Samp_Exam1_Sol

# Samp_Exam1_Sol - SAMPLE EXAM 1 SOLUTIONS ECON 80A...

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SAMPLE EXAM 1 SOLUTIONS ECON 80A Professor: Paroma Sanyal Microeconomic Theory Sachar 126 Brandeis University (781) 736-2268 Spring 2009 [email protected] NAME : Total 100 points Time : 1hr. 20 min Section 1: Multiple Choice Questions (2 points each) (10 Points) Please answer all questions in this section. Write your name and ID number clearly on Page 1 and on your blue books. Circle your answers (in pen) on the question paper for the multiple choice questions. ONLY SIMPLE CALCULATORS ALLOWED. 1. Which is true of the two budget lines drawn below? Y X b a 2. The point on a linear demand curve where revenue is maximized is A) where elasticity equals 1. C) where elasticity equals infinity. B) where elasticity equals 0. D) where the price is the highest. 3. Which statement is true? A) The further down a budget line a consumer moves, the more of his budget he is spending. B) When the price of good x (on the horizontal axis) falls and the price of good y rises, the budget line gets steeper. C) When Pete adopts a corner solution he is definitely not maximizing utility. D) The "composite good" is the amount of money the consumer has left over after buying the commodity on the horizontal axis. It can be spent on all other goods in a multi-good model. 4. A new technology is announced which allows Intel to produce chips for less. Chips are a key input in the production of PCs. What would we expect to happen to the market for PCs? A) The demand curve would shift left. C) The demand curve would shift right. B) The supply curve would shift left. D) The supply curve would shift right. 5. Perfect substitutes will have indifference curves which are A) concave. B) convex. C) linear (a straight line) . D) L - shaped. E) none of the above. 1 A) Line a has a higher nominal income than line b. B) Line b and line a have the same nominal income. C) The absolute price of good Y is greater with budget line a than with budget line b. D) More than one of the above is true. E) None of the above is true.

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