Econ 302 Exam 1 FA07 - Exam 1 Ec302, secs 7 and 13. Rashid....

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Exam 1 Ec302, secs 7 and 13. Rashid. Part 1. You may answer as many questions as you wish in Part 1, but you cannot get more than 40 for part 1. (There are 10 bonus questions--- in case you missed a topic, or there is ambiguity in the question etc). NO CALCULATORS. Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. If you have an income of $18 to spend, if commodity 1 cost $3 per unit, and if commodity 2 costs $9 per unit, then the equation for your budget line can be written a. . b. . c. x 1 + 3 x 2 = 6. d. 4 x 1 + 10 x 2 = 19. e. 12( x 1 + x 2 ) = 18. ____ 2. If you could exactly afford either 2 units of x and 7 units of y , or 4 units of x and 3 units of y , then if you spent all of your income on y , how many units of y could you buy? a. 11 b. 7 c. 15 d. 6 e. None of the above. ____ 3. Murphy used to consume 100 units of X and 50 units of Y when the price of X was $2 and the price of Y was $4. If the price of X rose to $6 and the price of Y rose to $6, how much would Murphy’s income have to rise so that he could still afford his original bundle? a. $300 b. $900 c. $600 d. $500 e. None of the above. ____ 4. Edmund must pay $6 each for punk rock video cassettes. If Edmund is paid $18 per sack for accepting garbage and if his relatives send him an allowance of $108, then his budget line is described by the equation a. 6 V + 18 G = 108. b. 6 V = 108 – G . c. 6 V –18 G = 108. d. 6 V = 18 G . e. None of the above. ____ 5. Charlie’s indifference curves have the equation , where larger constants correspond to bet- ter indifference curves. Charlie strictly prefers the bundle (6, 15) to the bundle a. (15, 6). b. (7, 14). c. (11, 13). d. All of the above. e. None of the above.
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____ 6. Ambrose has indifference curves with the equation , where larger constants corres- pond to higher indifference curves. If good 1 is drawn on the horizontal axis and good 2 on the vertical axis, what is the slope of Ambrose’s indifference curve when his consumption bundle is (36, 10)? a. –0.33 b. –16 c. d. e. –6 ____ 7. Nancy Lerner is taking a course from Professor Goodheart who will count only her best midterm grade and from Professor Stern who will count only her worst midterm grade. In one of her classes, Nancy has scores of 70 on her first midterm and 30 on her second midterm. When the first midterm score is measured on the hori- zontal axis and her second midterm score on the vertical, her indifference curve has a slope of zero at the point (70, 30). This class could a. not be either Professor Goodheart’s or Professor Stern’s. b. be Professor Stern’s but could not be Professor Goodheart’s. c. be either Professor Goodheart’s or Professor Stern’s. d.
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This note was uploaded on 05/08/2011 for the course ECON 302 taught by Professor Avrin-rad during the Fall '09 term at University of Illinois, Urbana Champaign.

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Econ 302 Exam 1 FA07 - Exam 1 Ec302, secs 7 and 13. Rashid....

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