Practice Midterm #2

Practice Midterm #2 - 1 3 2 80 3 4 90 Midterm #2 (Fall...

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80 90 70 1 2 3 4 3 2 1 Midterm #2 (Fall 2007) Multiple Choice {Circle letter of best answer} 1. On a demand and supply diagram, the total revenue from sales of a good is shown as: a) a vertical distance. b) a horizontal distance. c) the area of a triangle. d) the area of a rectangle. 2. If the price elasticity of demand exceeds 1.0 but is less than infinity, demand is a) inelastic. b) unit elastic. c) elastic. d) perfectly elastic. 3. If the price elasticity of demand is ____, the demand curve is ____. a) infinity; horizontal b) infinity; vertical c) one; horizontal d) one; vertical 4. A fall in the price of lemons from $10.50 per bushel to $9.50 increases the quantity demanded from 19,200 to 20,800. The price elasticity of demand in this range is a) 0.80. b) 1.20. c) 1.25. d) 8.00. 5. If the demand for a product is price inelastic, but not perfectly price inelastic, then a 10 percent decrease in its price causes the quantity demanded to increase by a) more than 10 percent. b) 10 percent. c) less than 10 percent. d) 0 percent. 6. If two different goods are complements, their a) cross elasticity of demand is negative. b) cross elasticity of demand is positive. c) income elasticity of demand is negative. d) income elasticity of demand is positive. 7. The price elasticity of supply measures a) how often the price of the good changes. b) the slope of the supply curve. c) how sensitive the quantity supplied is to changes in supply. d) how sensitive the quantity supplied is to changes in the price. 8. If the marginal social cost of the sixth slice of pizza is greater than the marginal social benefit, then the output level is a) efficient and more pizza should be produced. b) efficient and less pizza should be produced. c) inefficient and more pizza should be produced.
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d) inefficient and less pizza should be produced. 9. If the city of Fresno holds a referendum to determine if taxes will be raised to pay for road repairs, the city is using a ____ allocation method. a) majority rule b) market price c) contest d) personal characteristics 10. If the only people who benefit from pizza are those who buy it, the demand curve for pizza a) lies above the marginal social benefit curve for pizza. b) lies below the marginal social benefit curve for pizza.
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This note was uploaded on 12/05/2009 for the course ECON 88008 taught by Professor Carollfoster during the Winter '08 term at UCSD.

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Practice Midterm #2 - 1 3 2 80 3 4 90 Midterm #2 (Fall...

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