quiz 1

# quiz 1 - College of Human Ecology Cornell University Ithaca...

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College of Human Ecology Cornell University, Ithaca, New York Department of Policy Analysis and Management PAM 200 Intermediate Microeconomics A. Sinan ¨ Un¨ur – Fall 2007 Quiz 1 – Answers August 23, 2007 Questions MC1: If the State of California decides to raise the drinking age to 25 (and nothing else changes), what would happen to the demand for beer? ( a ) The demand for beer will shift right. ( b ) The demand for beer will shift left. ( c ) The demand for beer will stay the same, but people will move up the demand curve consuming less. ( d ) One cannot tell what will happen with the information given. Answer : 1b . Clearly, not everyone under 25 would stop drinking beer just because of the new law (just like we know there are a lot of people who can obtain alcohol even though they are under 21). However, the law increases the barriers to obtaining alcohol for a new group of people and therefore it would cause the demand for beer in California to decrease. A decrease in demand (as opposed to a fall in quantity of beer demanded) is represented by a leftward shift in the demand curve. MC2: Temperature is measured and reported in Fahrenheit in the U.S. whereas most other coun- tries use the Celsius scale. The two scales are related to each other according to the follow- ing function: F = 1 . 8 C + 32 , where F denotes the temperature in Fahrenheit and

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quiz 1 - College of Human Ecology Cornell University Ithaca...

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