★★★ Detailed Solution to Examination One (Int’l Business Administration, WUCL) ★★★

Summer 2010

Instructor: 衛忠欣 (Jong-Shin Wei)

經濟學(一) (Principles of Microeconomics)

(07)342-6031 ext.6222

93001@mail.wtuc.edu.tw

jsw12011958@gmail.com

9:30 am ~ 10:40 am, July 9, 2010

Open books/notes exam (excluding texts written in Chinese). Absolutely no talking nor borrowing items during exams.，可使用自己的資料、字典或翻譯機。行動電話若響起，該生扣十分、以強調基本禮貌。務必工整依序作答。題目較多，目的在於測試是否有平日閱讀英文資料之習慣。Watch your time and have fun!

Part One: 20 Multiple choice questions. [By multiple choice in an English-speaking academic environment, we mean that you must choose the most appropriate one from 4 alternatives. 依慣例，答錯不倒扣！] 80 points

1. An economic agent, called A, has 20 hours to be spent on producing goods X and Y under linear (or fixed rate) technologies specified as follows. Spending a hours, with 0 ≦ a ≦20, on the production of X can bring him a/2 units of X (or expressed by x = a/2); spending hours, with 0 ≦ a ≦ 20, on producing Y can yield a units of Y (i.e., y = a). A’s production possibility frontier (or PPF for short) is

(A) 2ax + ay = 20;

(B) (a/2)x + ay = 20;

(C) 2x + y = 20;

(D) x + 2y = 20.

Ans: C. [In light of linear (or fixed rate) technologies, since a hours can produce a/2 units of X, 1 unit of X requires (labor in the amount of) 2 hours. Similarly,a hours can produce a units of Y, implying that 1 unit of Y requires (labor in the amount of) 1 hour. Hence, 2x + y = 20.]

2. [continued from question 1] Since a/2 units of X are trade-off for a units of Y, we shall say that the opportunity cost of producing

(A) 1 unit of Y is 2 units of X;

(B) 1 unit of Y is 0.5;

(C) 1 unit of X is 0.5;

(D) 1 unit of X is 2 units of Y.

Ans: D. [a/2 : a = 1/2 : 1 = 1: 2]

3. [continued from question 2] We then conclude that

(A) A has the absolute advantage in producing Y;

(B) A has the absolute advantage in producing X;

(C) A has the comparative advantage in producing Y;

(D) None of the above (is true).

Ans: D. [Recall definitions of absolute advantage and comparative advantage]

4. [continued from question 1] The PPF of A

(A) has -2 as slope and two intercepts as 10 and 20;

(B) has -1/2 as slope and two intercepts as 20 and 20;

(C) has -2 as slope and two intercepts as 10 and 20;

(D) has -1/2 as slope and two intercepts as 10 and 20.

Ans: A. [The geometric properties of a line, 2x + y = 20 on the X-Y plane]

5. An economic agent, called B, has 30 hours to be spent on producing goods X and Y under linear (or fixed rate) technologies specified as follows. Spending a hours, with 0 ≦ a ≦20, on the production of X can bring him a/2 units of X (or expressed by x = a/2); spending hours, with 0 ≦ a ≦ 20, on producing Y can yield a/2 units of Y (i.e., y = a/2). B’s production possibility frontier (or PPF for short) is

(A) x + y = 30;

(B) x + y = 15;

(C) x + 2y = 20;

(D) 2x + 2y = 15.

Ans: B. [In light of linear (or fixed rate) technologies, since a hours can produce a/2 units of X, 1 unit of X requires (labor in the amount of) 2 hours. Likewise,a/2 hours can produce a units of Y, implying that 1 unit of Y requires (labor in the amount of) 2 hour. Hence, 2x + 2y = 30 or x + y = 15.]

6. [continued from question 5]

(A) The opportunity cost of producing 1 unit of X is 2 units of Y;

(B) The opportunity cost of producing 1 unit of X is 0.5 unit of Y;

(C) The opportunity cost of producing 2 units of X is 2 units of Y;

(D) None of the above is true.

