econ302-m1-fall07-solution

econ302-m1-fall07-solution - University of Illinois at...

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Unformatted text preview: University of Illinois at Urbana-Champaign ECON302 Intermediate Microeconomics Exam 1 September 26, 2007 Solutions : PART I: Multiple Choice Questions (50 points) 1. For which of the following goods is the market most restricted geographically? a. retail gasoline. b. housing. c. gold. d. beef. 2.Which of the following is a positive statement? a. the President of the United States ought to be elected by a direct vote of the American people rather than the Electoral College. b. because many adults cannot afford to go to college, tax credits for tuition should be introduced. c. a fundamental assumption of the economic theory of consumer behavior is that consumers always prefer having more of any good to having less of it. d. all of the above. e. none of the above. 3. If the actual price were below the equilibrium price in the market for bread, a a. surplus would develop and get worse. b. shortage would develop and market forces would tend to correct the problem. c. surplus would develop, but market forces would tend to correct the problem. d. shortage would develop and market forces would tend to make it worse. 1 4. From 1970 to 1993, the real price of college education increased and total enrollment increased. Which of the following would cause an unambiguous increase in the real price of college education? a. a shift to the right in the supply curve for college education and a shift to the right in the demand curve for college education. b. a shift to the right in the supply curve for college education and a shift to the left in the demand curve for college education. c. a shift to the left in the supply curve for college education and a shift to the right in the demand curve for college education. d. a shift to the left in the supply curve for college education and a shift to the left in the demand curve for college education. 5. Which of the following would shift the demand curve for new textbooks to the right? a. a fall in the price of papers used in publishing texts. b. a fall in the price of equivalent used textbooks. c. an increase in the population of students. d. a fall in the price of new textbooks. 6. Which of the following represents the price elasticity of demand? a. ( Q/P) / ( P/Q) b. ( Q/P) + ( P/Q) c. ( Q/P) - ( P/Q) d. ( Q/ P) * (P/Q) 7. Along any downward sloping straight-line demand curve: a. the price elasticity varies, but the slope is constant. b. both the price elasticity and slope vary. c. the slope varies, but the price elasticity is constant. d. none of the above is necessarily true. 8. If the price elasticity of demand for gasoline is estimated to by -0.20 in the short run, which is the most likely value of the long-run elasticity?...
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econ302-m1-fall07-solution - University of Illinois at...

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