SUMA 07 Midterm 1A

SUMA 07 Midterm 1A - Professor: M. Rush ECO 2023 SUMMER A...

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Unformatted text preview: Professor: M. Rush ECO 2023 SUMMER A 2007 MIDTERM 1 Read all instructions on this page On the scantron bubble sheet, please enter: 1. Your name and initials 2. Your UF ID number 3. Special Code: 11 4. Test code: A 5. Sign your name on the back of the bubble sheet. This test is governed by UF’s academic honesty code. It is intended to have 35 multiple choice questions. Please check to be sure your copy has all 35. ♦ The next is important: Unless you are specifically told otherwise, on this test do not assume that demand or supply is either perfectly elastic or perfectly inelastic. Do not ask questions of me or the TA’s; in the interest of fairness I have instructed them not to answer any questions during the exam. I have become increasingly concerned that some students are at a real disadvantage because they are unwilling to ask questions during the exam while others ask a lot of questions. Hence, to level the playing field, I have decided to eliminate all questions during the test. I don’t like this policy, but it seems the fairest policy. TURN OFF ALL CELL PHONES AND OTHER COMMUNICATION DEVICES You will have 60 minutes to complete the exam and bubble in all your answers. This time includes completing the extra credit question if you choose to answer it. When the TAs say that time is up, you must hand in your exam. We will not give extra time to finish bubbling in the answers, so be sure you are done when the 60 minutes are up. Of course, you may hand in your test at any time before the 60 minutes are up. An answer key for the multiple choice questions will be posted on the class web page later this evening. The test scores will be on the Web within a few days. Check if the test code and UF ID number you bubbled‐in are correct now. Also check to be sure your name is correct—do it now. I have heard a rumor that the ability to correctly record these had been mastered by a few students at FSU as well as a couple of accounting and journalism students. I will investigate these rumors but in the meanwhile, CHECK YOUR TEST CODE AND UF ID NUMBER. IF YOU GET EITHER OF THESE WRONG, YOU WILL LOSE 5 POINTS!!!! ECO 2023 MIDTERM 1 SUMMER A 2007 After the scores are posted, if you think your posted score is incorrect, email the grader at the email address on the syllabus page. You have one week after the curved score is posted to request a grade check. After a week, the score will not be changed. If the web reports what you bubbled in for each question and you ask the grader to check an answer because you believe you bubbled in something other that what is reported and the reported answer on the web is correct, you will lose 1 additional question. After one week, THERE IS NO APPEAL ABOUT THE GRADE—IT IS WHAT IT IS. 2 ECO 2023 MIDTERM 1 SUMMER A 2007 1) Inter‐city bus trips are an inferior good and people’s incomes increase. As a result, the equilibrium quantity of inter‐city bus trips ____ and the efficient quantity of inter‐city bus trips ____. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; does not change E) decreases; decreases 2) When a market without any price controls is at equilibrium, the quantity demanded ____ the quantity supplied. A) must equal B) might equal C) must be less than D) must be greater than E) More information is needed to answer the question. 3) The price elasticity of demand for gasoline is 0.2; the price elasticity of demand for pizza is 2.0. If both the price of gasoline and the price of pizza fall by 10 percent, then the percentage increase in the quantity of gasoline demanded ____ the percentage increase in the quantity of pizza demanded. A) is less than B) is greater than C) is less than D) cannot be compared to E) None of the above answers are correct. 4) Suppose that the quantity demanded of HDTVs increases from 175,000 sets per week to 225,000 sets per week as a consequence of a fall in the price from $1,050 to $950. The price elasticity of demand is A) 25.00. B) 2.50. C) 5.00. D) 0.40 E) None of the above answers are correct. 3 ECO 2023 MIDTERM 1 SUMMER A 2007 5) The salaries paid to the engineers who design CPU chips increases. As a result, the equilibrium price of a CPU chip ____ and the equilibrium quantity of CPU chips _____. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases 6) The most anyone is willing to pay for another purse is $60. Currently the price of a purse is $40, and the cost of producing another purse is $30. The consumer surplus of one additional purse is A) $60. B) $40. C) $30. D) $20. E) $10. 