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Old%20Midterm%201 - Brown University Economics 11,...

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Brown University Economics 11, Principles of Economics Student’s name (please print): Student ID. No.: Spring 2007 – First Midterm Exam Wednesday February 14, 2007, at 10:00 a.m. Professors: R. Serrano and R. Friedberg — Time allowed: 50 minutes The total score is 100 points. The exam is divided into two parts. The ±rst part is worth 60 points, and it consists of 10 multiple choice questions, worth 6 points each. Your answers to the multiple choice questions must be marked on the questions themselves. The second part is worth 40 points, and it consists of two problems, worth 20 points each. You must write your answers in the blank space provided following each problem. Show all work for your answer to the two problems. Good luck! 1
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Part I. Multiple choice questions : Select one, and only one, of the choices given for each of the following questions. Circle your selected answer clearly. 1. If the US absolute cost of producing computers is lower than Japan’s, one can conclude the following: (a) The US has a comparative advantage over Japan in the production of computers. (b) If the two countries exploit the gains from trade between them, the US will be for sure exporting computers to Japan. (c) Japan has an absolute advantage over the US in the production of computers. (d) We cannot conclude anything about comparative advantage until we are given information regarding the absolute costs of producing other goods. 2. The demand curve for Ipods expresses a negative relation between the current price of Ipods and its current quantity demanded, all other things equal. Suppose that Microsoft comes up with a new version of MP3’s, much better and cheaper than its previous versions. In addition, it is expected that, in response to the Microsoft move, Apple will have to lower the price of Ipods in the near future. What will be the likely effect of these two changes on the demand curve for Ipods? (a) The demand curve for Ipods will be unaffected. (b) The demand curve for Ipods will shift entirely to the right. (c) The demand curve for Ipods will shift entirely to the left. 2
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(d) We will observe a movement along the demand curve for Ipods (lower price and higher quantity demanded). 3. Suppose we learn that the production of Valentines in St. Cupid (Rhode Island) is sub-
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This note was uploaded on 05/17/2008 for the course ECON 1110 taught by Professor Mehta during the Spring '08 term at Brown.

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Old%20Midterm%201 - Brown University Economics 11,...

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