Econ1 S09 2nd Midterm (Stein) - Econ 001: Midterm 2 (Dr....

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Econ 001: Midterm 2 (Dr. Stein) March 25, 2009 Instructions: This is a 60-minute examination. Write all answers in the blue books provided. Show all work. Use diagrams where appropriate and label all diagrams carefully. Write your name and your Recitation Instructor's name in every blue book that you use. This exam is given under the rules of Penn's Honor system. All blue books, blank or filled, must be handed in at the end of this exam. No blue books may be taken from the room. The use of Programmable Calculators is in violation of Departmental rule. It is strictly forbidden! The Midterm has 2 parts. Part 1 consists of 9 multiple-choice questions. Please write you answers in blue book 1. Part 2 consists of 2 short answer questions. Please use a separate blue book for each answer. Part I: Multiple Choice Questions (Best 8 out of 9: 4 points each/32 points total): 1. Mrs. X spends all her income on Apples and Bananas. If the price of both goods rises by 10 percent, which of these statements are correct? I. If we give Mrs. X 10 percent more income, she would be as happy as before the price increase. II. After the price increase, she will consume goods Apples and Bananas in the same proportion as before. III. After the price increase, she will consume more of the cheaper good. a. I only b. I and II c. I, II and III d. None of the above 2. In the standard labor-leisure model from class, the absolute value of the slope of the budget line is equal to a. the wage rate b. income c. the opportunity cost of an hour spent on leisure d. both (a) and (c) are correct e. both (b) and (c) are correct f. (a), (b), and (c) are all correct g. none of the above are correct
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3. Consider the standard labor-leisure model from class. Suppose that wages go up and we observe that time spent on leisure activities increases. This implies that a. the substitution effect dominated the income effect b. the income effect dominated the substitution effect c. leisure is a normal good d. labor supply will be upward sloping e. both (a) and (c) are correct f. both (c) and (d) are correct g. both (b) and (c) are correct h. both (b) and (d) are correct 4. Based on the information below, what are the Total Fixed Costs for this firm? Quantity TC VC MC 4 15 5 35 5 a. 0 b. 6 c. 15 d. 30 5. Which of the following statements are true? I. When ATC is decreasing, MC is decreasing as well. II. When AVC is decreasing, MC is decreasing as well. a.
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This note was uploaded on 01/14/2012 for the course ECON 101 taught by Professor Profeessor during the Spring '11 term at Aachen University of Applied Sciences.

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Econ1 S09 2nd Midterm (Stein) - Econ 001: Midterm 2 (Dr....

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