10 gallons...