Econ2_Practice_1B

Econ2_Practice_1B - page 1 of 5 Economics 2 Winter 2009...

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page 1 of 5 Economics 2 your name _______________________________ Winter 2009 your TA’s name __________________________ day and time of your discussion section ________ PRACTICE FIRST EXAM DIRECTIONS: No calculators, books, or notes of any kind are allowed. All papers and notebooks must remain closed and on the floor at all times throughout the exam, and students are not allowed to leave the examination room until finished. Answer all questions in the space provided with the exam. 100 points are possible on this exam. HINTS: Feel free to use either of the following formulas if you find them useful. Area of a triangle = (1/2) (base) (height) Area of a trapezoid = (1/2) (base1 + base2) (height) PART I: MULTIPLE CHOICE—circle the correct answer (4 points each, 76 points total) 1.) A subsidy to the consumers of an item usually leads to a.) an increase in producer surplus and an increase in total economic surplus b.) a decrease in producer surplus and a decrease in total economic surplus c.) a decrease in producer surplus and an increase in total economic surplus d.) an increase in producer surplus and a decrease in total economic surplus 2.) Which policy is most efficient when dealing with overbooked airline flights? a.) first-come, first-served b.) compensation to customers who miss their flight c.) price ceiling d.) price floor 3.) If the supply curve for a good is perfectly elastic, which of the following statements best describes the burden of a tax on the good? a.) the burden of the tax falls entirely on the producers b.) the burden of the tax falls entirely on the consumers c.) the burden of the tax is zero d.) the burden of the tax is infinite 4.) Suppose you’d be willing to pay $12 for an item, but you are able to buy it for $10. Then your consumer surplus a.) is more than $10 b.) is exactly $10 c.) is less than $10, but positive d.) is exactly 0 5.) Which of the following is not an example of the economic waste caused by a price ceiling? a.) consumers may waste time waiting in line to try to get the product b.) the product may not go to the people who value it the most c.) too little of the good will be produced d.) the marginal benefit to some customers may be less than the marginal cost of producing the good
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Econ2_Practice_1B - page 1 of 5 Economics 2 Winter 2009...

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