Midterm1_1 - Midterm ILecture 1 (9:05-9:55) 50 minutes Econ...

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1 Midterm I—Lecture 1 (9:05-9:55) 50 minutes Econ 1101: Principles of Microeconomics Thomas Holmes October 15, 2007 Name: _______________________________________________ TA’s Name: __________________________________________ Section Number: ______________________________________ (TA’s Name and Section Number are worth 2 bonus points.) If you need more space, use the back of the page. Clearly state where your work/answer are. Clearly highlight/circle solutions. Calculators are NOT allowed. You may leave answers as fractions. Fully label all graphs. Read each question carefully and be sure to answer all parts of every question. There should be 8 pages including the cover sheet.
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2 Question 1 (10 points): Consider the market for corn. For each of the following situations, determine what happens to the equilibrium price and equilibrium quantity of corn . Circle the correct answer. (a) There is no rain throughout the entire summer in the corn-growing regions. Quantity: increases decreases can’t tell Price: increases decreases can’t tell (b) The price of cars that use ethanol for fuel decreases. (Ethanol is made out of corn.) Quantity: increases decreases can’t tell Price: increases decreases can’t tell (c) Sugar prices fall. (Sugar and corn syrup are both used as sweeteners in beverages and candy.) Quantity: increases decreases can’t tell Price: increases decreases can’t tell (d) A new kind of corn is developed that is resistant to damage from insects. Quantity: increases decreases can’t tell Price: increases decreases can’t tell (e) Both (c) and (d) happen at the same time. Quantity: increases decreases can’t tell Price: increases decreases can’t tell Question 2 ( 2 points): Americans work more than Germans and the French. Ed Precott (2004 Nobel Laureate and former Minnesota faculty member) has argued that these differences are related to the differences in taxes between European countries and the U.S. True or False (circle one)
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Midterm1_1 - Midterm ILecture 1 (9:05-9:55) 50 minutes Econ...

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