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First Midterm F07

# First Midterm F07 - ECONOMICS 211 FIRST MIDTERM EXAMINATION...

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ECONOMICS 211 FIRST MIDTERM EXAMINATION, Fall 2007 (2 hours, 100 points) Circle the name of your instructor: Blazek Ergen nal İ Muthitacharoen Soligo You NAME: __________________________________________________________________________ PLEDGE:_______________________________________________________________________________________ _________________________________________________________________________________________________ _________________________________________________________________________________________________ PART 1: MULTIPLE CHOICE: Circle the correct answer (3 points each; 18 points in total) 1. Which of the following would shift the demand for chocolate chip cookies? a) the price of chocolate chips cookies. b) the price of sugar. c) the price of sugar cookies. d) the development of a faster mixing machine that prepares the cookie dough. 2. Suppose Marcy’s new job pays a higher income than her previous job. As a result, she buys more Boston lettuce and less iceberg lettuce. For Marcy, a) Boston lettuce is an inferior good and iceberg lettuce is a normal good. b) Boston lettuce is a normal good and iceberg lettuce is an inferior good. c) both Boston lettuce and iceberg lettuce are normal goods. d) both Boston lettuce and iceberg lettuce are inferior goods. 3. Suppose two goods have a cross-price elasticity that is equal to 1.24. This information implies that the two goods are a) complements. b) substitutes. c) inferior goods. d) normal goods. 1

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If total expenditures on a good decrease as the price decreases, then the demand is a) elastic. b) inelastic. c) unitary elastic. d) indeterminate. 5. Suppose at the current bundle he is consuming, Ibrahim obtains 10 units of satisfaction from the last pound of steak consumed and 6 units of satisfaction from the last piece of chicken consumed. The price of steak is \$5 per pound, and the price of chicken is \$2 per piece. Given the above information, which of the following is true? a) Ibrahim is maximizing his utility at this current bundle. b) Ibrahim should buy more chicken in order to maximize utility. c) Ibrahim should buy more steak in order to maximize utility. d) Whether he is maximizing his utility or not at this current bundle cannot be determined, since we do not know his utility function. 6. Which of the following statements is false when the government imposes a price ceiling? a) Suppliers are able to sell all of the good that they are willing to sell at the price ceiling. b) An excess supply occurs. c) A black market may occur in which the price of good will be above the price ceiling. d) Arbitrageurs might buy the good at the price ceiling and resell the good at a price that is higher than the market equilibrium price. 2
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First Midterm F07 - ECONOMICS 211 FIRST MIDTERM EXAMINATION...

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