exam 2 - ARE 201 Spring 2009 Exam #2 Topics: Chapters 4-6...

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1 ARE 201 Spring 2009 Exam #2 Topics: Chapters 4—6 Date: 3/12/2009 Time: 1:30pm—2:45pm Instructor: Prof. Zheng Format: Closed-book MULTIPLE CHOICE (3 points each) 1. For each good produced in a market economy, demand and supply determine a. the price of the good, but not the quantity. b. the quantity of the good, but not the price. c. both price and quantity. d. neither price nor quantity is determined by demand and supply, because prices are ultimately set by producers. 2. Each of the following are determinants of demand EXCEPT a. tastes. b. technology. c. income. d. the price of related goods. 3. Which of the following cause and effect events is in order for a seller? a. Technology improves, profit falls, the supply curve shifts left. b. An input price falls, profit increases, the supply curve shifts right. c. An input price rises, profit falls, the supply curve shifts right. d. An input price rises, profit rises, the supply curve shifts left. 4. Another term for equilibrium price is a. balancing price. b. market-clearing price. c. constant price. d. satisfactory price. 5. Demand for a good would tend to be more inelastic the a. fewer the available substitutes. b. longer the time period considered. c. more the good is considered a luxury good. d. more narrowly defined the market is. 6. Suppose the price of Twinkies is reduced from $1.45 to $1.25 and, as a result, the quantity of Twinkies demanded increases from 2,000 to 2,200. Using the midpoint method, the price elasticity of demand for Twinkies in the given price range is a. 2.00. b.
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exam 2 - ARE 201 Spring 2009 Exam #2 Topics: Chapters 4-6...

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