7) If University of Miami increased its season football ticket sales from 43,000 to 47,000 when it lowered price from $350.00 to $200.00, then its demand for season tickets must be A) elastic because total revenue decreased when the price was lowered. B) elastic because total revenue increased when the price was lowered. C) inelastic because total revenue decreased when the price was lowered. D) inelastic because total revenue increased when the price was lowered. 8) At the quantity of 200 bushels of apples, the marginal social benefit of a bushel of apples is $100 and the marginal social cost is $50. To produce the efficient quantity of apples, A) more apples should be produced. B) fewer apples should be produced. C) there should be no change in the amount of apples produced. D) more information on the willingness of consumers to purchase apples is needed to determine the efficient level of apples. 4 ECO 2023 MIDTERM 1 SUMMER A 2007 9) The above figure shows the market for blouses. The government decides to impose a sales tax on sellers. Using the figure, how much is the total tax revenue (not the tax per blouse) does the government raise? A) $20,000. B) $40,000. C) $60,000. D) $80,000. E) $100,000. 10) In the above figure, the price per blouse kept by sellers of blouses before the tax was ____ and after the tax the price kept by sellers of blouses is ____. A) $20; $20 B) $20; $40 C) $10; $20 D) $20; $30 E) $20; $10 11) Males aged 21 to 25 drink more beer than other age and sex groups. If the number of males aged 21 to 25 decreases, the equilibrium price of beer ____ and the equilibrium quantity ____. A) falls; decreases B) falls; increases C) rises; decreases D) rises; increases 5 ECO 2023 MIDTERM 1 SUMMER A 2007 12) An increase in the supply of corn raises the total revenue received by all corn farmers taken together if the ____ corn is ____. A) supply of; elastic B) supply of; inelastic C) demand for; elastic D) demand for; inelastic 13) The tax incidence on buyers will be larger the more ____ the demand for the good and the more ____ the supply of the good. A) elastic; inelastic B) inelastic; elastic C) inelastic; inelastic D) elastic; elastic 14) The price of jet fuel rises. As a result, the equilibrium price of travel by airplanes ____ and the equilibrium quantity ____. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases 15) If peanut butter and jelly are complements their cross elasticity of demand must be A) infinitely high. B) a positive number that might be greater than 1. C) a number between zero and one. D) a negative number. 16) Which of the following does NOT shift the supply curve? A) A technological advance. B) A decrease in the wages of the workers used to produce the good. C) A fall in the number of suppliers. D) An increase in consumers’ incomes. E) An increase in the future expect price of the good. 17) The alllocatively efficient quantity of a product is produced when the marginal social benefit of the product A) exceeds the marginal social of the product cost by as much as possible. B) equals zero. C) equals the marginal social cost of the product. D) is less than the marginal social cost of the product. 6 ECO 2023 MIDTERM 1 SUMMER A 2007 18) You notice that the price and quantity of corn both increase. This observation can be the result of the A) demand curve for corn shifting rightward. B) demand curve for corn shifting leftward. C) supply curve of corn shifting rightward. D) supply curve of corn shifting leftward. 19) The “invisible hand” is the idea that A) demand curves slope downward. B) people’s self‐interested choices make efficient use of society’s resources even though it is no person’s intention to make society better off C) the deadweight loss really does not matter to society because it is invisible to most members of society. D) elasticity measures responsiveness. 20) Deadweight loss is A) not a social loss. B) made up of a loss of only consumer surplus. C) made up of a loss of only producer surplus. D) made up of a loss of both consumer surplus and producer surplus. Quantity of beans (bushels) 5 4 3 2 1 0 Quantity of carrots (bushels) 0 5 9 12 14 15 21) The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels of beans to 3 bushels of beans? A) 9 bushels of carrots B) 12 bushels of carrots C) 3 bushels of carrots D) 21 bushels of carrots E) 3 bushels of beans 7 ECO 2023 MIDTERM 1 SUMMER A 2007 22) Perhaps because of a hurricane, suppose that both suppliers and demanders of oil believe that the price of oil next month will be higher than they had previously thought. As a result, the current equilibrium price of oil ____ and the current equilibrium quantity of oil ____. A) rises; probably changes but whether it increases or decreases is ambiguous B) falls; probably changes but whether it increases or decreases is ambiguous C) rises; decreases D) probably changes but whether it rises or falls is ambiguous; increases E) probably changes but whether it rises or falls is ambiguous; decreases 23) Perhaps because of a hurricane, suppose