ECON 2500 Name:______________________________
Exam #1 October 12, 1995
1. A meter is approximately ____________ inches.
2. _______________________ invented the telephone.
3. COLA stands for _____________________________.
Answer four (4) of the following six (6) questions:
1. "Capitalism may be characterized as an automatic self-regulating system motivated by the self-interest of individuals and regulated by competition." Explain and critically evaluate.
2. Use a graph to illustrate the concept of equilibrium price. How is equilibrium established and maintained? What causes it to change?
3. What are the basic characteristics of public goods? What are the choices in policy decisions that may be called for? What about the production of these goods?
4. Explain the difference between progressive, regressive and proportional taxes.
5. What is the difference between cyclical, structural and frictional unemployment? What is meant by the term full-employment unemployment rate? Can unemployment be a problem? Are there any policy implications.
6. Answer the questions below given the following two production possibilities curves.
Product
South Korea's production possibilities
A
B
C
D
E
F
___________________________________________________________________
Radios
(in thousands) 30
24
18
12
6
0
Chemicals
(in tons) 0
6
12
18
24
30
Product
U.S. production possibilities
R
S
T
U
V
W
___________________________________________________________________
Radios
(in thousands)10
8
6
4
2
0
Chemicals
(in tons) 0
4
8
12
16
20
What
do the comparative-cost conditions tell you?
What is the possible range of the terms of trade possible level of specialization? What does this tell you about efficiency in the use of resources?