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THE GEORGE WASHINGTON UNIVERSITY Department of Economics Economics 1011 Prof
THE GEORGE WASHINGTON UNIVERSITY
Department of Economics
Economics 1011 Prof. Steve Suranovic
Section 10 Fall 2011
Quiz #1 - Answers
Write the term or answer each question in the box provided on the right.
Each answer 1s worth | point (13 points total).
1. Of Micro or Macro economics, this field involves
the study of the decisions of individual firms and
households.
2. This type of reasoning draws conclusions from a
given set of assumptions.
3. Economists generally use this word to denote the
happiness or satisfaction that consumers maximize.
4. Assuming diminishing marginal utility, if the first
unit consumed gives a person 5 utils and the second
unit gives an additional 4 utils, how much may the third
5. of none, one or two, the number of people who
benefit when two people willingly exchange one thing
for another.
6. Of increase, decrease or stay the same, this will
happen to a person’s butter demand if MUp/Ps <
MUc/Pc, where B refers to butter, C refers to cream
cheese and MU means marginal utility.
7. the price of a bag of peanuts in dollars if 12 bags of
peanuts trades for 12 glasses of beer and the price of
beer is $4 per glass
8. Of self-interest or benevolence, what Adam Smith .
argues motivates brewing activity.
9. Friedrich Hayek called this process the spontaneous
economic order, but Adam Smith called the process
this.
10. Name two assumptions in the map model presented
in class
11. Name one simplifying assumption in the pure
exchange model with Smith and Jones.
12. Of somewhat, mostly, or perfectly, this is how well
economic models generally assume Smith and Jones
know their own preferences.
13. Pop rocks candy can be used to remind us that this
will happen whenever a transaction between two people
occurs.
Expert Solution
THE GEORGE WASHINGTON UNIVERSITY
Department of Economics
Economics 1011 Prof. Steve Suranovic
Section 10 Fall 2011
Quiz #1 - Answers
Write the term or answer each question in the box provided on the right.
Each answer 1s worth | point (13 points total).
1. Of Micro or Macro economics, this field involves
the study of the decisions of individual firms and
households.
answer. micro
2. This type of reasoning draws conclusions from a
given set of assumptions.
answer. Deductive OR a priori
3. Economists generally use this word to denote the
happiness or satisfaction that consumers maximize.
answer. Utility
4. Assuming diminishing marginal utility, if the first
unit consumed gives a person 5 utils and the second
unit gives an additional 4 utils, how much may the third
answer. Any x such that x<4 (eg 3,2,1 all are OK)
5. of none, one or two, the number of people who
benefit when two people willingly exchange one thing
for another.
answer. Two
6. Of increase, decrease or stay the same, this will
happen to a person’s butter demand if MUp/Ps <
MUc/Pc, where B refers to butter, C refers to cream
cheese and MU means marginal utility.
answer. decrease
7. the price of a bag of peanuts in dollars if 12 bags of
peanuts trades for 12 glasses of beer and the price of
beer is $4 per glass
answer. $4.00
8. Of self-interest or benevolence, what Adam Smith .
argues motivates brewing activity.
answer. Self-interest
9. Friedrich Hayek called this process the spontaneous
economic order, but Adam Smith called the process
this.
answer. The invisible hand
10. Name two assumptions in the map model presented
in class
answer. Lines are roads
To the right is north
Rectabgles are buildings
Arrows are the direction to travel
Names at line endfs are street names
Etc.
11. Name one simplifying assumption in the pure
exchange model with Smith and Jones.
answer. Only two people
Only two goods
Goods are not produced
Apples and oranges are homogeneous
Etc.
12. Of somewhat, mostly, or perfectly, this is how well
economic models generally assume Smith and Jones
know their own preferences.
answer. Perfectly
13. Pop rocks candy can be used to remind us that this
will happen whenever a transaction between two people
occurs.
answer. Happiness bursts for both or utility increase surplus value created . etc
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