LINIVERSITY OF WATERLOO

Departmentof Economics
Economics101-03
First Mid-term Examination
_L.a$y-.S..!0i.1h-.,,,,.

..--,-,Fu&y,$.-eplp-p._b._e..r

THIS EXAM IS FORLARRY SMITH'S STT]DENTSONLY

Aids: Calculator, a 8 1/2" x I 1" referencesheetTIANDWRITTEN anda GeneralUseDictionary
MULTTPLE CHOICE - 37 QUESTTONS
TIME ALLOWED - 90 MII\UTES
PLEASE READ THESE INSTRUCTIONS CAREFULLY. IT IS YOTJR
RESPONSIBILITY TO PRODUCE
A MACHI}IE READABLE COMPUTERCARD
1

Fill in answercmd with a PENCIL.

2.

LeaveSectionNumber BLANK and Test Master BLAI\IC

3.

Fill in all other hformation.

4.

Checkyour I.D. entry,again.

5.

Make sureyour computercard choicerefersto the correctquestion.

6.

If you makea correction,erasethe previousanswercompletely.

7.

Do not makeany straymarkson the card.

8.

Hand in computercard.

9.

Takethe questionpaperwith you.

LarrySmith'sFirstEcon101MidtermSeptember
30,2011

6. In light of rising competitivepressures,why do so manypersonsstill adoptunaggressive

careerstrategies?
(A) They aretrying to replicatetheir families' careerpaths
@) They areunawareof the pressuresthey will face
(C) Their families areoften ill-informed
(D) A-11
of the above
(E) None of the above
7. Why is it dangerousto "hope for tle best" with respectto career?
(A) Competitivepressureswill keeprising indefrnitely
@) Luck neverplays a part in careersuccess
(C) Expectopinion urgeseveryoneto adoptaggressivecareerplans
@) A stableeconomicenvironmentdemandsa very high level of skill
(E) None ofthe above
8. Two yearsagoWally, a computersciencegraduate,washired by Wild StreetStudios,an
entertainmenVmedia
company. Wally wasvery happyto get this job becausehe loved
beingentertained,especiallyby Wild Street'smoviesand games.He also followed the
activities of entertainmentpersonalities.However,Wally hasnow beenpassedover for
two promotionsin the IT division. What the besteconomicadviceyou can give to
Wally?
(A) Wait until you havemore senioritybeforeyou try to getpromoted
(B) Work harderto promoteyourself, your personalbrand
(C) Recognizethat you needmore skilVinsightto get promotedthanto get hired
@) Put in longerhours
(E) None of the above
9. Janet,a graduatingengineer,had an interview with Dominion HeavyMining Machinery
Companythat went well. They offeredher a position at a competitivepay scale. What is
the most economicallyliteratereasonfor acceptingthejob offer?
(A) The pensionplan benefitsaremore generousthan at othercompanies
(B) The companydevotesa large shareof its revenuesto researchand development
insteadof salaries
(C) Dominion customersarecommoditymineralproducers
(D) The company'scorporatestrategyis to just matchits competitor'sofferings
(E) None ofthe above

