Exam 2 Review-1 - New Exam 2 Review NOTE Questions 39 and...

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New Exam 2 Review NOTE: Questions 39 and 41 will not be covered on the exam. MULTIPLE CHOICE. Answers are shown at the end of the Exam. 1) Suppose that in a month the price of school bumper stickers increases from $1 to $1.50. If the price elasticity of demand (calculated using the initial value formula) is 0.1 and the initial quantity demanded was 200, the new quantity demanded is: A) 190. B) 50. C) 10. D) 150. 2) Buyers and sellers acting in their own best interest generate outcomes that are in society's best interest when all of the following are true except: A) there are no spillover costs. B) there are some spillover benefits. C) buyers and sellers are informed. D) markets are perfectly competitive 3) Government intervention in markets can increase market efficiency when: A) foreign imports cause jobs to be lost in domestic industries. B) producers are not paying for the negative spillovers they cause by producing. C) apartment rental rates are too high for poor people to afford housing. D) produce prices are too low for farmers to afford to stay in business. 4) In the case of perfectly elastic demand, the demand curve is: A) horizontal. B) upward sloping. C) downward sloping. D) vertical. 5) Government regulated prices below the free market equilibrium are inefficient because: A) no one can be made better off without hurting someone by participating in another transaction. B) all mutually beneficial transactions happen. C) more goods could be produced using society's resources. D) they prevent mutually beneficial transactions. 6) If the government imposes a maximum price that is above the equilibrium price: A) quantity demanded will be less than quantity supplied. B) demand will be greater than supply. C) this maximum price will have no economic impact. D) the available supply will have to be rationed. 7) Suppose that the price of a box of pop tarts is $2 each. Michael is willing to pay $5 for the first box, Richard is willing to pay $4 for the second box, Jessica is willing to pay $3 for the third box, and Brooke is willing to pay $1 for the fourth box. In equilibrium, what is the total consumer surplus from the consumption of pop tarts? A) $4 B) $5 C) $3 D) $6 8) On a linear demand curve, demand is ________ at small quantities than it is at the middle of the demand curve. A) equally elastic B) more elastic C) less elastic D) impossible to tell 9) If a product has a large number of excellent substitutes, demand for the product is most likely to be: A) very elastic. B) elastic. C) inelastic. D) very inelastic. 1
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New Exam 2 Review 10) Refer to Figure 6.3. On this graph, area BCD is: A) consumer net benefit. B) consumer surplus. C) total surplus. D) producer surplus. 11)
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This note was uploaded on 12/16/2009 for the course ACCT 116B 00138 taught by Professor Seymour during the Fall '09 term at Mesa CC.

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Exam 2 Review-1 - New Exam 2 Review NOTE Questions 39 and...

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