Sample mid-term one solution set

Sample mid-term one solution set - Econ 201 Winter Quarter...

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Econ 201 Winter Quarter 2007. Sample Mid-term One. SOLUTION SET ( SOLUTION MARKED IN RED ) 1. How can a firm increase the demand for the product it sells? a. By lowering the price. b. Convincing buyers that the price will be lower in the future. c. Advertising the product to change buyers' tastes in favor of the product. d. None of these can be done by a firm to increase demand for its product. 2. Which of the following is counted in GDP? a. the cost of a speed boat purchased at Bob's Boats used by drug smugglers. b. the value of leisure. c. the value of goods and services produced in the underground economy. d. the value of non-market production. Figure 3-13 3. The drug BGH (bovine growth hormone) dramatically increases the milk output of dairy cows. Farmers in Wisconsin, a big dairy state, vigorously oppose licensing the drug, fearing that excess supply and a consumer reaction on the purity of food issue will put many of them out of business. Which graph in Figure 3-13 best illustrates the farmers' fears? a. 1 b. 2 c. 3 d. 4 The following are the equations describing the market for Manga comic books: 20 - 2P and 5 + 3P 4. If consumers decide that they want 20 percent fewer comic books at every price, the equation for the new demand curve for comic books will be a. 20 - 1.6P. b. 0.2(20 - 2P). c. 0.8(20 - 2P). d. 80(20 - 2P). 5. If the government imposes a price floor of $2 a comic book, how many comic books will be sold? a. 16 b. 10 c. 12 d. 14 1
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6. If you as a lender want an increase in purchasing power of 4 percent from making a loan and you set the nominal interest rate at 9 percent, then your a. real rate of interest is 13 percent. b. expected rate of inflation is 5 percent. c. expected rate of inflation is 13 percent. d. real rate of interest is 36 percent. Figure 3-9 7. "Moonshine" is illegal home brew made by adding sugar to accelerate corn fermentation. Ten pounds of sugar are necessary to make a gallon of moonshine. In the mid-1970s, the price of sugar tripled and the price of moonshine skyrocketed from $6 to $15 a gallon. Which graph in Figure 3-9 best illustrates this? a. 1 b. 2 c. 3 d. 4 8. Aneta has owned an Italian sports car for several years and now she wants to sell it. She paid $8,500 for it in 1993 and she has just sold it for $19,000 in 2001. How is this sale included in the GDP for 2001? a. $8,500 is included in 2001 GDP b. $19,000 is included in 2001 GDP c. The increase in value of $10,500 is included in 2001 GDP d. It is not included in 2001 GDP 9. Anakin Skywalker and Yoda have each been doing their own housework. Anakin decides to hire Yoda to do his housework, and in turn, Yoda hires Anakin to do his housework. As a result of this change, a. GDP falls. b.
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This note was uploaded on 05/05/2008 for the course ECON 201 taught by Professor Witte during the Winter '08 term at Northwestern.

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Sample mid-term one solution set - Econ 201 Winter Quarter...

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