econ exam 1 - Version A Georgia State University Principle...

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Unformatted text preview: Version A Georgia State University Principle Macroeconomics, Econ 2105 Fall, 2010 First Midterm Exam Key Multiple choice questions, select the best answer for each (five points each). 1. In economics, scarcity refers to the fact that there are not enough a. capital resources as compared to land, labor, and entrepreneurship. ♠ material goods and services to completely satisfy everyone’s wants and needs . c. hours in the day to consume all of the goods. d. dollars for spending on goods that directly satisfy consumers, such as food and clothing. VB, go to # 19; VC, go to # 18. 2. The opportunity cost of an item is a. always greater in periods of inflation and lower during periods of deflation. ♠ what you give up to get the item . c. always equal to the dollar value of the item. d. equal to the explicit cost of producing the item. VB, go to # 23; VC, go to # 17. 3. The inverse demand of a product is given by P = 800- . 1 Q, where Q is the quantity and P is buyers’ price. The consumers’ surplus when the buyers pay a price of $450(= P ) equals a. $550,125. ♠ $612,500 . c. $112,970. d. $350,750. e. none of the above. VB, go to # 24; VC, go to # 19. Here buyers’ price P = $450 is given, therefore, use the formula that you need. In this problem a = 800, m d = 0 . 1. CS = ( a- P ) 2 2 m d = (800- 450) 2 2 × . 1 = $612 , 500 . 1 4. Typically, less of a product is demanded as its price goes up because a. buyers’ incomes are unlimited. b. suppliers offer less of the product for sale. c. buyers lose interest in the product when its price goes up. ♠ buyers can substitute other goods in place of the product whose price is rising . VB, go to # 25; VC, go to # 20. 5. The inverse supply of a product is given by P = 50 + 1 2 Q, where Q is quantity and P is sellers’ price. If the sellers sell 3050 (=Q), their producers’ surplus is a. $3,300,225. ♣ $2,325,625 . c. $380,700. d. $8,745,000. e. none of the above. VB, go to # 12; VC, go to # 21. In the inverse supply equation, b = 50, m s = 1 / 2 = 0 . 5. We are given Q = 3050, therefore, use the formula that you need. PS = m s Q 2 2 = . 5 × 3050 2 2 = $2 , 325 , 625 . 6. Equilibrium price is a. the price that creates the maximum consumers surplus. b. any price that doesn’t results in a shortage of the good....
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This note was uploaded on 01/18/2011 for the course ECON 11853 taught by Professor Brianallenhunt during the Fall '10 term at Georgia State.

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econ exam 1 - Version A Georgia State University Principle...

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