Exam2Fall07Ans - Last Name: _ TA's name: _ First Name: _...

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Last Name: ___________________ First Name: _______________________ TA’s name: ___________________ ECON 2010 – 200 Principles of Microeconomics Exam # 2-Version A Fall 2007 Section 1. Multiple choice questions: ___1. Lauren goes to an all you can eat buffet. As she continues to eat more and more food, she receives less and less satisfaction from each additional food. This describes: a. The law of diminishing marginal utility. b. Her opportunity cost. c. The law of supply. d. None of the above. ___ 2. The major drawback of a price ceiling that is binding is a. It causes a surplus. b. Decreases tax revenue collected by the government. c. It causes a shortage. d. There is no drawback. ___ 3. One outcome of a tax, whether the tax is imposed on the buyer or the seller, is that a. The price the seller receives is higher. b. The supply curve will shift to the right. c. The demand curve will shift to the right. d. The size of the market is reduced. ___ 4. A sales tax put on a good with inelastic demand and elastic supply will: a. Burden only consumers since it is a sales tax. b. Create a larger burden on consumers than producers. c. Create a larger burden on producers than consumers. d. Have no effects on consumers. e. None of the above. ___ 5. John consumes tortillas and prime rib. Tortillas are an inferior good and prime rib is a normal good. The price of tortillas decreased and John consumed less prime rib than before. Therefore, we can conclude that for prime rib: a. The income effect is greater than the substitution effect. b. There is no income effect. c. The income effect equals the substitution effect. d. There is no substitution effect. e. The income effect is less than the substitution effect. ___ 6. Goods are non-rival if: a. Consumption of a good by one person does not affect consumption by other. b. Consumption of a good causes positive spillovers to social benefits. c. Consumption of a good by one person decreases social welfare. d. It is not possible to prevent an individual from using the good. e. The quantity consumed of a good decreases as income increases. 1
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___ 7 Suppose Lauren is willing to pay $13 for her first hamburger, $10 for the second hamburger, $5 for the third hamburger and $2 for a fourth hamburger. If Lauren is able to buy any number of hamburgers for $4, her consumer surplus is: a. $4 b. 13 c. 10 d. 16 e. 14 ___8. A consumer can maximize his utility between two goods if a. x
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This note was uploaded on 04/07/2008 for the course ECON 2010 taught by Professor Mertens,wi during the Fall '07 term at Colorado.

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Exam2Fall07Ans - Last Name: _ TA's name: _ First Name: _...

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