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Unformatted text preview: Professor: M. Rush ECO 2023 Fall 2009 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: B 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 34 multiple choice questions and one extra credit question. When you are told to start, please check to be sure your copy has all the questions. Choose the best answer for each question. ♦ 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 may not use a cell phone, a Blackberry, or any other sort of device that allows for communication as your calculator. 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 will be posted on the Web 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 FALL 2009 After the scores are posted, if you think your posted score is incorrect, email the grader at the email address on the syllabus page and the last question on this exam. 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. EXTRA CREDIT QUESTION INSTRUCTIONS There is an extra credit question on the last page. You can earn up to 3 points added to this exam’s test score. If you choose to answer the extra credit question, be sure to follow all the instructions on the page with the extra credit question and provide all the required information. DO IT LEGIBLY IF WE CANNOT READ YOUR NAME AND/OR UF ID, YOU WILL NOT GET ANY EXTRA CREDIT! When you hand in your test, you must hand in the extra credit page. You may copy your answer to the extra credit question in the space below. I will announce in class when the extra credit questions are graded and will post the grades on the class page but it will take a week or two. Do not email me, the grader, or the email address for questions about when the extra credit will graded. I will announce this in class. THERE IS NO APPEAL ABOUT THE GRADE—IT IS WHAT IT IS. 2 ECO 2023 MIDTERM 1 FALL 2009 1) Suppose UF raises the price of tickets to its football games and the total revenue increases. Based on this, then it is most likely the case that A) UF football games are a normal good. B) there are not many substitutes for UF football games. C) if ticket prices were lowered, then total revenue would increase by even more. D) the supply of tickets to UF football games is elastic. 2) The price elasticity of demand for tennis balls is 2.0 and the price of tennis balls falls by 6%. The quantity of tennis balls demanded increases by ____. A) 2% B) 3% C) 6% D) 8% E) 12% 3) The figure above shows the U.S. demand and the U.S. supply of shirts. If the world price of shirts is $20 per shirt, the United States ____ shirts per year. A) imports 32 million B) imports 48 million C) exports 48 million D) exports 16 million E) None of the above. 3 ECO 2023 MIDTERM 1 FALL 2009 4) The figure above shows the U.S. demand and the U.S. supply of shirts. If the world price of shirts is $20 per shirt and the United States imposes a tariff of $4 per shirt, then the United States ____ shirts per year. A) imports 32 million B) imports 48 million C) imports 24 million D) exports 24 million E) None of the above. 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 5) The above figure shows the market for pizza. Suppose for consumers tacos are a substitute for pizza and tacos rise in the price. Which panel shows the effect of this change? A) Figure A. B) Figure B. C) Figure C. D) Figure D 6) Suppose jet fuel rises in price. Then the equilibrium price of travel by plane ____ and the equilibrium quantity of travel by plane ____. A) rises; increases B) does not change; decreases C) falls; decreases D) rises; does not change E) rises; decreases 4 ECO 2023 MIDTERM 1 FALL 2009 7) In 2008 the government issued new regulations that increased the amount of ethanol that had to be added to gasoline. These new regulations ____ the equilibrium price of ethanol and ____ the equilibrium quantity of ethanol. A) raised; increased B) raised; decreased C) lowered; decreased D) lowered; increased 8) (This is an out of the book question.) Utilitarianism is the idea that A) competition brings efficiency. B) efficiency brings equality. C) income equality is fair. D) efficiency is fair. 9) New technology for producing computer chips is discovered. As a result, the equilibrium price of computer chips ____ and the equilibrium quantity ____. A) falls; decreases B) falls; increases C) falls; does not change D) rises; decreases E) rises; increases 10) (This is an out‐of‐the‐book question.) If buyers of an illegal good are punished but sellers are not, then the price of the illegal good ____ and quantity ____. A) rises; increases B) rises; does not change C) rises; decreases D) falls; increases E) falls; decreases 11) Suppose the demand for a life‐saving drug is perfectly inelastic. If the cost of producing the drug rises, the equilibrium price of the drug ____ and the equilibrium quantity ____. A) does not change; increases B) falls; increases C) rises; does not change D) does not change; decreases E) falls; does not change 5 ECO 2023 MIDTERM 1 FALL 2009 12) When a market is in equilibrium, A) consumer surplus necessarily is larger than producer surplus. B) producer surplus necessarily is larger than consumer surplus. C) consumer surplus necessarily is the same as producer surplus. D) None of the above answers are correct. 13) Plywood is used in the construction of houses. If the price of plywood rises, what happens in the market for houses? A) The supply of houses increases. B) The supply of houses decreases. C) The demand for houses increases. D) The demand for houses decreases. E) Both answers B and D are correct. 14) If a demand curve is a downward sloping straight line, the price elasticity of demand always A) increases when the demand curve shifts rightward. B) increases when the demand curve shifts leftward. C) increases when moving upward along the demand curve. D) decreases when moving upward along the demand curve. 15) The equilibrium rent for an apartment is $600 per month and the government imposes a rent ceiling of $500 per month. The producer surplus from apartments ____ and a deadweight loss ____ created. A) decreases; is not B) decreases; is C) increases; is D) does not change; is not E) More information is needed about the demand and supply of apartments to answer this question. 