that both suppliers and demanders of oil believe that the price of oil next month will be higher than they had previously thought. Suppose that the magnitude of the impact on the suppliers is larger than that impact on the demanders. As a result, the current equilibrium price of oil ____ and the current equilibrium quantity of oil ____. A) rises; probably changes but whether it increases or decreases is ambiguous B) rises; increases C) rises; decreases D) probably changes but whether it rises or falls is ambiguous; increases E) falls; increases 24) Last year I read in the Wall Street Journal that there has been new technology developed for producing orchids. This new technology means that the equilibrium price of an orchid ____ and the equilibrium quantity ____. A) rises; decreases B) rises; increases C) falls; decreases D) falls; increases 25) If the price elasticity of demand for airline travel is 0.52 in the short run and 1.46 in the long run, then the demand for airline travel is ____ in the short run and ____ in the long run. A) elastic; elastic B) elastic; inelastic C) inelastic; elastic D) inelastic; inelastic 8 ECO 2023 MIDTERM 1 SUMMER A 2007 26) For consumers, cupcakes and granola bars are substitutes. The price of a granola bar increases. As a result, the demand for A) granola bars will increase, that is, the demand curve will shift rightward. B) cupcakes will increase, that is, the demand curve will shift rightward. C) granola bars will decrease, that is, the demand curve will shift leftward. D) cupcakes will decrease, that is, the demand curve will shift leftward. 27) The above figure shows the demand and supply curves for housing. What would be the effect of a rent ceiling equal to $500 per month? A) a surplus equal to 3,000 apartments. B) a shortage equal to 3,000 apartments. C) a shortage equal to 2,000 apartments. D) nothing because the rent ceiling has no effect on the equilibrium price and quantity. E) None of the above answers are correct 28) The above figure shows the demand and supply curves for housing. As a result of a rent ceiling at $500, the deadweight loss is represented by the area A) feag. B) triangle gfe. C) triangle eca. D) triangle acb. E) None of the above answers are correct 9 ECO 2023 MIDTERM 1 SUMMER A 2007 Price (dollars per pizza) S Price (dollars per pizza) S D2 D1 D1 D2 Quantity (pizzas per month) Figure A Price (dollars per pizza) Quantity (pizzas per month) Figure B S2 S1 Price (dollars per pizza) S1 S2 D D Quantity (pizzas per month) Figure C Quantity (pizzas per month) Figure D 29) The above figure shows the market for pizza. Which panel shows the effect of research that suggests eating pizza helps protect people from heart attacks? A) Figure A. B) Figure B. C) Figure C. D) Figure D 30) The Wall Street Journal reported a month or two ago that the number of firms producing flat panel LCD screens has increased. The increase in the number of firms means that the equilibrium price of a flat panel LCD screen ____ and the equilibrium quantity ____. A) rises; increases B) rises; decreases C) falls; decreases D) falls; increases 10 ECO 2023 MIDTERM 1 SUMMER A 2007 31) If the price of a soda increases by 4 percent and as a result the quantity of sodas demanded decreases by 6 percent, the price elasticity of demand equals A) 0.40. B) 1.50. C) 0.67. D) 4.00. E) None of the above answers are correct. 32) The demand curve for a product is horizontal. Hence, the demand for the product is _____ and the price elasticity of demand equals _____. A) perfectly elastic; infinity B) perfectly inelastic; zero C) perfectly elastic; one D) perfectly inelastic; infinity E) unit elastic; one 33) Hot dogs are a complement for hot dog buns and hot dogs rise in price. As a result, the equilibrium price of a hot dog bun ____ and the equilibrium quantity of hot dog buns ____. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases E) does not change; decreases 34) If the government outlaws the purchase and the sale of pizza, then the equilibrium price of a pizza will ____ and the equilibrium quantity will ____. A) rise; decrease B) not change; decrease C) fall; decrease D) fall; not change E) probably change but in an ambiguous direction; decrease 35) After the scores are posted, if you have a question about your test score, email the grader at [email protected] and the director is so stupid (HINT: Be SURE to answer this question because you’ll get credit for any answer.) A) he threw a rock at the ground and missed. B) he thought the Superbowl was a really big bowl of cereal. C) he thought Taco Bell was a Mexican phone company. 11 ...
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This note was uploaded on 01/11/2010 for the course ECO 2023 taught by Professor Rush during the Fall '08 term at University of Florida.

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