Ans: C. [1 : 1 = 2 : 2]

7. [continued from questions 1 and 5] Regarding A and B,

(A) A has the absolute advantage in producing X;

(B) A has the absolute advantage in producing Y;

(C) B has the absolute advantage in producing X;

(D) B has the absolute advantage in producing Y.

Ans: B. [For x = 1, A needs to spend 2 hours; B needs to spend 2 hours. For y = 1, A needs to spend 1 hour; B needs to spend 2 hours. Hence, A has the absolute advantage in producing Y. Incidentally, we can see from intercepts and numbers on the right-hand side of two equations. For A, 20 hrs bring him 10 units of X, 10/20 = 1/2. For B, 30 hrs bring him 15 units of X, 15/30 = 1/2. We have a tie here. For A, 20 hrs bring him 20 units of Y, 20/20 = 1. For B, 30 hrs bring him 15 units of Y, 15/30 = 1/2. Note 1 > 1/2. Measuring productivity (between two agents) is the key here.]

8. [continued from questions 1 and 5] Regarding A and B,

(A) Neither has the comparative advantage in producing X;

(B) A has the comparative advantage in producing X;

(C) B has the comparative advantage in producing X;

(D) None of the above.

Ans: C. [For A, the opportunity cost of producing 1 unit of X is 2 units of Y. For B, the opportunity cost of producing 1 unit of X is 1 unit of Y. Hence, B has the comparative advantage in producing X. Also, A has the comparative advantage in producing Y. Intuition? A’s PPF is steeper than B’s PPF.]

9. [continued from question 1] Now we introduce another economic agent, called C, who has 30 hours to be spent on producing goods X and Y. The PPF is x + y = 30.

Regarding A and C,

(A) A has the absolute advantage in producing X;

(B) A has the absolute advantage in producing Y;

(C) C has the absolute advantage in producing X;

(D) None of the above.

Ans: C. [For x = 1, A needs to spend 2 hours; C needs to spend 1 hour. For y = 1, A needs to spend 1 hour; C needs to spend 1 hour. Hence, C has the absolute advantage in producing X.]

10. [continued from questions 5 and 9] Regarding B and C,

(A) B has the absolute advantage in producing X;

(B) B has the absolute advantage in producing Y;

(C) C has the absolute advantage in producing both goods;

(D) None of the above.

Ans: C. [For x = 1, B needs to spend 2 hours; C needs to spend 1 hour. For y = 1, B needs to spend 2 hours; C needs to spend 1 hour. Hence, C has the absolute advantage in producing both X and Y.]

11. 基於 incentives and rational behavior 的認知，校長呼籲同學不要盲目熱衷展場美女(國內所謂的賣場showgirl)的打工之途，與下列何者相似？

(A) 如果知道要分手，當初就不該交往；

(B) 黃豆漲價，讓豆漿變淡，比漲價要好；

(C) 帥哥美女的追求者人數，真的不多；

(D) 在重視點名成績且有150名學生的課堂上，道德勸說同學勿伏案小睡。

Ans: D. [如果課業負擔不重，展場美女的打工機會，當然有吸引力。如果到課就有基本分數，即使精神不濟也會上課。]

12. There are three projects, 1, 2, and 3. The benefit from undertaking project i is B(i); the cost of undertaking project i is C(i), where i = 1, 2, 3. If we know that project 1 has the smallest opportunity cost, then

(A) project 1 has the largest net benefit;

(B) project 1 has the smallest net benefit;

(C) project 1 的淨效益，不可能等於 project 1 的機會成本；

(D) project 1 的淨效益，不可能大於 project 1 的機會成本。

*Ans: D. [To see why (A) is incorrect, consider the following example. Let B(1) = 10, C(1) = 6, B(2) = 10, C(2) = 4, B(3) = 8, and C(3) = 2. The opportunity cost of undertaking project 1 is 6 = Max{10 - 4, 8 - 2}; the opportunity cost of undertaking project 2 is 6 = Max{10 - 6, 8 - 2}; the opportunity cost of undertaking project 3 is 6 = Max{10 - 6, 10 - 4}.]

