Econ_198_Aut_07_Exam_1 - Introduction to Microeconomics...

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1 Introduction to Microeconomics Allen R. Sanderson Economics 19800 Autumn 2007 FIRST HOUR EXAMINATION Name (Please Print): ______________________________________ [42 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 20 points total. 1. Scarcity: a. is not a problem for the wealthy, only the impoverished. b. will eventually disappear as technology continues to advance. c. is a problem faced by consumers (or demanders) but not by producers (or suppliers). d. means that ultimately price elasticities have to be zero for any population as a whole. e. causes people to have to make tradeoffs in light of opportunity costs. 2. Which of the following represents a positive economic statement (as opposed to a normative one)? a. If welfare payments to the poor were to be increased, our society would be better off. b. The less gasoline we use, the better our overall quality of life. c. The Federal government should raise the taxes (and tax rates) on wealthy people. d. Equity is a more important economic principle and goal than efficiency. e. Recent increases for domestic security have slowed the growth rate of the economy. 3. Why would a bar charge its customers a lot for a glass (or bottle) of water but give them peanuts, chips, pretzels – in bowls kept fully stocked – for free? a. Because nuts and chips are inferior goods whereas water and beer are normal goods. b. Because bar patrons don’t get as much consumer surplus from snacks as they do from drinks. c. Because the demand for snacks is highly elastic and the demand for drinks is inelastic. d. Because the cross elasticity of demand between alcoholic drinks and water is positive while the cross elasticity between alcoholic drinks and salty snacks is negative. e. Because there is so much diminishing marginal utility associated with snacks but not drinks. 4. If a country’s PPF moves outward, this represents: a. a lower unemployment rate. b. economic growth. c. less scarcity. d. more equity if governments can improve upon market outcomes. . e. lower opportunity costs but people still face tradeoffs. . 5 In the market for turkeys in the U.S. (and by that I mean the foodstuff, not Jennifer Lopez films), which of the following is different? a. Thanksgiving approaches, traditionally a holiday when Americans eat a lot of turkey. b. We fall into a recession, decreasing incomes of Americans, most of whom regard turkey as an inferior good. c. The appeal of being a vegetarian wears off and former veggie-lovers “gobble up ”all meats. d.
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This test prep was uploaded on 04/07/2008 for the course ECON 198 taught by Professor Sanderson during the Spring '08 term at UChicago.

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Econ_198_Aut_07_Exam_1 - Introduction to Microeconomics...

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