Practice_exam1_B

Practice_exam1_B - page 1 of 8 Economics 2 Winter 2011 your...

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page 1 of 8 Economics 2 your name _______________________________ Winter 2011 your TA’s name __________________________ day and time of your discussion section ________ PRACTICE EXAM 1B DIRECTIONS: No calculators, books, or notes of any kind are allowed. All papers and notebooks must remain closed and on the floor at all times throughout the exam, and students are not allowed to leave the examination room until finished. Answer all questions in the space provided with the exam. 100 points are possible on this exam. HINTS: Feel free to use either of the following formulas if you find them useful. Area of a triangle = (1/2) (base) (height) Area of a trapezoid = (1/2) (base1 + base2) (height) PART I: MULTIPLE CHOICE—circle the correct answer (4 points each, 72 points total) 1.) In general, a tax imposed on the producers of a good results in a.) an increase in producer surplus and an increase in consumer surplus b.) a decrease in producer surplus and a decrease in consumer surplus c.) a decrease in producer surplus and an increase in consumer surplus d.) an increase in producer surplus and a decrease in consumer surplus 2.) When is the deadweight loss associated with a subsidy going to be the smallest? a.) when the elasticity of demand is equal to one b.) when the elasticity of demand is greater than one c.) when supply is perfectly elastic d.) when supply is perfectly inelastic 3.) When the government imposes a price ceiling below the market-clearing price, the result is a.) an increase in producer surplus and an unclear effect on consumer surplus b.) a decrease in producer surplus and an unclear effect on consumer surplus c.) an unclear effect on producer surplus and an increase in consumer surplus d.) an unclear effect on producer surplus and a decrease in consumer surplus 4.) Which of the following conditions is associated with an economically efficient outcome? a.) price equals marginal cost b.) price equals average cost c.) price equals fixed cost d.) price equals total cost 5.) Which of the following is not an example of an economic inefficiency that is introduced by rationing? a.) people waste time waiting in line to buy the product b.) the product does not necessarily go to the people who want it the most c.) the marginal cost of producing another unit of the good exceeds the marginal benefit to consumers d.) none of the above
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page 2 of 8 6.) For a linear demand curve, a.) marginal revenue increases and demand becomes more elastic as the level of output increases b.) marginal revenue decreases and demand becomes less elastic as the level of output increases c.) marginal revenue decreases and demand becomes more elastic as the level of output increases
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Practice_exam1_B - page 1 of 8 Economics 2 Winter 2011 your...

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