eco - Economics 304K FINAL EXAM SOLUTIONS Part I. Multiple...

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Economics 304K FINAL EXAM SOLUTIONS
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Part I. Multiple choice . Do the following 50 multiple choice questions: Read each question carefully and CIRCLE the best answer. THERE IS ONLY ONE ANSWER TO EACH QUESTION. It often helps to jot down a quick graph or do some work next to the question before searching for the answer. 1. Other things equal, when the price of a good rises, the a. demand curve shifts to the left. b. supply increases. c. quantity supplied of the good increases. d. quantity demanded of the good increases. 2. The opportunity cost of going to college is a. the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. b.the value of the best opportunity a student gives up to attend college. c. zero for students who are fortunate enough to have all of their college expenses paid by someone else. d.zero, since a college education will allow a student to earn a larger income after graduation. 3. The local pizza restaurant makes such great bread sticks that consumers do not respond much at all to a change in the price. If the owner is only interested in increasing revenue, he should a. lower the price of the bread sticks. b.leave the price of the bread sticks alone. c. raise the price of the bread sticks. d.reduce costs. 4. A shortage results when a. a binding price ceiling is imposed. b.a binding price floor is imposed. c. a price ceiling is imposed but it is not binding. d.a price floor is imposed but it is not binding. 5. Assume the law of demand and the law of supply both apply to the market for cars. If the government imposed a $500 tax per car on buyers of cars, then the price received by sellers of cars would a.decrease by less than $500. b.decrease by exactly $500. c. decrease by more than $500. d.increase by an indeterminate amount. 6. When a tax is placed on the sellers of a product, the a. size of the market is decreased. b.effective price received by sellers decreases and the price paid by buyers increases. c. supply of the product decreases. d.All of the above are correct. 2
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Figure 1 3
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7. Refer to Figure 1 . The effective price sellers receive after the tax is imposed is a. $1.00. b.$3.50. c. $5.00. d.$6.00. 8. Refer to Figure 1 . From this tax the government will collect a total of a.$125.00. b.$175.00. c. $200.00. d.$250.00. 9. Suppose a tax of $1 per unit is imposed on a good. The more elastic the demand for the good, other things equal, a. the larger is the decrease in quantity demanded as a result of the tax. b.the smaller is the tax burden on buyers relative to the tax burden on sellers. c. the larger is the deadweight loss of the tax. d.All of the above are correct. 4
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10. If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will a.increase producer surplus. b.reduce producer surplus.
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This note was uploaded on 01/23/2012 for the course CH 210C taught by Professor Fetland during the Spring '07 term at University of Texas.

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eco - Economics 304K FINAL EXAM SOLUTIONS Part I. Multiple...

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