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Lecture

# Economics 1021A/B Lecture Notes - European Route E6, Economic Equilibrium, Marginal Product

Department
Economics
Course Code
ECON 1021A/B
Professor
Jeannie Gillmore

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NAME _________________________________
THE UNIVERSITY OF WESTERN ONTARIO
E. Rivers ECONOMICS 1021B-001 March 18, 2012
MIDTERM #2
INSTRUCTIONS:
1. You will have 2 hours to complete the exam.
2. Check that your examination contains 50 questions.
3. Use a BLACK PENCIL to complete your Scantron Form.
iii. Enter your SECTION NUMBER â€“ 001
iv. Ensure that the VERSION CODE on your question packet
matches the version code on your Scantron Form.
In order to get credit for a question, you must record the correct answer on your
Scantron Form. No credit will be given for answers recorded in your question
packet.
4. You may have pencils, erasers, your student card, and a non-graphing, non-
programmable calculator at your desk. All other items must be left in your bag at
the front of the examination room.
5. Please ensure that all electronic devices (cell phones, laptops, etc.) are turned off
before storing them in your bag at the front of the examination room.
6. There are no washroom breaks allowed during the test.
7. WHEN YOU HAVE FINISHED, PLEASE HAND IN ALL EXAM
AND ALL SCRAP PAPER YOU HAVE BEEN PROVIDED).
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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
Use the figure below to answer the following question.
Figure 1
1) Shelly's budget line is shown in Figure 1 Which point is unaffordable given her income and current
prices?
A) A and B
B) B only
C) C only
D) C and D only
E) All points are unattainable.
2) David has an income of \$30 to buy movie tickets and bus tickets. The price of a movie ticket is \$6
and the price of a bus ticket is \$2. What is David's real income?
A) \$32
B) \$38
C) \$30
D) 5 movie tickets or 15 bus tickets
E) 15 movie tickets or 5 bus tickets
3) David has an income of \$30 to buy movie tickets and bus tickets. The price of a movie ticket is \$6
and the price of a bus ticket is \$2. What is the relative price of a bus ticket in terms of movie
tickets?
A) 1/3 movie tickets
B) 15 movie tickets
C) \$6
D) \$3
E) 2 movie tickets
A-1
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4) The magnitude of the slope of the budget line is the
A) relative price of the good measured on the horizontal axis.
B) price of the good measured on the vertical axis.
C) absolute price of the good measured on the horizontal axis.
D) real price of the good measured on the vertical axis.
E) relative price of the good measured on the vertical axis.
5) Suppose all prices double and income also doubles. Which statement is true?
A) The budget line shifts rightward.
B) The slope of the budget line increases.
C) The budget line does not change.
D) The slope of the budget line decreases.
E) The budget line shifts leftward.
6) Larry consumes only beer (B) and chips (C). The equation of his budget line (with beer measured
on the vertical axis) is
A) QB = Y - (PC/PB)QC.
B) QB = Y/PB - (PC/PB)QB.
C) QB = Y/PB - (PC/PB)QC.
D) QC = Y/PC - (PB/PC)QB.
E) QB = Y/PC - (PB/PC)QC.
7) An indifference curve is
A) a line that shows combinations of goods among which a consumer is indifferent.
B) the boundary between normal goods and inferior goods.
C) the boundary between what a consumer can afford and what he cannot afford.
D) the boundary between what can be produced and what cannot be produced.
E) a line with a positive slope.
A-2
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