201e1PRACTICE_EXAM - NAME _ STUDENT NUMBER_ Economics 201-3...

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NAME _________________________ STUDENT NUMBER________________ Economics 201-3 C. Liedholm Midterm 1 EARLY BIRD EDITION READ THE QUESTIONS CAREFULLY. THE TOTAL TIME FOR THE EXAM IS 60 MINUTES. CHOOSE THE BEST ANSWER TO EACH OF THE FOLLOWING QUESTIONS OR STATEMENTS. MARK CORRECT ANSWER ON SCORE SHEET. (60 POINTS). 1. The “law of demand” states that, other things constant, price and: a. income are directly related b. income are inversely related c. quantity demanded are directly related d. quantity demanded are inversely related e. tastes are directly related Answer questions 2 and 3 on the basis of the following graph of a nation's production possibilities frontier for two products, buns and gutters. 10 12 14 BUNS 2. If a nation moves from position B to position A: a. the opportunity cost to the nation of this move is equal to 2 gutters b. the opportunity cost to the nation of this move is equal to 1 gutter c. the opportunity cost to the nation of this move is equal to 2 buns d. the opportunity cost to the nation of this move is equal to 10 buns e. none of the above gutters 5 A B 7 4 1 GUTTERS C
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3. If the nation moves from position C to position A, the opportunity cost to the economy of this move is: a. 10 buns b. 4 gutters c. 5 gutters d. zero e. none of the above 4. On the production possibilities graph, production is efficient if: a. The production point is inside the frontier b. The production point is outside the frontier c. The production point is on the frontier d. The production point is on or inside the frontier e. None of the above 5. In the basic circular flow diagram, households and firm interact a. in the markets for goods and services and in the markets for factors of production b. in the markets for goods and services and in the financial markets c. in the stock markets and the market for the factors of production d. in the markets for goods and services and in the foreign exchange markets e. none of the above 6. Which of the following will NOT shift the demand curve for hotdogs sold at MSU football games?: a. increase in income in the State of Michigan b. increase in the price of tickets to MSU football games c. decrease in the price of hotdogs sold at MSU football games d. increase in the price of soft drinks sold at football games e. none of the above 7. Suppose that income of consumers of white flour, an “inferior” good, decreases. Assuming all other variables affecting demand and supply remain constant, one would predict that the: a. equilibrium price and quantity of white flour would increase b. equilibrium price and quantity of white flour would decrease c. equilibrium price would increase and the quantity would decrease d. equilibrium price would decrease and the quantity would increase e. none of the above 8. Coke and Pepsi are substitute goods. An increase in the price of Coke would: a. shift the demand curve for Coke to the left b. shift the demand curve for Pepsi to the left c. decrease the price of Pepsi d. increase the price of Pepsi e. none of the above
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9.
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201e1PRACTICE_EXAM - NAME _ STUDENT NUMBER_ Economics 201-3...

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