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Test 2 version 2 - Page 1 of 14 McMaster University...

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Page 1 of 14 McMaster University Department of Economics ECON 1B03 Midterm Test #2 VERSION 2 Instructor: Professor H Holmes Duration: 2 hours Total Number of Pages: 14 INSTRUCTIONS : Answer all questions on the scan sheets. USE AN HB PENCIL ONLY. Make sure you carefully fill in the bubbles. YOU MUST FILL IN YOUR STUDENT NUMBER, AND VERSION NUMBER ON THE SCAN SHEET OR YOUR GRADE WILL NOT BE RECORDED. You may use the Casio FX calculator. Hand in the scan sheet and this test copy. TOTAL MARKS AVAILABLE : 50 NAME:____________________________________________________ STUDENT #: _______________________________________________ MUGSI ID: ________________________________________________ SECTION : Circle One: 9:30-10:20 11:30-12:20 Wednesday Night
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Page 2 of 14 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. Figure 1 ____ 1. Refer to Figure 1 . If the government imposes a binding price floor of $14.00 in this market, the result would be a a. surplus of 20. b. surplus of 40. c. shortage of 20. d. shortage of 40. Figure 2 ____ 2. Refer to Figure 2 . With a price ceiling present in this market, when the supply curve for gasoline shifts from S1 to S2
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Page 3 of 14 ____ 3. Assume that the demand and supply curves for cars are elastic. If the government imposed a $500 tax on the buyer of each car, we can assume that the Figure 3 ____ 4. Refer to Figure 3 . The price sellers receive after the tax is imposed is ____ 5. Refer to Figure 3 . The amount of the tax that buyers would pay would be a. $10.00. b. $6.00. c. $4.00. d. $2.00.
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Page 4 of 14 Figure 4 ____ 6. Refer to Figure 4 . The price sellers receive after the tax is imposed is ____ 7. Refer to Figure 4 . The amount of the tax that sellers would pay would be Continued on the next page…
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Page 5 of 14 Figure 5 ____ 8. Refer to Figure 5 . In which market will the majority of a tax be paid by the buyer? ____ 9. If a tax is imposed on a market with inelastic demand and elastic supply, a. buyers will bear most of the burden of the tax. b. sellers will bear most of the burden of the tax. c. the burden of the tax will be shared equally between buyers and sellers. d. it is impossible to determine how the burden of the tax will be shared. ____
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