24Midterm+1 - UCI Econ 100A Mid Term I Dr El Hag Winter...

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UCI Econ 100A- Mid Term I Dr. El Hag- Winter 2011 Please answer the following multiple choice questions ( possible points 15). 1. SUPPOSE THE INCOME ELASTICITY FOR TRANSPORTATION IS 1.8. WHICH OF THE FOLLOWING IS AN INCORRECT STATEMENT? A) TRANSPORTATION IS A NORMAL GOOD. B) EXPENDITURES ON TRANSPORTATION GROW MORE RAPIDLY THAN INCOME GROWS. C) EXPENDITURES ON TRANSPORTATION WILL FALL LESS RAPIDLY THAN INCOME FALLS. D) WHENEVER THE INCOME INCREASES BY 1%, THE EXPENDITURE ON TRANSPORTATION INCREASES BY 1.8%. ANSWER: C DIFFICULTY: MED 2. IF THE CROSS-PRICE ELASTICITY BETWEEN KETCHUP AND HAMBURGERS IS -2.5, A 2% INCREASE IN THE PRICE OF KETCHUP WILL LEAD TO A A) 5% DROP IN QUANTITY DEMANDED OF KETCHUP. B) 5% DROP IN DEMANDED OF HAMBURGERS. C) 5% INCREASE IN QUANTITY DEMANDED OF KETCHUP. D) 5% INCREASE IN DEMANDED OF HAMBURGERS. ANSWER: B DIFFICULTY: MED 3. The demand for good X has been estimated by Q X d =12 - 3P X + 4P Y . Suppose that good X sells at $2 per unit and good Y sells for $1 per unit. Calculate the own price elasticity. a. -0.2 b . -0.3 c. -0.5 D . -0.6 4) Indifference curves are convex to the origin because of: A) transitivity of consumer preferences.
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B) the assumption of a diminishing marginal rate of substitution. C) the assumption that more is preferred to less. D) the assumption of completeness. E) none of the above Answer: B Diff: 1 Section: 3.1 Alvin's preferences for good X and good Y are shown in the diagram below. Figure 3.2 5) Refer to Figure 3.2. At any consumption bundle with the quantity of good X exceeding the quantity of good Y (that is, a bundle located below the 45 degree line, like point A), Alvin's marginal rate of substitution of good X for good Y is A) diminishing. B) positive.
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D) zero. Answer: D Diff: 1 Section: 3.1 Consider the following three market baskets: Table 3.1 Food Clothing A 6 3 B 8 5 C 5 8 6) Refer to Table 3.1. If preferences satisfy all four of the basic assumptions: A) A is on the same indifference curve as B. B) B is on the same indifference curve as C. C) A is preferred to C.
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This note was uploaded on 01/17/2012 for the course ECON 100A taught by Professor Safarzadeh during the Fall '09 term at UC Irvine.

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24Midterm+1 - UCI Econ 100A Mid Term I Dr El Hag Winter...

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