Eco 101 830 Answer Key Exam 2 Form A Spring 2006 1. A 2. D 3. B 4. D 5. A 6. B 7. A 8. D 9. C 10. C 11. B 12. D 13. B 14. C 15. A 16. A 17. C 18. B 19. C 20. D 1. a. The budget is $100. We get this by observing the consumer can by 5 sweaters and $20 and nothing else (5x20=100) or they can buy 100 cups of coffee for $1 each and nothing else (1 x100 = $100) b. IC1 is the LOWEST total utility. IC3 is the HIGHEST total utility c. The consumer equilibrium is where the IC is tangent to the budget line, at 3 sweaters and 40 coffees 2. The decision not to wear a helmet affects not only the riders of motorcycles and helmet makers but others not involved in the decision to wear a helmet. Helmet less riders without insurance could incur huge medical and disability expenses paid for by the taxpayers and other insured. Society could lose out on productive members and be hurt by a greater overall volume of litigation due to greater injury rates. Thus, a law is needed to force riders to consider these
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