Exam 1 - Introduction to Microeconomics Spring 2011 Exam 1...

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Introduction to Microeconomics Spring 2011 Exam 1 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. ____ 2. ____ 3. ____ 4. Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a a. surplus to exist and the market price of roses to decrease. b. shortage to exist and the market price of roses to decrease. c. shortage to exist and the market price of roses to increase. d. surplus to exist and the market price of roses to increase. The supply curve for coffee a. does not shift when the price of coffee changes because the quantity supplied of coffee is measured on the horizontal axis of the graph. b. does not shift when the price of coffee changes because the price of coffee is measured on the vertical axis of the graph. c.shifts when the price of coffee changes because the price of coffee is measured on the vertical axis of the graph. d. shifts when the price of coffee changes because the quantity supplied of coffee is measured on the horizontal axis of the graph. The market supply curve a. is found by vertically adding the individual supply curves. b. represents the sum of the prices that all the sellers are willing to accept for a given quantity of the good. c. slopes downward. d. represents the sum of the quantities supplied by all the sellers at each price of the good. Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the a. b. c. d. demand for flour to decrease. demand for flour to increase. supply of flour to decrease. supply of flour to increase. Figure 5-5 60 54 48 42 36 30 24 18 12 6 Price 3 6 9 Demand 12 15 18 21 24 27 30 33 Quantity ____ ____ ____ ____ 5. Refer to Figure 5-5. Using the midpoint method, between prices of $12 and $18, price elasticity of demand is a. 1.33. b. 0.33. c. 1.89. d. 0.67. 6. Tom is restoring a car and has already spent $3500 on the restoration. He expects to be able to sell the car for $5000. Tom discovers that he needs to do an additional $2000 of work to make the table worth $5000 to potential buyers. He could also sell the car now, without completing the additional work, for $2800. What should he do? a. It does not matter which action he takes since the outcome will be the same either way. b. He should complete the additional work and sell the car for $5000. c. He should sell the car now for $2800. d. He should keep the car since it wouldn’t be rational to spend $5500 restoring a car and then sell it for only $5000.
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7. A a. amount of government spending and its productivity. b. productivity and its standard of living. c. total population and its average citizen’s income. d. rate of population growth and the extent of its trade with other countries. 8.
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Exam 1 - Introduction to Microeconomics Spring 2011 Exam 1...

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