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First Midterm S08


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ECONOMICS 211 FIRST MIDTERM EXAMINATION, Spring 2008 (2 hours, 100 points) Circle the name of your instructor: Gilbert Juarez Soligo Wu NAME: __________________________________________________________________________ PLEDGE:_______________________________________________________________________________________ _________________________________________________________________________________________________ _________________________________________________________________________________________________ PART 1: MULTIPLE CHOICE: Circle the correct answer (3 points each; 24 points in total) MULTIPLE CHOICE (Circle the correct answer) 1. (3 points) Amy is a college student who buys only two goods: Pizza and Pepsi. To determine how Amy can maximize her utility from consuming Pizza and Pepsi, you need to know: I. Amy’s preferences for Pizza and Pepsi II. The prices of Pizza and Pepsi III. Amy’s income. A) I only. B) I and II. C) II and III. D) I, II and III. 2. (3 points) The demand for a good is perfectly inelastic and the supply for a good is neither perfectly elastic nor perfectly inelastic. The burden of a sales tax on the good is borne by: A) buyers only. B) sellers only. C) both buyers and sellers. D) neither buyers or sellers. 3. (3 points) Which of the following variables is changing along an individual demand curve? A) income of the individual. B) price of the good. C) price of the good and income of the individual. D) price of a complementary good. 1
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4. (3 points) If the substitution effect is exactly equal in size to the income effect for an inferior good, the demand curve for the good will be A) upward sloping. B) downward sloping. C) vertical. D) horizontal. 5. (3 points) Suppose the absolute value of the price elasticity of demand for tickets to a sports event is 0.82. An increase in the price of the tickets to the sports event will A) increase total expenditures. B) decrease total expenditures. C) leave the total expenditure the same. D) make us unable to tell the change in total expenditure without knowing the elasticity of supply curve. 6. (3 points) Suppose Teddy 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. A) Teddy should continue consuming steak and chicken in the same proportion because he is
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