sample_exam1_intermediate

# sample_exam1_intermediate - Intermediate Microeconomics...

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Intermediate Microeconomics 220:203:03 Instructor: Tibor Besedes Sample Exam 1 Name:_______________________________________________ SSN:___________________ Note: Write your SSN under ID and fill in the proper boxes. Write 001 for the exam and mark it accordingly. Mark B as the test form. Choose the best answer and mark it on the scantron. When you are done, turn in the scantron only. You can keep the exam itself. Please, mind your own work. Good luck! 1. If the quantity of good a (Qa) is plotted along the horizontal axis, the quantity of good b (Qb) is plotted along the vertical axis, the price of good a is Pa, the price of good b is Pb and the consumer's income is I, then the slope of the consumer's budget constraint is: a. -Qa/Qb b. -Qb/Qa c. -Pa/Pb d. -Pb/Pa e. I/Pa or I/Pb 2. The theory of consumer behavior is based on certain assumptions. It includes at least the assumption(s) that preferences are: a. complete. b. transitive. c. intransitive. d. both (a) and (b) are correct. e. both (a) and (c) are correct. Use the following information to answer the questions below. Andy derives utility from two goods, potato chips (Qp) and Cola (Qc). Andy receives zero utility unless he consumes some of at least one good. The marginal utility that he receives from the two goods is given as follows: Qp MUp Qc MUc 1 12 1 24 2 10 2 22 3 8 3 20 4 6 4 18 5 4 5 16 6 2 6 14 7 -2 7 12 8 -4 8 10 3. What is the total utility that Andy will receive if he consumes 5 units of potato chips (Qp) and no Cola drink (Qc)? a. 4 utils. b. 10 utils. c. 30 utils. d. 40 utils. e. none of the above.

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Page 2 4. When a good is inelastic, consumer expenditures on the good a. increase when price increases. b. decrease when price increases. c. do not change when price increases. d. are not related to price elasticity of demand. Use the following information to answer the questions below. The demand curve for the new computer game, Rock and Roll Trivia, is given as follows: Q = 200 - 5P - .1Pc - .5Pd + .2A - I where P is the price of the game, Pc is the price of a computer Pd is the price of a diskette A is the level of advertising Q is the level of income 5. Suppose P = 10, Pc = 100, Pd = 2, A = 5, and I = 50. How many games will be sold? a. -100 b. 0 c. 50 d. 90 e. none of the above Consider the following diagram for the questions below. Alvin's preferences for good X and good Y are shown in the diagram below. 6. Except at the corner of the indifference curves, Alvin's marginal rate of substitution of good X for good Y is a. diminishing. b. positive. c. constant and positive. d. zero.
Page 3 7. A consumer has the following Cobb-Douglas preferences, u(x,y)=x 2 y 5 . Suppose that the price of good X is 3 and that of good Y is 6. The consumer's income is 50. What happens to the optimal bundle this consumer chooses if his income increases to 500. a. The quantities of X and Y increase tenfold.

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sample_exam1_intermediate - Intermediate Microeconomics...

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