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Unformatted text preview: Dr. Narag Winter Quarter 2008 Econ 1 Sample Midterm Examination Winter Quarter 2008 (1) A production possibilities curve shows the various combinations of output: (a) An economy can produce (b) Consumers would like to consume (c) An economy should produce (d) Producers would like to produce (e) Both b and d above. (2) Which of the following is most likely to cause a shortage to become smaller? (a) An increase in market price (b) A decrease in supply (c) An increase in demand (d) A decrease in price (e) Both b and c above (3) A shortage (excess demand) occurs when: (a) Demand decreases (b) Price is below the equilibrium, such as when there is a price ceiling (c) Price is at the equilibrium (d) Price is above the equilibrium, such as when there is a price floor (4) Which of the following is an example of normative statement in Economics? (a) Lower interest rate would encourage investment (b) Interest rate should be reduced to encourage investment (c) Price of electricity increases because price of fossil oils increase (d) During recession, production falls and unemployment increases (5) Which of the following will reduce the quantity demanded of bread? (a) An increase in the price of bread (b) An increase in the price of butter (c) An increase in the price of flour (d) An increase in consumer incomes (6) Two goods are substitutes when their cross elasticity is: (a) Positive (b) Negative (c) Zero (d) One (7) Considering demand only, a tax on which of the following goods would cause a larger deadweight loss? (a) Gasoline (b) Medicine (c) Restaurant meals (d) Tobacco (8) Suppose the government imposes a $10 excise tax on the sale of sweaters by charging suppliers $10 for each sweater sold. Based on economic analysis, we would predict that (a) The price of sweaters will increase by $10 (b) Consumers of sweaters will bear the entire burden of the tax (c) The price of sweaters will increase by less than $10 (d) Both a and b are true (9) One observes that the equilibrium price of rice falls and the equilibrium quantity falls. Which of the following best fits the observed data? (a) An increase in demand with supply constant (b) An increase in demand coupled with a decrease in supply (c) An increase in demand coupled with an increase in supply (d) A decrease in demand with supply constant (e) Demand constant and an increase in supply (10) Which of the following will...
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This note was uploaded on 04/16/2008 for the course ECON 1 taught by Professor Nagata during the Winter '08 term at UCLA.
- Winter '08