Econ_198_Spr_05_Exam__3 - Introduction to Microeconomics...

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Introduction to Microeconomics Allen R. Sanderson Economics 19800 Spring 2005 THIRD HOUR EXAMINATION Name (Please Print): ______________________________________ [40 Points Possible] Part I. Multiple Choice. Circle letter corresponding to your answer. One point each; 19 points total. 1. Which of the following is the best example of a pure public good? a. garbage/trash collection b. elementary and secondary education c. Yellowstone National Park d. The Museum of Science and Industry e. NPR (National Public Radio) 2. Which of the following most clearly illustrates the concept of derived demand? a. An increase in the price of beef causes the demand for chicken and poultry to increase. b. An increase in the demand for new houses leads to an increase in the demand for plumbers and electricians. c. An increase in consumers’ incomes leads to an increase in the demand for air travel. d. New research linking tobacco to lung cancer and other diseases leads to a drop in smoking. e. An increase in the demand for automobiles leads to an increase in the quantity of automobiles supplied. 3. We have encountered a discussion of “lemons” in which one of the following markets? a. used cars b. stocks and bonds c. insurance d. voting e. labor (that is, hiring or firing someone) 4. The desire of most of us for consumption now rather than in the future is called: a. rational expectations. b. the shortsightedness effect. c. the risk premium. d. a positive rate of time preference. e. the utility of wealth. 5. The demand for an input (or factor of production) will be more elastic: a. the more elastic the demand for the final product. b. the more difficult it is to substitute other resources for this particular one. c. when the cost of the factor is small relative to the total cost of the final product. d. the more productive that factor is relative to other inputs. e. in the short run than in the long run. 6. The substitution effect of a wage increase for an individual worker leads to: a. an outward shift in the labor supply curve. b.
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Econ_198_Spr_05_Exam__3 - Introduction to Microeconomics...

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