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Intermediate macroeconomics exam1

Intermediate Microeconomics: A Modern Approach, Seventh Edition

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ECONOMICS 300 FIRST MIDTERM SPRING 2004 PLEDGE:____________________________ NAME:______________________________ Multiple Choice (3 points each) (48 points total) 1. When a consumer is consuming a bundle on her budget constraint then a. She must be maximizing her utility. b. She must be exhausting her income. c. Her marginal rate of substitution is equal to the opportunity cost. d. None of the above. 2. Bill currently consumes Doritos (D) and Cheese Whiz (C). Doritos cost $5, Cheese Whiz costs $4, and his income is $50. If there is a 50% tax on Doritos, a $2 subsidy of Cheese Whiz and an income tax of $40, then Bill’s new budget constraint would be: a. 90 = 9D + 2C b. 10 = 9D + 2C c. 10 = 7.5D + 2C d. 10 = 7.5D + 6C 3. Sarah insists that she has an increasing marginal utility for Hershey’s Kisses (K). Which graph would best show her Total Utility for Kisses? A B C a. A. b. B. K TU TU K TU K c. C. d. None of the above. 1
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4. If two goods are both desirable and preferences are convex, then: a. There must be a kink in the indifference curve. b. The indifference curves must be straight lines. c. There is a bliss point. d. None of the above. 5. Suppose Nancy always drinks 3 bottles of Gatorade (G) for every 2 Powerbars (P) she eats. She always consumes the goods in this fixed proportion. Her utility for Gatorade and Powerbars could be modelled with the following function. a.
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Intermediate macroeconomics exam1 - ECONOMICS 300 FIRST...

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