econmidterm1key

econmidterm1key - Econ 1 Fall 2007 Midterm 1(KEY Version A...

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Econ 1 Fall 2007 - Midterm 1 (KEY) Version: A Student Name: _____________________________ Student ID: _______________________________ 1. Explain the difference between economic profit and accounting profit and provide one example to illustrate the difference. 2. Describe the concept of opportunity cost. Provide one example. Fall 2007 Economics 1 – Midterm1 (version A) Page 1 of 12
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Please select the best answer from the choices provided and mark the corresponding letter on your Scantron form. For True/False questions, please mark "A" for True and "B" for False on your Scantron form. 3. In perfect competition, an individual producer faces a firm-demand curve that: a. Slopes upward to the right. b. Slopes downward to the right. C. Is horizontal or flat. d. Is vertical or straight up and down. 4. Total revenue is: A. The price of a product times the quantity sold in a given time period. b. The profit a company earns from the sales of goods. c. Equal to revenues minus the costs of production. d. The additional revenue earned from the sale of one more unit. 5. Market failure means: a. Government solutions fail to improve economic outcomes. B. The market mechanism does not produce the best mix of output. c. The market allocates goods more efficiently that does the government. d. The market is responsive to consumer demand. 6. In a market, the equilibrium price is determined by: a. Only what buyers are willing and able to purchase. b. Only what sellers are willing and able to offer for sale. C. The interaction of both demand and supply. d. The government. 7. Average total cost is: A. Total cost divided by the quantity produced. b. Change in total cost because of a one unit increase in output. c. Change in total output divided by the change in total cost. d. Total output times total cost. 8. Demand is defined as the: a. Desire for goods and services. b. Ability and willingness to sell goods at various prices. C. Ability and willingness to buy specific quantities of a good or service at various prices in a given time period, ceteris paribus . d. Sensitivity of buyers to a change in price. Fall 2007 Economics 1 – Midterm1 (version A) Page 2 of 12
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9. If demand is elastic, then: a. Quantity demanded is not very responsive to changes in price. B. Quantity demanded is very responsive to changes in price. c. Consumer spending does not respond to changes in income. d. Total revenue falls in response to a price decrease. 10. Suppose the price elasticity of demand for tacos is 0.80. If the price of tacos increases by 10 percent, then the quantity demanded of tacos should, ceteris paribus : A. Decrease by 8 percent. b. Increase by 8 percent. c. Decrease by 1.25 percent. d. Increase by 1.25 percent.
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This note was uploaded on 04/07/2008 for the course ECON 1 taught by Professor Crane during the Fall '08 term at UC Irvine.

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econmidterm1key - Econ 1 Fall 2007 Midterm 1(KEY Version A...

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