1Exam #1Principles of Microeconomics – Econ1014Spring 2013Green versionI.Do not open this exam or begin writing until you are told to begin.II.Make sure your student ID and exam version are on your scantron formand your name and student ID are bubbled in before you begin the exam.You will not be given time to do this at the end of the exam.III.Be sure to read directions carefully, use your exam copy to help you solvethe problems and transfer all your answers to the scantron form. Onlyanswers bubbled into the scantron form before time is called will beaccepted. No work on the exam copy itself will be graded.IV.You will not be given time to fill in any scantron answers after time iscalled, so make sure to do this before time is called.V.You are allowed to use only a pencil, eraser and ruler for the exam. Anyother materials used or in sight are prohibited. In particular, you are NOTallowed the use of a calculator or any translation device.Failure to followthese directions is considered cheating and will result in a grade of zerofor this exam.VI.You must stop writing and put down your pen or pencil immediately whenyou are told it is time to stop the exam. Failure to follow these directionsis considered cheating and will result in a grade of zero for this exam.
2Please choose the best answer possible in each case.1. The price elasticity of demand measures:1.How responsive consumers are to income changes2.How far the demand curve shifts when there is a change in price.3.How responsive consumers are to price changes.4.How much consumer expenditure changes when market price changes.5.None of the above2. In the free market system, the way goods and services get rationed is through ____.1.Government regulation2.Cost benefit analysis3.The price system4.Models5.None of the above3. According to an economist, which of the following is a “need”?1.A house2.An education3.Government4.All of the above5.None of the above4. Which of the following models would be considered to be the best economic model?1.A model of the textbook market that creates an exact replica of the conditions within thetextbook market.2.A model with no simplifying assumptions.3.A model which is easy to use, contains no unnecessary assumptions, and has a 50% accuracyrate in making predictions.4.A model of the bread market that predicts market equilibrium price and sales with a 100%accuracy rate.5.Impossible to choose among the above choices5. Which of the following would be considered by an economist to be a positive statement?1.People are rational.2.The existence of externalities results in market failure.3.People are irrational.4.All of the above5.None of the above6. Because of ______ people make ______.1.Scarcity; models2.Limited resources; unlimited wants3.Needs and wants; cost benefit analysis choices4.Scarcity; choices5.None of the above
37. Suppose you are starting your last year in college pursuing a math degree. You have spent 3 years