Exam #1

# Exam #1 - FIRST EXAMINATION ECON 200 FALL 2010 1 Write the...

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FIRST EXAMINATION ECON 200 FALL, 2010 1. Write the color of your exam in the upper right-hand corner of your SCANTRON sheet: WHITE, BLUE, GREEN, or YELLOW. 2. Enter the number 111111 under “Special Codes” on the SCANTRON sheet. 3. Fill in your name (last name, then first name) at the top of the SCANTRON . Fill in your student ID number on the SCANTRON sheet. 4. There are 40 multiple choice questions. All questions will be counted equally. There is no penalty for choosing an incorrect answer. 5. Answer the multiple choice questions on the SCANTRON sheet. You will have 70 minutes to com- plete this examination.

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ECON 200 Fall 2010 First Exam Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Soup is an inferior good if a. the demand for soup falls when the price of a substitute for soup rises. b. the demand for soup rises when the price of soup falls. c. the demand curve for soup slopes upward. d. the demand for soup falls when income rises. 2. The market demand curve a. is found by vertically adding the individual demand curves. b. slopes upward. c. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good. d. represents the sum of the quantities demanded by all the buyers at each price of the good . 3. If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price results in a a. 0.4 percent decrease in the quantity demanded. b. 2.5 percent decrease in the quantity demanded. c. 4 percent decrease in the quantity demanded. d. 40 percent decrease in the quantity demanded. 4. For good X, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward- sloping straight line. A tax of \$10 per unit is imposed on good X. The tax reduces the equilibrium quantity in the market by 200 units. The deadweight loss from the tax is a. \$2,000. b. \$1,000. c. \$500. d. \$250. 5. Raisin bran and milk are complementary goods. A decrease in the price of raisins will a. increase consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk. b. increase consumer surplus in the market for raisin bran and increase producer surplus in the market for milk. c. decrease consumer surplus in the market for raisin bran and increase producer surplus in the market for milk. d. decrease consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk.
The next three questions refer to the following figure. Suppose the government imposes a \$10 per unit tax on a good. Demand Supply A B D J K C F L G H M 1234567891 0 1 1 1 2 1 3 1 4 Quantity 2 4 6 8 10 12 14 16 18 20 22 24 Price 6. Refer to the figure above . The tax causes producer surplus to decrease by the area a. D+F.

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Exam #1 - FIRST EXAMINATION ECON 200 FALL 2010 1 Write the...

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