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Exam 2

Exam 2 - 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. ____ 5. Suppose you make jewelry. If the price of gold falls, then we would expect you to a. face a greater demand for your jewelry. b. be willing and able to produce more jewelry than before at each possible price. c. be willing and able to produce less jewelry than before at each possible price. d. face a weaker demand for your jewelry. Which of the following statements is correct? a. The demand for bourbon whiskey is more elastic than the demand for alcoholic beverages in general. b. The demand for smoke alarms is more elastic than the demand for Persian rugs. c. The demand for natural gas is more elastic over a short period of time than over a long period of time. d. All of the above are correct. The following diagram shows a budget constraint for a particular consumer. 40 30 20 10 y 10 20 30 40 50 60 70 80 90 x If the price of X is \$10, what is the price of Y? a. \$70 b. \$15 c. \$25 d. \$35 Suppose the government has imposed a price ceiling on cellular phones. Which of the following events could transform the price ceiling from one that is binding to one that is not binding? a. A technological advance makes cellular phone production less expensive. b. Cellular phones become more popular. c. Traditional land line phones become more expensive. d. The components used to produce cellular phones become more expensive. A production possibilities frontier is bowed outward when a. the more resources the economy uses to produce one good, the fewer resources it has available to produce the other good. b. the rate of tradeoff between the two goods being produced depends on how much of each good is being produced. c. the rate of tradeoff between the two goods being produced is constant. d. an economy is self-sufficient instead of interdependent and engaged in trade. Figure 21-9 ____ ____ ____ 6. Refer to Figure 21-9 . Bundle C represents a point where a. MRS xy > P x /P y . b. MRS xy < P x /P y . c. MRS xy > P y /P x . d. MRS xy = P x /P y . 7. In a. central planners. b.the government. c. corporations. d. self-interest and prices. Figure 5-14 a market economy, economic activity is guided by 10 9 8 7 6 5 4 3 2 1 Price 5 10 15 20 25 30 35 40 Quantity Supply 8. Refer to Figure 5-14. Using the midpoint method, what is the price elasticity of supply between \$4 and \$6? a. 1.20 b. 1.00 c. 0.75 d. 1.25

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____ 9. ____ 10. ____ 11. ____ 12. ____ 13. ____ 14. T o improve living standards, policymakers should a. formulate policies designed to increase productivity. b. provide tax breaks for the middle class. c. impose restrictions on foreign competition. d. impose tougher immigration policies. If the cross-price elasticity of two goods is negative, then those two goods are a. normal goods. b. complements. c. necessities. d. inferior goods. Which of the following statements is not correct concerning government attempts to reduce the flow of illegal drugs into the country? a. Drug interdiction shifts the demand curve for drugs to the left. b.Drug interdiction shifts the supply curve of drugs to the left.
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