Economics 1 - Fall 2003 - Train - Midterm 1 Answers

Economics 1 - Fall 2003 - Train - Midterm 1 Answers - Page...

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Unformatted text preview: Page 1 of 5 Department of Economics Professor Kenneth Train University of California, Berkeley Spring Semester, 2003 ECONOMICS 1 FIRST MIDTERM EXAMINATION In class, March 3 INSTRUCTIONS 1. Please fill in the information below: Your Name: SUGGESTED ANSWERS Your SID#: DO NOT DISTRIBUTE TO STUDENTS! GSIs Name: Section Number (Days/Time): 2. The exam ends at 3:55 pm . 3. If you finish early, please remain in your seat so that you do not disturb the other students. 4. When time is called, please pass your exam to the aisle. Please stay in your seat until the exams are collected. 5. There are a total of 100 points, 4 questions, and 5 pages (including this cover sheet). Points for each question are in parentheses. 6. Answer the questions in the space provided. (NO BLUE BOOKS.) If you need extra room to answer questions, use the backs of the pages. 7. Calculators are not permitted. Have fun! J >>> D O NOT TURN THE PAGE UNTIL YOU ARE TOLD TO BEGIN THE EXAM . <<< Page 2 of 5 Question 1: True/False/Uncertain (20 points, 7 minutes) For each of the following decide whether the statement is true, false, or uncertain and explain why. Your explanation determines your grade; you will receive no credit for an answer without an explanation. Use diagrams where appropriate. a) [4 points] An increase in the price of gasoline causes the demand curve for gasoline to shift to the right. False: An increase in the price of gasoline leads to a change in quantity demanded, causing a movement along the demand curve. b) [8 points] A consumer is maximizing his/her utility if the marginal utility is equal for all goods. False: A consumer is maximizing his/her utility if the marginal utility per dollar is equal for all goods. c) [8 points] When the government places an excise tax on a market with a vertical supply curve and a downward sloping demand curve, the sellers and buyers equally share the burden of the tax. False: All of the tax burdens fall on the sellers because of the vertical supply curve. If you shift down the demand curve by the tax amount, t, the new equilibrium price that the sellers receive is (the original price t), and the price that buyers pay does not change. and the price that buyers pay does not change....
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Economics 1 - Fall 2003 - Train - Midterm 1 Answers - Page...

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