6 ECO 2023 MIDTERM 1 FALL 2009 Point A B C D E Production chocolate bars 0 10 20 30 40 Production cans of cola 100 90 70 40 0 16) The above table shows production points on Sweet‐Tooth Land’s production possibilities frontier. What is the opportunity cost of one chocolate bar if Sweet‐Tooth Land moves from point B to point C? A) 90 cans of cola B) 1 chocolate bar C) 2 cans of cola D) 70 cans of cola E) 0 cans of cola 17) The most anyone is willing to pay for a purse is $60. Currently the price of a purse is $40, and the lowest price for which a purse would be produced and sold is $10. The consumer surplus to society of a purse is A) $60. B) $30. C) $20. D) $10 E) $50. 18) Corn is used by refiners to produce ethanol. Suppose the demand for corn is inelastic and there is a bad growing season. The equilibrium price of corn ____ the equilibrium quantity of corn ____. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases 19) The price elasticity of demand ____ when the units used to measure the price change (say from dollars to yen) and ____ when the units used to measure the quantity change (say from pounds to tons). A) changes; changes B) changes; does not change C) does not change; changes D) does not change; does not change 7 ECO 2023 MIDTERM 1 FALL 2009 20) Suppose the supply of wheat decreases due to a bad growing season. As a result, the equilibrium price of wheat ____ and the consumer surplus from wheat ____. A) rises; decreases B) rises; might change but more information is needed C) rises; increases D) does not change; decreases E) does not change; does not change 21) If immigration increases the U.S. labor force, then the U.S. PPF A) shifts outward. B) shifts inward. C) does not shift. D) More information is needed to determine the answer. 22) Food is a normal good and in the recent recession people’s incomes fell. As a result, the equilibrium price of food ____ and the equilibrium quantity ____. A) rose; increased B) rose; decreased C) fell; increased D) fell; decreased 23) When the price of a pizza is $11, 19 million pizzas per day are demanded. When the price of a pizza is $9, 21 million pizzas per day are demanded. The price elasticity of demand equals A) 0.50. B) 2.00. C) 1.73. D) 1.00. E) None of the above are correct. 24) People discover that eating fast food tacos leads to better health. Simultaneously there are technological advances in producing fast food tacos. The equilibrium price of a fast food taco ____ and the equilibrium quantity ____. A) rises; might increase, decrease, or not change B) rises; increases C) falls; increases D) might rise, fall, or not change, does not change E) might rise, fall, or not change; increases 8 ECO 2023 MIDTERM 1 FALL 2009 25) The quantity of new cars increases by 10 percent. If the price elasticity of demand for new cars is 1.25, the price of new cars will fall by A) 2.5 percent. B) 8 percent. C) 10 percent. D) 12.5 percent. E) None of the above are correct. 26) Suppose more people are worried about the flu than in previous winters. If the supply of flu vaccine is perfectly elastic, then the equilibrium price of flu vaccine ____ and equilibrium quantity ____. A) rises; increases B) rises; decreases C) rises; does not change D) does not change; increases E) falls; increases 27) The price of a pizza falls. Which of the following is a possible cause? A) An increase in the price of hamburgers, which are, for consumers, a substitute for pizza. B) A fall in the price of the cheese used to produce pizza. C) A decrease in the number of pizza restaurants. D) An increase in the wages paid workers who produce pizza. 9 ECO 2023 MIDTERM 1 FALL 2009 28) The figure above shows the market for blouses when the government imposes a tax. The amount of the tax is ____ per blouse and once the tax is imposed buyers pay ____ per blouse and sellers pay ____ per blouse. A) $20; $0; $20 B) $30; $20; $10 C) $30; $10; $20 D) $20; $30; $10 E) $20; $10; $10 29) The figure above shows the market for blouses when the government imposes a tax. The deadweight loss from the tax is A) $6 million. B) $2 million. C) $4 million. D) $0. E) $1 million. 30) The figure above shows the market for blouses. After the government imposes the tax, the consumer surplus is equal to A) $10 million. B) $2 million. C) $4 million. D) $0. E) $8 million. 10 ECO 2023 MIDTERM 1 FALL 2009 31) Currently the United States imports tomatoes from Mexico. These imports ____ the consumer surplus of U.S. tomato consumers, ____ the producer surplus of U.S. tomato producers, and ____ U.S. total surplus. A) increase; increase; increase B) increase; decrease; decrease C) decrease; increase; increase D) increase; decrease; decrease E) increase; decrease; increase 32) Currently Mexico exports tomatoes to the United States. These exports ____ the consumer surplus of Mexican tomato consumers, ____ the producer surplus of Mexican tomato producers, and ____ Mexican total surplus. A) increase; increase; increase B) increase; decrease; decrease C) decrease; increase; increase D) increase; decrease; decrease E) increase; decrease; increase 33) The income elasticity of demand for natural Christmas trees is positive. This result means that A) natural and artificial Christmas trees are substitutes. B) natural Christmas trees are a normal good. C) the demand for natural Christmas trees is inelastic. D) the demand for natural Christmas trees is elastic 34) After the scores are posted, if you have a question about your test score, email the grader at [email protected] while if you have questions about a question (or an answer) email me 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 called me to get my phone number. B) he went to The Gap to have his teeth fixed. C) he thinks the Internet is used to catch fish. 11 ECO 2023 MIDTERM 1 FALL 2009 EXTRA CREDIT QUESTION _____________________________ (Name) PRINT your name and UF ID in the spaces above. YOU MUST WRITE ___________________________ (UF ID) YOUR NAME AND UF ID LEGIBLY TO RECEIVE CREDIT FOR THIS QUESTION. When you have answered the question, hand in this page and ONLY THIS PAGE. Keep the rest of the test to help you study for the final exam. 1. Draw and label a diagram showing the market for hot dogs. Determine the effect on the price and quantity of hot dogs if the number of firms producing hot dogs increases. 12 ...
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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.
- Fall '08