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Midterm1_F08(2)

Midterm1_F08(2) - ECONOMICS 211 FIRST MIDTERM EXAMINATION...

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ECONOMICS 211 FIRST MIDTERM EXAMINATION, Fall 2008 (2 hours, 100 points) NAME: __________________________________________________________________________ PLEDGE :_______________________________________________________________________________________ _________________________________________________________________________________________________ _________________________________________________________________________________________________ PART 1: MULTIPLE CHOICE: Circle the correct answer (3 points each; 18 points in total) 1. (3 points) If Amtrak Train Co. raises the price of its passenger tickets, then a) the company’s total revenue will increase if demand is unitary elastic with respect of price. b) the more price elastic the demand at the original market equilibrium the greater will be the decrease in the number of tickets demanded. c) the greater the cross elasticity between Amtrak train tickets and Greyhound bus tickets, the greater the decrease in demand for bus tickets. d) the company's total revenue will decrease if it is a normal good. 2. (3 points) Which of the following statements would you expect to be true about T-shirts and clothing? 1
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3. (3 points) Which of the following is a TRUE statement about a normal good? PART II: SHORT PROBLEMS ( 14 points in total) 4. (5 points) If the demand curve for a good is perfectly inelastic, then the good is inferior. True or False? Explain your answer.
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