# test1_solns - Department of Economics University of Toronto...

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Page 1 of 6 Department of Economics Prof. Gustavo Indart University of Toronto October 21, 2005 ECO 100Y – L0101 INTRODUCTION TO ECONOMICS Midterm Test #1 L A S T N A M E F I R S T N A M E STUDENT NUMBER INSTRUCTIONS : 1. The total time for this test is 50 minutes. 2. This exam consists of two parts. 3. This question booklet has 6 (six) pages. 4. Aids allowed: a simple calculator. 5. Use pen instead of pencil . DO NOT WRITE IN THIS SPACE P a r t I /10 Part II 1. /15 2 . /15 T O T A L /40 /100 SOLUTION

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Page 2 of 6 PART I (10 marks) Instructions: Enter your answer to each question in the table below. Only the answers recorded in the table will be marked. Table cells left blank will receive a zero mark for that question. Each question is worth 2.5 (two and one-half) marks. No deductions will be made for incorrect answers. 1 2 3 4 C D A B 1. 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 2. Suppose the government decides to cancel 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 3. 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
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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...

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