Exam 1 Spring 2016 - Name Student MICROECONOMICS 1014-01...

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Name:_____________________________ Student #___________________ MICROECONOMICS 1014-01 EXAM 1 2/10/2016 Dr. Parsons VERSION: 188 Please do not begin the exam until you are told to. You have 60 minutes to finish the exam. When the time is up do not write anything more on the scantron. On the scantron sheet, fill in NAME and STUDENT NO. Only pencil, erasers, both sides of one 8.5 x 11 cheat sheet, and a standard function calculator may be used on this exam. No other devices are allowed. You may not use the calculator on your cell phone. Fill all answers on your scantron. No answers will be accepted unless they have been filled into the scantron.
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1 Version: 188 TWAG!! 1. The elasticity of demand for a good is –1.5. A 20 percent decrease in price will cause a: 1) 30 percent decrease in quantity demanded. 2) 3 percent increase in quantity demanded. 3) 30 percent increase in quantity demanded. 4) 20 percent decrease in quantity demanded. 2. David sells his car, which he considers worthless, to Cameron for $200. Which of the following statements is true? 1) David is made better off by the trade, but Cameron is made worse off. 2) This trade did not create value because Cameron is buying a car that David considers worthless. 3) Cameron is the only one made better off by the trade. 4) David and Cameron must have different preferences for the car. 3. Which statement is an example of positive economics? 1) A decrease in income will lead to an increase in demand for off-brand supermarket foods. 2) Unemployment is more harmful than inflation. 3) The retirement age should be raised to 70 to combat the effects of our aging population. 4) Pollution is the most serious economic problem. 4. Roses grown in Kenya travel to Amsterdam and ultimately to your local flower shop because: 1) the World Rose Commission coordinates the different elements of the rose industry. 2) of the trade agreement between the governments of Kenya and Amsterdam. 3) markets coordinate the specialization and trade necessary for the flower industry to function. 4) customers are willing to pay more for roses that pass through Amsterdam.
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2 5. The Environmental Protection Agency has imposed new, higher fuel efficiency standards on cars sold in the United States. Which of the following best describes how such standards will affect the equilibrium price and quantity in the market for crude oil? 1) The demand for gasoline will decrease, the price of gasoline will fall, and the equilibrium price and quantity demanded of crude oil will decrease because gasoline and crude oil are complements. 2) The demand for gasoline will decrease, the price of gasoline will fall, and the demand for crude oil will increase because gasoline and crude oil are substitutes. 3) The demand for gasoline will decrease, the price of gasoline will fall, and the equilibrium price and quantity demanded of crude oil will decrease because crude oil is an input into the production of gasoline.
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