ECONOMICS 201

MIDTERM EXAM

WINTER 2004

NAME_________________________________________

Note: show all work and formulae

Part 1: 25 multiple-choice questions

Part 2: Short answer Questions:

1. If the supply of turkeys in a particular November (Remember Thanksgiving) turned out to be unusually small, do you think a turkey shortage would result? Why or why not? Graph.

2. According to Paul Heyne, what is the gravest flaw in contemporary theological discussions of economic justice? Explain.

3.What is comparative advantage? How might this concept explain Nike’s decision to locate a production facility in a third world country?

4. Use a graph to show the implications of a binding minimum law. Use the graph to indicate who wins and who loses. Use the graph to indicate any non-money costs associated with a binding minimum wage law. Why do minimum wage laws tend to hurt young, unskilled workers?

5. According to the supplemental reading on tea: “India's tea producers are at a price disadvantage internationally.” Why?