EC101 Sample Midterm 1 Questions
Solutions are at the end of the file
questions refer to the market for tickets for an event at the BU Agganis Arena, with the demand
and supply schedules shown below:
The supply curve for tickets at the BU Agganis Arena is
The equilibrium price and quantity in the market for tickets at the Arena are
$20 and 7,000
$14 and 7,000
$20 and 1,000
$2 and 7,000
Suppose that the BU administration thinks that every student should be able to go to this event, so they make
admission free; students can just come by the Arena to pick up a ticket.
What will happen in this market?
There will be surplus of 28,000
There will be a shortage of 7,000 tickets
There will be a shortage of 33,000 tickets
There will be a surplus of 7,000 tickets
A new administration takes over, and has a very different opinion; they think that BU students are wasting
valuable studying time by going to too many sporting events.
So, they let the market determine the
equilibrium price and quantity, but then set a tax of $5 on buyers of tickets; whenever a student buys a ticket,
they must contribute an additional $5 to a University fund.
Who will bear the burden of this tax?
Ticket-buyers and ticket-sellers will bear the burden evenly
It is impossible to know exactly
Only ticket-sellers bear the burden
Only ticket-buyers bear the burden
Recall the article “Your Career Matters: A Dearth of Economics Doctorates Leads to Royal Recruiting
If, as the article suggests happened, the supply of economics doctorates falls while the demand for
economics doctorates rises, what would happen to the salary and quantity of economics doctorates to bring
the market back into equilibrium?
The effect on salary is ambiguous, but quantity will rise.
Salaries will fall and quantity will rise.
Salaries will rise and quantity will rise.
Salaries will rise, but the effect on quantity is ambiguous.