Mideterm - Name: _ Class: _ Date: _ ID: A 1 Mid Term Exam...

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Name: ________________________ Class: ___________________ Date: __________ ID: A 1 Mid Term Exam II, Spring '09 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Welfare economics is the study of a. the well-being of less fortunate people. b. welfare programs in the United States. c. the effect of income redistribution on work effort. d. how the allocation of resources affects economic well-being. ____ 2. When a buyer’s willingness to pay for a good is equal to the price of the good, a. the buyer’s consumer surplus for that good is maximized. b. the buyer will buy as much of the good as the buyer’s budget allows. c. the price of the good exceeds the value that the buyer places on the good. d. the buyer is indifferent between buying the good and not buying it. ____ 3. Suppose Lauren, Leslie and Lydia all purchase bulletin boards for their rooms for $15 each. Lauren's willingness to pay was $35, Leslie's willingness to pay was $25, and Lydia's willingness to pay was $30. Total consumer surplus for these three would be a. $15. b. $30. c. $45. d. $90. This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. Table 7-2 BUYER WILLINGNESS TO PAY DAVID $8.50 LAURA $7.00 MEGAN $5.50 MALLORY $4.00 AUDREY $3.50 ____ 4. Refer to Table 7-2 . If the price of Vanilla Coke is $6.90, who will purchase the good? a. all five individuals b. Megan, Mallory and Audrey c. David, Laura and Megan d. David and Laura ____ 5. The area below a demand curve and above the price measures a. producer surplus. b. consumer surplus. c. excess supply. d. willingness to pay. Name: ________________________ ID: A 2 ____ 6. Which of the following is not true when the price of a good or service falls? a. Buyers who were already buying the good or service are better off. b. Some new buyers, who are now willing to buy, enter the market. c. The total consumer surplus in the market increases. d. The total value of purchases before and after the price change is the same. ____ 7. A seller is willing to sell a product only if the seller receives a price that is at least as great as a. the seller’s producer surplus.
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b. the sellers’s cost of production. c. the seller’s profit. d. the average willingness to pay of buyers of the product. ____ 8. When Ronald Reagan ran for the presidency in 1980, he pledged to bring about a. large cuts in personal income taxes. b. large cuts in payroll taxes. c. large increases in personal income taxes. d. large increases in payroll taxes. ____ 9. A tax on a good a. raises the price that buyers effectively pay and raises the price that sellers effectively receive. b. raises the price that buyers effectively pay and lowers the price that sellers effectively
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Mideterm - Name: _ Class: _ Date: _ ID: A 1 Mid Term Exam...

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