1st Interim Exam - Fall 2007

1st Interim Exam - Fall 2007 - MICROECONOMICS ECON 103 —...

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Unformatted text preview: MICROECONOMICS - ECON 103 — Name George Mason University — Fairfax Campus Last Name, First Name Ist Interim Exam - Fa11200'7 — Section 003 — 7:30 to 8:45 AM, Tues. 3: Thurs. - Instructor: EC. Holt if Not Student ID 27 September 2007, Chapters 1 thru 6, including Ch 1 Appendix. When finished, please sign pledge below and turn in both this test and your Scantron. HONOR PLEDGE: Ihave neither given nor received aide on this exam. Signed: MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The most fundamental economic problem is A) scarcity. B) health. C) security. D) the fact the United States buys more goods from foreigners than we sell to foreigners, 2) Which of the following is EL): a factor of production? A) the wages paid to workers. B) the effort of farmers raising cattle. C) the water used to cool a nuclear power plant. D) the management skill of a small business owner. 3) The night before a midterm exam, you decide to go to the movies instead of studying for the exam. You score 60 percent on your exam. If you had studied the night before, you'd have scored 70 percent. What was the opportunity cost of your evening at the movies? A) Zero. C) '70 percent B) 10 percent off your grade. D) 60 percent. 4) Positive and normative statements differ in that A) positive statements can be tested, Whereas normative statements cannot. B) normative statements can be tested, whereas positive statements cannot. C) normative statements never use the word "should." D) normative statements depict "what is” and positive statements depict "what ought to be." (Student‘s Signature) 1) 2) 3) 5) In the above figure, which curve shows a positive relationship between x and y? A) Only curve A. B) Only curve B. C) Only curve C. D) All the curves show a positive relationship. 10 co «munmow 6) In the above figure, the slope across the are between a and d is A) 4/3, E) 1. C) 2. D) 1/2. 5) Hots (millions per year] to w A tn 0 ml o I 2 4 5 s Bananas (millions of pounds per year) 4 '7) In the production possibilities frontier depicted in the figure above, which of the following 7) combinations of hats and bananas is generated by an efficient allocation of resources? A) 2 million pounds of bananas and 5 million hats B) 3 million pounds of bananas and 4 million hats C) 0 pounds of bananas and 6 million hats D) All of the above combinations are efficient. 8) In the production possibilities frontier depicted in the figure above, What is the opportunity cost of 8) increasing the production of bananas from two million pounds to three million pounds? A) 1 million hats B) 1/2 million hats C) 2 million hats D) 3 million hats 9) Marginal cost is the opportunity cost 9) A) that arises from producing one more unit of a good or service. B) that your activity imposes on someone else. C) of a good or service divided by the number of units produced. D) of a good or service that exceeds its benefit. 10) Homer and Teddy are stranded on a desert island. To feed themselves each day they can either 10) catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is correct? A) Teddy has a comparative advantage in both catching fish and picking fruit. B) Homer has a comparative advantage in both catching fish and picking fruit. C) Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit. D) Homer has a comparative advantage in picking fruit and Teddy has a comparative advantage in catching fish. 11) If the price of a hot dog is $2 and the price of a hamburger is $4, then the A) money price of a hot dog is 2 hamburgers. B) money price of a hamburger is 2 hot dogs. C) relative price of a hot dog is 1/2 of a hamburger. D) relative price of a hamburger is 1/2 of a hot dog. 12) The law of demand states that, other things remaining the same, the higher the price of a good, the A) smaller is the demand for the good. B) smaller is the quantity of the good demanded. C) larger is the demand for the good. D) larger is the quantity of the good demanded. 13) The demand for a good increases when the price of a substitute . and also increases when the price of a complement A) falls; falls B) rises; falls C) rises; rises D) falls; risas 14) The demand curve for a normal good shifts leftward if income price or the expected future A) decreases; rises B) increases; rises C) increases; falls D) decreases; falls 15) Which of the following does m shift the supply curve? A) a technological advance B) an increase in the price of the good C) a fall in the price of a substitute in production D) a decrease in the wages of labor used in production of the good 16) An increase in the cost of producing video tape shifts the supply curve of video tape and shifts the demand curve for videotape A) not at all; leftward B) rightward; leftward C) leftward; leftward D) leftward; not at all 11) 12) 13) 14) 15) 16) Price Price Quantity demanded (61011?” Per dISC) 36,000 Me .