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Unformatted text preview: ANSWER KEY: MIDTERM ECON 1Winter 2008 Dr. Narag Multiple Choice Questions: (1) Which of the following factors will tend to be associated with products with a highly price- elastic demand? (3 points) (a) A very short time period for consumers to respond to price changes (b) Few close substitutes (c) Many very close substitutes (d) A per-unit price that is only a very small portion of most peoples' budgets (2) The main goal in economics is how to: (3 points) (a) induce people to want less (b) increase human abilities (c) make the best use of scarce resources (d) increase only the welfare of poor people (3) Consider the PPF for military and nonmilitary goods. If as a society, we decide that we want a larger proportion of our output to be military goods, this is likely to correspond to: (3 points) (a) an outward shift of the PPF (b) an inward shift of the PPF (c) movement along the PPF (d) a movement from a point inside the PPF to a point on the PPF (4) If the cost of producing a good rises for sellers, then how will this affect the supply/demand market equilibrium for that good? (3 points) (a) Price will rise and quantity will fall (b) Price will fall and quantity will rise (c) Price and quantity will both rise (d) Price and quantity will both fall (5) If both the supply and demand curves shift to the right, then we can expect: (3 points) (a) an increase in the equilibrium quantity (b) a decrease in the equilibrium quantity (c) an increase in the equilibrium price (d) a decrease in the equilibrium price (6) Which of the following best describes products that have a large, positive cross-price elasticity of demand? (3 points) (a) The goods are strong consumer complements (b) The goods are weak consumer complements (c) The goods are strong consumer substitutes (d) The goods are weak consumer substitutes (7) Which of the following would most likely cause the demand for veggie-burgers to decrease (an inward shift in veggie burger demand)? (3 points) (a) An increase in the price of veggie-burgers (b) An increase in the price of tofu-burgers, perceived as a substitute by veggie-burger consumers (c) An increase in the price of burger buns (d) A technological innovation that lowers the cost of producing veggie-burgers (e) A decrease in the price of veggie-burgers (8) Suppose that the price elasticity of demand is 1.5. If price falls, total revenue will: (3 points) (a) remain the same (b) fall (c) rise (d) double (e) c and d (9) In Country A, everyone has an equal preference for eating either a bagel or a bowl of cereal for breakfast. In addition, when people in Country A eat cereal, they always eat a banana at the same time. However, they dont slice the banana into little bits and put it in the bowl with the same time....
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This test prep was uploaded on 04/22/2008 for the course MATH 32A taught by Professor Gangliu during the Winter '08 term at UCLA.
- Winter '08