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econ 201 final winter 2008 final.doc

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ECON 201
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Concordia UniversityDepartment of EconomicsECON 201INTRODUCTION TO MICROECONOMICSWinter 2008FINAL EXAMINATION AND ANSWERSSTUDENT NAME STUDENT NUMBER Please read all instructions carefully1This is a threehour exam 180 minutes The questions are worth 150 marks altogether It is a good strategy to spend one minute per mark for your answers 150 minutes and spend the remaining time 30 minutes to review your answers2The exam has 14 pages and it consists of four parts iPart I 25 multiplechoice questions 25 marksiiPart II Choose 5 out of 7 truefalse questions 25 marksiiiPart III Choose 4 out of 5 long questions 80 marks and ivPart IV Choose 2 out of 3 current events questions 20 marks3Write all your answers on this exam Do not use additional booklets 4You are allowed to use a nonprogrammable calculator You may use either pen or pencil to provide your answers1Part I Twentyfive 25 Multiple Choice Questions Circle your answers Total25 marks1Complete the following sentence Microeconomics isaconcerned with the size of the total amount of income earned by all households in an economybunrelated to macroeconomicscconcerned exclusively with the role of the government in the economydthe branch of economics that studies the decisions of individual households and firms enone of the above2In the economic sense the cost of something used in production isa the benefit foregone by not using it in its best alternative useb the explicit cost the same as accountants costc the payment actually made to the factor of productiond the same as the tax authorities definitione fixed cost and variable cost3Suppose that the price of a substitute for a particular good falls and the prices of the raw materials used to manufacture the good increase What would you expect to occur in the market for this good aThe equilibrium price would increase but the impact on the amount sold in the market would be ambiguousbThe equilibrium price would decrease but the impact on the amount sold in the market would be ambiguouscBoth equilibrium price and equilibrium quantity would increasedEquilibrium quantity would increase but the impact on equilibrium price would be ambiguouseEquilibrium quantity would decrease but the impact on equilibrium price would be ambiguous4Which one of the following would not shift the supply curve for good X to the rightaA decrease in the price of Y a substitute for the production of XbA reduction in the price of resources used in producing XcAn improvement in technology affecting the production of XdAn increase in the price of XeAn increase in the price of Y a complement in the production of X5Suppose the total revenue from the sale of Montreal Gazette newspapers last month increased due to a decrease in price assume a downward sloping demand curve What can be concluded about the price elasticity of demand for Gazettea Demand is elasticb Demand is inelasticc Demand is unit elasticd Demand elasticity is equal to zeroe Nothing can be concluded about the price elasticity6Which of the following statements best differentiates price ceilings and price floorsa Price ceilings represent minimum prices while price floors represent maximum pricesb Price ceilings are always set below the equilibrium price and price floors are always set above the equilibrium pricec Price ceilings are maximum allowable prices whereas price floors are minimum allowable pricesd Price floors cause shortages to appear whereas price ceilings have the opposite effecte None of the above7At any single output the height of the demand curve measuresa the consumer surplus enjoyed from consuming that unitbthe difference between the buyers willingness to pay for that unit and the market pricecthe profit earned by the seller from the sale of that unitd the value buyers place on that unit of the goodethe income elasticity of demand8Currently Joe and Halyna are consuming the same amount of strawberries but Joes demand curve is much more elastic than Halynas Which statement is true aHalynas consumer surplus exceeds JoesbAny comparison of consumer surplus depends on the price of strawberriescHalynas consumer surplus equals JoesdNo statement can be made regarding consumer surpluseseJoes consumer surplus exceeds Halynas2
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