- szrooo . u 8,00 28,900 12,000 . 17) The above table gives the demand and supply schedules for compact discs. If the price of a compact 17) disc is $28, there is a and the price of a compact disc will __—....——— A) shortage; rise B) surplus; fali C) shortage; fall D) surplus; rise 18) The above table gives the demand and supply schedules for compact discs. Based on the table, the 18) equilibrium quantity and price of a compact discs is A) 16,000 and $24. B) 16,000 and $16. C) 20,000 and 9520. D) 28,000 and $12. :3. Price (dollars) 5 on D 300 400 500 4500 Quantity O 100 200 19) Based on the above figure, which of the following is true? 19) A) At a price of $6, quantity demanded is equal to quantity supplied. B) At a price of $8, quantity demanded is less than quantity supplied. C) At a priCe of $4, quantity demanded is greater than quantity supplied. D) All of the above answers are correct. 20) The price of a gallon of milk falls. Which of the following is a possible cause? 20) A) A decrease in the price of oatmeal, a complement to milk. B) Milk is a normal good and people's incomes rise. C) A discovery that milk cause diabetes. D) A drought that reduces supplies of feed grains fed to cows that produce milk. 21) The price elasticity of demand measures 21) A) the slope of a budget curve. B) the responsiveness of the quantity demanded to changes in price. C) how sensitive the quantity demanded is to changes in demand. D) how often the price of a good changes. 22) A 20 percent increase in the quantity of pizza demanded results from a 10 percent decline in its 22) price. The price elasticity of demand for pizza is A) 10.0. B) 20.0. C) 0.5. D) 2.0. (dollars per bushel) (bushels) —- —_ 0,000 12,000 23) The table above gives the demand schedule for snow peas. The price elasticity of demand between 23) $6.00 and $7.00 per bushel is A) 2.0. B) 1.0. C) 5.0. D) 2.6. 24) Producers total revenue will decrease if 24) A) the price rises and demand is elastic. B) income increases and the good is a normal good. C) the price rises and demand is inelastic. D) income falls and the good is an inferior good. 25) The cross elasticity of demand between Coca—Cola and Pepsi—Cola is so that Coke and 25) Pepsi are A) negative; substitutes B) positive; complements C) negative; normal goods D) positive; substitutes 26) A rise in the price of cabbage from $14 to $18 per bushel, caused by a shift of the demand curve, 26) increases the quantity supplied from 4,000 to 6,000 bushels. The elasticity of supply is A) 1.0. B) 0.8. C) 1.6. D) 0.6. 27) The principle of decreasing marginal benefit means that as the quantity of a good consumed 27) A) increases, its total benefit decreases. 3) increases, its marginal benefit decreases. C) decreases, its marginal benefit decreases. D) None of the above answers is correct. O 4 8 32 16 20 24 Quantity {gallons oi ice cream per year} 28) The above figure shows Dana's marginal benefit curve for ice cream, If the price of ice cream is $2 28) per gallon, then the maximum that Dana is willing to pay for the 8th gallon of ice cream is A) $3. B) $5. C) $1. D) $2. 29) Alice is willing to pay $3 for the second slice of pizza she eats. The price she pays is $2. Alice‘s 29) consumer surplus for this slice of pizza equals A) $3. B) s2. C) so. D) $1, Price {dollars per chicken sandwich] O 3 6 9 I 2 1 5 t 8 Quantity (chicken sandwiches per day) 3G) The above figure illustrates the marginal social benefit and marginal sociai cost for chicken 30) sandwiches. If the quantity is decreased from 6 to 3 and the price increases from $3 to $4, consumer surplus will decrease by A) $1.50. B) $3.00. C) $2.00. D) $4.50. [0an OU‘IO 01 Price (dofiors per pair of gioves} O 1 2 3 4 5 Quom‘ity {fl‘nousonds 0F gloves per do } 31) In the above figure, if the production of gloves was restricted to 2,000 a day, then the deadweight 31) loss would equal A) $0, because 2,000 gloves per day is an efficient quantity of gloves to produce. B) $10,000. C) $5,000. D) $2,000. Minimum 5 wage 32) The above figure illustrates the labor market for local fast food restaurants. What would be the 32) effects of a minimum wage imposed at $5.50 per hour? A) a shortage of 400 hours B) unemployment equal to 400 hours C) unemployment equal to 200 hours D) nothing because the minimum wage has no effect on the equilibrium price and quantity S + tax on seller Price (dollars per unit) 0 l 2 3 4 5 6 Quantity {thousands of units) 33) In the above figure, the amount of tax revenue is 33) A) $4,000. B) $8,000. C) $6,000. D) $2,000. 10 Answer Key Testname: HEADER AM FALL 07 1) A 2) A 3) B 4) A 5) D 6) D 7) D 8) A 9) A 10) c 11) c 12) B 13) B 14) D 15) B 16) D 17) B 18) C 19) D 20) c 21) B 22) D 23) D 24) A 25) D 26) c 27) B 23) A 29) 1:) 30) D 31) c: 32) B 33) A 11 ...
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1st Interim Exam - Fall 2007 - MICROECONOMICS ECON 103 —...

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