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Econ1 S09 2nd Midterm (Stein)

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

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

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