Practice Questions Midterm 2

Practice Questions Midterm 2 - Econ 101-008, Michael Salemi...

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Econ 101-008, Michael Salemi Second Midterm Examination Practice Questions 1. If an increase in border patrols decreases the supply of illicit drugs, which of the following is expected? a. A decrease in the price of illicit drugs. b. An increase in the quantity of illicit drugs. c. A decrease in drug related crime. d. An increase in the total amount spent on drugs. 2. Which of the following goods is likely to have the most inelastic demand? a. A Burger King hamburger. b. A can of Del Monte brand peaches. c. A Prescription blood pressure medication. d. A pizza in the campus dining hall. 3. An economically rational individual is the sole supplier of a special type of varnish that is used for finishing fine furniture. Which of the following would the supplier never do? a. Lower the price of the varnish. b. Sell varnish to different customers at different prices. c. Choose a price for the varnish that implied that demand was elastic. d. Choose a price for the varnish that implied that demand was inelastic. 4. The demand for a Toyota Corolla (a compact car) is _________ price elastic than the demand for compact cars because ____________. a. More, There are many other cars with similar features. b. Less, There are many other cars with similar features. c. More, Toyotas are manufactured with interchangeable parts. d. Less, Toyotas are manufactured with interchangeable parts. 5. Which of the following would cause the supply of tea kettles to become less price elastic? a. The tea kettle industry shifts to a production technique that uses specially trained labor. b. Transportation services improve in the city where most industry firms are located. c. The invention of a new pump lowers the cost of producing coffee makers. d. The tea kettle industry replaces a specialized heating element with one that can work in a variety of consumer machines. 6. An allocation is economically efficient if … a. The allocation implies that consumer surplus is as large as possible. b. It allows for a variety of easily accomplished secondary trades. c. No one is willing to pay more for the good than the market price. d. After the allocation, no two individuals can agree on a trade.
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7. Assume I bring 30 cookies into a class with 30 students, each of whom has a positive reservation price for one and two cookies. Which of the following allocations is efficient? a. I give one cookie to each student. b. I give all 30 cookies to one student. c. I divide all the cookies equally among the female students. d. I give the students with the 15 highest midterm grades 2 cookies each. 8.
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Practice Questions Midterm 2 - Econ 101-008, Michael Salemi...

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