LarrySmith's
FirstEcon101Midterm
September
30,2011

14. The marketstructure(competiveness)

classificationsystem
(A) Representsfour distinctly separatecategories
(B) Is a continuumfiom highly competitiveto no competition
(C) Hastheoreticalvalue,but little practicalapplication
(D) Hastheoreticalvalue andapplicationfor companies,but not for individuals
(E) Noneofthe above
15. Which of the following is tnre aboutan oligopolistic industry? Oligopolies
(A) Facestrongprice pressure
(B) Have few barriersto entry
(C) Havemany competitors
products(commodities)
@) Always sell homogeneous
@) None of the above
16. Xi is working at Wacko Gamesfor over a year andhe hasjust receiveda wageincrease
rising prices. He talked to his boss,arguing
1,/of2 percen! barely enoughto accommodate
that his friendsat similar companiesareeamingmore than he andthat they aregetting
biggerincreases.His bossrepliesthat X soundslike he's unhappyworking at Wacko
andasksif he wantsto resign. X's mostimportantmistakewasto fail to refer to:
(A) The company'sgrowth
(B) His productivity
(C) Wacko'scompetitors
(D) His willingnessto wait until his next scheduledincrease
(E) None of the above
17. A centralpremiseof economicsis that resourcesarealwavsinadequate.What arethey
inadequatein relationshipto (or relativeto)?
(A) The frnite stockof resourceson this planet
@) Potentialenergysuppliesor reserves
(C) Labour
@) The demandsplacedon thosetesources
(E) None of the above
18. Which of the following is true?Innovations
(A) Needto be evolutionary,so changecanbe introducedin small steps
@) Are lessimportantthan loweredwages
(C) Needto be aggressive,sincecompetitivepressuresaxeso intense
@) Of all kinds areequally valuablein the marketplace
(E) None of the above

LarrySmith's
FirstEcon101Midterm
September
30,2011

24. In the years2006to 2007, investorsaroundthe world investedin complexsecurities

backedby U.S. housingloanscalled"sub-prime"that alsooffered a high yield (return).
Whenthoseloansfailed. the securitieslost value,andthe global finaacial marketwas
destabilized.The recessionof 2008-2009followed. What economicmistakedid the
investorsmake? They forgot that:
(A) The U.S. populationand demandfor housingis falling
@) Interestrateswere so low
(C) A higb yield comeswith the costof greaterrisk
(D) Financialinnovationshouldbe encouraged
(E) None ofthe above
25. The intemet"bubble" ofthe late 1990sarosebecauseinvestorsconfusedmost criticallv
(A) Demandwith supply
(B) Quantitydemandedwith demand
(C) Demographictrendswith price
@) The boomersdemandwith that of the largerpopulation
(E) Noneofthe above
26. In the begirmingthe demandfor RIM's Blackberryarosefrom:
(A) Employers
@) Employeesin general
(C) Young employees
@) Young retail consumers
fE) None of the above
27. StevenJobshasled Apple to stunningsuccessbecausebetterthan othershe understoe.d
that:
(A) Technologicalflrnction was paramormt
@) Containingcostwasparamount
(C) Asian supplierswere critical
(D) "taste" was asimportantasfunction
(E) None of the above

LarrySmith'sFirstEcon101MidtermSeptember30, 2011

33- The computermanufacturingindustryis understresssinceit appearsthat the gronth of

mobile device(smarEhone,tablets)arebecoming
(A) Substituteproductswith respectto laptopsand desltops
@) Complementingproductswith respectto laptopsanddesktops
(C) A productionchallengeasthe demandfor moble devicesand smartphonesrise
sharplyandtogether
@) Unstable
(E) None of the above
34. GoogleandFacebookmustcompetebecause
(A) Facebookis popularintemetplatlorm anddistractspeoplefrom using Google
(B) They both need"face-time"
(C) They ofibr the samefunction to their millions of users
(D) Facebooksells ads
(E) None ofthe above
35. Smartphones
and smartphoneapplications(apps)are
(A) Substituteproducts
@) Complementaryproducts
(C) Unrelatedto eachother
(D) Both substituteandcomplementaryproducts
(E) None of the above
36. FIPis consideringthe saleof its personalcomputerdivision because
(A) Its productioncostsarerising
@) Microsoft is enteringthe market
(C) IBM did the samething
(D) Personalcomputersarebecomingcommodities
@) None of the above
37. By 2025,all the Boomerswill havereachedthe ageof 65. Basedon their pastbehavior
it is likely that
(A) Almost all will havequit working
(B) Alnost all of themwill still beworking
(C) Many will still be working
@) Therewill be an acutelabour shortage
(E) None ofthe above

LarrySmith'sFirstEcon101MidtermSeptember
30,2011