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# versionb1 - 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. If a 30 percent change in price causes a 15 percent change in quantity supplied, then the price elasticity of supply is a. 0.5, and supply is inelastic. b. 0.5, and supply is elastic. c. 2, and supply is inelastic. d. 2, and supply is elastic. ____ 2. A minimum wage that is set above a market's equilibrium wage will result in ____ 3. Which markets are represented in the simple circular-flow diagram? 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 ____ 4. Refer to Figure 2-6 . This economy has the ability to produce at which point(s)? ____ 5. Mike has spent \$500 purchasing and repairing an old fishing boat, which he expects to sell for \$800 once the repairs are complete. Mike discovers that, in addition to the \$500 he has already spent, he needs to make an additional repair, which will cost another \$400, in order to make the boat worth \$800 to potential buyers. He can sell the boat as it is now for \$300. What should he do? a. He should complete the repairs and sell the boat for \$800. b. It does not matter which action he takes; the outcome is the same either way.

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c. He should keep the boat since it would not be rational to spend \$900 on repairs and then sell the boat for \$800. d. He should sell the boat as it is now for \$300. ____ 6. Suppose that quantity demand falls by 30% as a result of a 5% increase in price. The price elasticity of demand for this good is Table 2-1 Production Possibilities for Toyland Dolls Fire Trucks 400 0 300 200 200 350 100 450 0 500 ____ 7. Refer to Table 2-1 . What is the opportunity cost to Toyland of increasing the production of dolls from 200 to 300? ____
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versionb1 - Introduction to Microeconomics Spring 2010 Exam...

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