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Prelim_2_Solutions

Prelim_2_Solutions - 2 ANSWERS ECON 1110 Preliminary Exam#1...

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2 - ANSWERS ECON 1110 – Preliminary Exam #1 – Fall 2008 Answer all 25 multiple choice questions on the accompanying bubble sheet.  The exam is closed-book  and closed-notes.  No electronic devises are permitted during the exam.  Unless explicitly stated, you  must assume that demand curves are downward sloping and supply curves are upward sloping. Use the following diagram to answer question 1.  The diagram represents the supply and demand  for human kidneys, used for transplants. 1. Assume that the government passes an effective law that bans the selling of kidneys so that the  only kidneys used in transplants are voluntarily donated (effectively the legal price to sell a  kidney is zero).  As a result, the total number of transplants will be a. Zero b. K c. E d. F e. J K Demand J H G Supply A Kidneys $/Q B C O E F 1
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2. Assume that the supply of coffee is perfectly elastic.  Therefore, 3. If meat and potatoes are compliments, then a potato blight will have what effect in the meat  market? 4. As a result of a decrease in supply the equilibrium price rose by 20% and the quantity  demanded decreased by 10%.  What will be the effect on total revenue and consumer surplus? 2
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