Test1_solns - Department of Economics University of Toronto Prof Gustavo Indart SOLUTION ECO 100Y L0201 INTRODUCTION TO ECONOMICS Midterm Test#1

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Page 1 of 12 Department of Economics Prof. Gustavo Indart University of Toronto June 16, 2005 SOLUTION ECO 100Y – L0201 INTRODUCTION TO ECONOMICS Midterm Test #1 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS : 1. The total time for this test is 1 hour and 45 minutes. 2. This exam consists of three parts. 3. This question booklet has 12 (twelve) pages. 4. Aids allowed: a simple calculator. DO NOT WRITE IN THIS SPACE Part I /30 Part II 1. /12 2 . /8 3 . /6 4 . /7 5 . /7 Part III 1. /18
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PART I (30 marks) Instructions : The multiple choice questions are to be answered using a black pencil or a black or blue ball-point pen on the separate (SCANTRON) sheet being supplied. Be sure to fill in your name and student number on the SCANTRON sheet! When you finish your examination, place the SCANTRON sheet inside the question booklet . Each question is worth 2 (two) marks. No deductions will be made for incorrect answers. You may use the question booklet as a worksheet to answer questions, and then transfer your answers onto the SCANTRON sheet. Make sure that all your answers are transferred onto the SCANTRON sheet. In case of a disagreement, the answer to be marked is the one in the SCANTRON sheet. 1. It has been observed that university enrolment in Canada is higher during periods of high unemployment. A possible explanation for this is that a) when prospects for getting a job are poor, the opportunity cost of getting a job is lower b) during periods of high unemployment, tuition fees are reduced c) during periods of high unemployment, teachers work harder d) when prospects for getting a job are poor, the opportunity cost of going to university is lower e) none of the above 2. Suppose the supply curve for breakfast cereals is upward sloping. Suppose also that as average household income increases we observe a fall in the price of breakfast cereal. We can conclude that breakfast cereal is a(n) a) luxury good b) substitute good c) inferior good d) normal good e) necessity good 3. Suppose the government decides to repeal an effective price floor that it had previously imposed on a particular good. It can be expected that a) the price would increase, the quantity demanded would decrease and the quantity supplied would increase b) the price would increase, the quantity demanded would increase and the quantity supplied would decrease c) the price would decrease, the quantity demanded would decrease and the quantity supplied would increase d) the price would decrease, the quantity demanded would increase and the quantity supplied would decrease e) no changes would take place 4. Suppose there are only three things you can do rather than attend a community social event: read a novel (you value this at $5), go to work (you could earn an extra $7), or watch videos with some friends (you value this at $10). The opportunity cost of attending the community social event is a) $10, because this is the highest valued alternative forfeited
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This note was uploaded on 06/09/2010 for the course ECO ECO100 taught by Professor Inheart during the Spring '09 term at University of Toronto- Toronto.

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Test1_solns - Department of Economics University of Toronto Prof Gustavo Indart SOLUTION ECO 100Y L0201 INTRODUCTION TO ECONOMICS Midterm Test#1

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