midterm-sol - Economics 321 MIDTERM Helen Schneider Fall...

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Economics 321 MIDTERM Helen Schneider Fall 2010 SOLUTIONS
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Part I. Multiple Choice . Do the following 10 multiple choice questions: Read each question carefully and CIRCLE the best answer. THERE IS ONLY ONE ANSWER TO EACH QUESTION. 1. You are hired by the government to evaluate the impact of a policy change that affects one group of individuals but not another. Suppose that before the policy change, members of a group affected by the policy change averaged $17,000 in earnings and members of a group unaffected by the policy averaged $16,400. After the policy change, members of the affected group averaged $18,200 in earnings while members of the unaffected group averaged $17,700 in earnings. What is the difference-in-difference estimator of the effect of the policy change? a. $100 b. $500 c. $1200 d. $1300 e. -$100 2. In Figure 1, reallocating both food and clothing away from Ann to Bill would be described by a movement from point _____ to point _____. a. B; C b. C; B c. E; D d. D; F 2 Bill Ann Clothing Food A B C F G D E Contract Curve Figure 1
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3. In the Figure2 above, moving from point B to point C: a. means reallocating more of at least one good from Bill to Ann. b. means reallocating more of at least one good from Ann to Bill. c. means there will be a more equitable society. d. decreases Pareto efficiency. e. Both a and d are correct 4. Public goods are characterized by a. Non-rivalness. b. excludability. c. the sum of the MRSs equaling MRT. d. all of the above. e. Both a and c are correct. 5. A person prefers large and small levels of national defense to medium-sized levels of national defense. This person a. is violating the law of transitivity. b. has single-peaked preferences. c. has multiple-peaked preferences. d. can not achieve his or her most-preferred outcome. 6.
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midterm-sol - Economics 321 MIDTERM Helen Schneider Fall...

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