2010Midterm1Fall09B_answers

2010Midterm1Fall09B_answers - Name: _ Date: _ Version B...

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Page 1 Name: __________________________ Date: _____________ Version B with answers 1. How people choose among the alternatives available to them is: A) not important. B) the study of microeconomics. C) not part of the study of economics. D) impossible to describe. 2. Economic signals: A) never provide adequate information to consumers. B) guide decision makers in their transactions in the marketplace. C) result in shortages and surpluses. D) interfere with the trades that can be mutually beneficial. 3. An increase in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price. A) an increase; a decrease B) a decrease; an increase C) a decrease; a decrease D) an increase; an increase 4. If the price of gasoline falls and stays low for an extended period of time, we expect people to: A) use more public transportation. B) ride bicycles. C) buy larger and less fuel-efficient cars. D) reduce their reliance on gasoline-powered cars.
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Page 2 Use the following to answer question 5: Figure: Cold Drinks Sold and Temperature 5. (Figure: Cold Drinks Sold and Temperature) If we move from point C to point E in the figure, the outside temperature has ________ and the number of cold drinks sold has ________. A) increased by 30 degrees; increased by 30 units B) decreased by 30 degrees; decreased by 30 units C) increased by 40 degrees; increased by 40 units D) increased by 20 degrees; increased by 20 units 6. In 2003, Congress passed a tax cut. Since taxes were reduced, the country did not incur any opportunity cost from this decision. A) True B) False 7. Khalil is offered a free ticket to the opera. His opportunity cost of going to the opera is: A) the price listed on the ticket. B) whatever Khalil would have done had he not gone to the opera. C) the price listed on the ticket or whatever Khalil would have done had he not gone to the opera. D) zero—the tickets were free. An irrelevant issue, that some thought relevant, was whether Khalil had time to sell the ticket. The answer is C whether he had time to sell it or not. If he did not go to the Opera, selling the
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Page 3 ticket might have been one of the things he had done . Note that if he sold it, it would not necessarily have been for the sticker price. 8. A market equilibrium will always be efficient even if it is not equitable. A) True B) False 9. One of the controversies surrounding America's energy markets is the trade-off between energy production and clean air. Assuming clean air has value, the United States will be on its production possibility frontier if and only if: A) resources used to create clean air and energy are being fully utilized. B) the price of energy is relatively low.
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2010Midterm1Fall09B_answers - Name: _ Date: _ Version B...

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