mt1f06 - Econ 101-Fall 2006 Midterm exam 1 October 9, 2006...

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Econ 101-Fall 2006 Midterm exam 1 October 9, 2006 Write your name: You have one hour and fifteen minutes to answer the exam. The exam contains 35 multiple choice questions; most of the questions are related, but with very few exceptions, each question can be answered separately. There are an undisclosed number of exam versions, with slight variations both in the questions and the ordering of the answers, in order to discourage you from being distracted by what your neighbors are doing. Be aware that the results of the test will be curved, so don’t panic if you feel that the exam is too difficult or too long: it would most likely be the case that the other students are also finding it too difficult or too long. You are allowed to use a calculator –even though you don’t really need one. You are NOT allowed to use any type of portable computer or communication device. Cheating is not tolerated.
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Use the following information to answer the next 6 (1 ~ 6) questions: In Weatherland, the market demand for umbrellas is described by the inverse demand equation P=15- (1/5)Q D and the market supply is described by the inverse supply equation P=15+(1/10)Q S . 1. What is the total demand for umbrellas when the price falls to zero? a) 0 b) 55 c) 60 d) 65 e) 75 2. The equilibrium price and quantity in the market of umbrellas is : (Quantity, Price) a) (30, 6) b) (45, 6) c) (40, 7) d) (35, 8) e) (50, 8) 3. What is the elasticity of supply when the price is $5? a) 1/2 b) 5/6 c) 1 d) 5/3 e) 5/2 4. The point where the elasticity of demand is zero is : (Quantity, Price) a) (15, 0) b) (75, 0) c) (0, 15) d) (45, 6) e) (40, 7) 5. The government of Weatherland decides to set a price ceiling of $10 for umbrellas. What will be the quantity produced in the new market equilibrium? (Hint: notice that the equilibrium price of umbrellas in question 2 was less than 10.) a) 25 b) 65 c) 70 d) 130 e) There is no change in the quantity produced.
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6. Suppose that the government of Weatherland decides to give some free raincoats to its citizens. These raincoats protect people from rain like umbrellas. As a result, the demand curve in the market will shift and the market will reach a new equilibrium with ____________ price and _______________ quantity. a) a higher; a higher b) a higher; a lower c) a lower; a higher d) a lower; a lower e) no change in; no change in Use the following graph of demand and supply curves in a local beer market to answer the next five (7 ~ 11) questions . 7. In the local market for beer, total demand is 160 when price is zero; on the other hand, demand is zero when the price is $20. If we assume the demand curve to be a straight line, the equation of the demand curve will be: a) P=160+8 Q D b) P=20-(1/8) Q D c) P=160-(1/8)Q d) P=20-8 Q D e) We need more information to get the equation. 8. If we also know the equation for the supply curve is P=(1/2)Q S in this market, what will be the equilibrium price and quantity?
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This note was uploaded on 08/08/2008 for the course ECON 101 taught by Professor Hansen during the Spring '07 term at Wisconsin.

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mt1f06 - Econ 101-Fall 2006 Midterm exam 1 October 9, 2006...

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