Midterm 1 Review Problem Set

Midterm 1 Review Problem Set - ECO303.02 Midterm 1 review...

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ECO303.02 Midterm 1 review problems Multiple-Choice Questions There is only one correct choice in the following questions. 1) Which of the following is a positive statement? A) The President of the United States ought to be elected by a direct vote of the American people rather than the Electoral College. B) A fundamental assumption of the economic theory of consumer behavior is that consumers always prefer having more of any good to having less of it. C) Because many adults cannot afford to go to college, tax credits for tuition should be introduced. D) all of the above E) none of the above Answer: B 2) The trade-offs facing consumers include: A) how to allocate income across goods and serves. B) how to allocate income between consumption and savings. C) both A and B D) none of the above Answer: C 3) Although the U. S. airline industry has only a relatively small number of sellers, the market is nevertheless highly competitive. The reason is that: A) the number of buyers is very large. B) due to fierce competition, no firm has significant control over prices. C) due to fierce competition, no firm has significant control over the quantity supplied. D) most airline routes are served by relatively many sellers. Answer: B 4) When an industry's raw material costs increase, other things remaining the same, A) the supply curve shifts to the left. B) the supply curve shifts to the right. C) output increases regardless of the market price and the supply curve shifts upward. D) output decreases and the market price also decreases. Answer: A 5) Since last year, the price of gold has risen from $120 to $420. What annual inflation rate would leave the real price of gold unchanged over the last twelve months? A) Approximately 29% B) 40% C) Approximately 71%
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ECO303.02 Midterm 1 review problems D) 250% E) none of the above Answer: D 6) Which of the following will NOT cause a shift in the supply of gasoline? A) An increase in the wage rate of refinery workers B) A decrease in the price of gasoline C) An improvement in oil refining technology D) A decrease in the price of crude oil Answer: B 7) You are analyzing the demand for good X. Which of the following will result in a shift to the right of the demand curve for X? A) A decrease in the price of X
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Midterm 1 Review Problem Set - ECO303.02 Midterm 1 review...

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