13. There are three projects, 1, 2, and 3. The benefit from undertaking project i is B(i); the cost of undertaking project i is C(i), where i = 1, 2, 3. If we know that only one project has the largest net benefit, then

(A)有最小機會成本的 project，必是有最大淨效益的 project；

(B)有最小機會成本的 project，未必是唯一；

(C)有最大機會成本的 project，必是有最大淨效益的 project；

(D) None of the above.

*Ans: A. [lectures]

14. Suppose that you chose to walk downtown to save $10 on a textbook priced at $30. Today, you will buy a computer on campus store at the price as $3000 even you know that the same computer can be found at a downtown store with price as $2960.

This reasoning is similar to

(A) 要求捐出一日所得，而不是每人捐2000元；

(B) 既然來到 all-you-can-eat 餐廳，我一定要拼命吃；

(C) 聽演講時，避免坐在最後一列；

(D) 勿以善小而不為、勿以惡小而為之。

Ans: A. [proportion!]

15. Suppose the net benefit of 1 is B(1) - C(1) = 10 - 8 = 2; the net benefit of 2 is B(2) - C(2) = 6 - 2 = 4. This is consistent with

(A)文藻實施全面點名的機會成本很大；

(B) sunk cost is important；

(C)明星球員應領高薪；

(D)妳愛1的程度超過妳愛2的程度，2比1還愛妳。

Ans: D.

16. The title of the movie we saw on the first day of class is

(A) Save the Earth;

(B) Earth;

(C) Our Home;

(D) Home.

Ans: D. [Obvious]

17. [continued from question 16] 該影片的旁白，一再重覆的是

(A) More and more;

(B) Faster and faster;

(C) Sooner or later;

(D) Bigger and bigger.

Ans: B. [Just see if you did pay attention to that movie.]

18. [continued from question 16] 該影片提到，紅樹林的快速消失，加害者是

(A) 養蝦場；

(B) 鯊魚；

(C) 水鳥；

(D) 螞蟻。

Ans: A.

19. [continued from question 16] 該影片提到，大幅度的森林變成農地，種植黃豆。約多少比例的黃豆，被用於歐亞地區禽畜的飼料？

(A) 50%;

(B) 60%;

(C) 75%;

(D) 90%.

Ans: D.

20. [continued from question 16] 該影片提到，在孟加拉，只貸款給窮人的銀行，實施30多年，

(A) 讓一億五千萬人受惠；

(B) 讓一千五百萬人受惠；

(C) 最後被爆料，竟然是在斂財；

(D) 創始者竟無緣得到諾貝爾獎。

Ans: A. [Additional information: 經濟學家穆罕默德．尤努斯(Muhammad Yunus)創建葛萊敏銀行(Grameen Bank)。穆罕默德．尤努斯於2006獲頒諾貝爾和平獎。You might also learn it in Money and Banking.]

Part Two: Analytical questions. [注意字體工整、邏輯順暢與不要出現錯別字或注音(與火星文)！如果字跡難以辨認，視同未答。畫蛇添足、答非所問、不知所云、自曝其短，將不利得分。] 20 points

21.你(妳)修這門暑修課程的機會成本為何？請扼要說明。

我為什麼不會問「你(妳)修這門暑修課程的淨效益為何」？

Ans: skipped. 如果要計算你(妳)修這門暑修課程的淨效益，就必須先估算暑修成績。

22.你(妳)未來在職場面試時，應不應該主動說明「這四年的教育都是全面強制點名的」？

Ans: No! [Why not? To be elaborated during lectures]

Performance:

12 students

Adjusting rule: (original score)(1.2)

Average: 56.3

Highest-lowest: 70-43

(撰寫試題無著作權；歡迎全貌下載流傳)