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versiona1 - Introduction to Microeconomics Spring 2010 Exam...

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Introduction to Microeconomics Spring 2010 Exam 1 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. Which of the following descriptions best depicts the substitution effect? a. the change in consumption resulting from a change in the price of one good, allowing the consumer's level of satisfaction to change b. the change in consumption resulting from a change in the price of one good, holding the consumer's level of satisfaction constant c. the change in consumption resulting from a change in the consumer's income, holding the prices of the goods constant d. the change in consumption resulting from a change in the consumer's income, holding the consumer's level of satisfaction constant ____ 2. When the price of a good is $5, the quantity demanded is 120 units per month; when the price is $7, the quantity demanded is 100 units per month. Using the midpoint method, the price elasticity of demand is about a. 2. b. 1.83. c. 10. d. 0.55. ____ 3. Which of the following statements is not valid when the market supply curve is vertical? a. Supply is perfectly inelastic. b. An increase in market demand will increase the equilibrium price. c. An increase in market demand will increase the equilibrium quantity. d. Market quantity supplied does not change when the price changes. ____ 4. Assume that Greece has a comparative advantage in fish and Germany has a comparative advantage in cars. Also assume that Germany has an absolute advantage in both fish and cars. If these two countries specialize and trade so as to maximize the benefits of specialization and trade, then a. Greece will produce more fish than it would produce in the absence of trade. b. Germany will produce more cars than it would produce in the absence of trade. c. the two countries’ combined output of both goods will be higher than it would be in the absence of trade. d. All of the above are correct. Figure 2-6 A B C D F G 2 4 6 8 10 12 14 16 bathtubs 5 10 15 20 25 30 35 40 45 barrels
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____ 5. Refer to Figure 2-6 . This economy has the ability to produce at which point(s)? a. A, B, D b. A, B c. A, B, C, F, G d. C, F, G ____ 6. A decrease in the price of a good will a. decrease quantity demanded. b. decrease demand. c. increase demand. d. increase quantity demanded. ____ 7. Holding all other forces constant, when the price of gasoline rises, the number of gallons of gasoline demanded would fall substantially over a ten-year period because a. buyers tend to be much less sensitive to a change in price when given more time to react. b. buyers tend to be much more sensitive to a change in price when given more time to react. c. buyers will have substantially more real income over a ten-year period. d.
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This note was uploaded on 11/16/2011 for the course 220 102 taught by Professor Perry during the Fall '09 term at Rutgers.

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versiona1 - Introduction to Microeconomics Spring 2010 Exam...

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