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Simon Fraser University
ECON 103
Iryna D

Simon Fraser University ECON 103-D100: Principles of Microeconomics Instructor: Iryna Dudnyk Summer 2011 MIDTERM EXAM 1 Version A FULL NAME: STUDENT ID: Your TA is (circle onFRANK QIANZHENG TUTORIAL SECTION: INSTRUCTIONS: you have 1 hour 30 minutes to complete the exam. Write all your an- swers in the space provided; any work outside the space provided will be given zero credit. You can write in either pen or pencil. If you write in pencil your exam cannot be regraded. The exam has 6 pages and 2 sections: 15 multiple choice questions 4 short answer questions MC WRITTEN PART TOTAL 1 I. MULTIPLE CHOICE. 15 questions, each question is worth 1 point. Circle only one answer that you think is the best. 1. John sells 1,000 cinnamon buns per day at price 2.00 per bun. He knows that the absolute value of price elasticity of demand for his cinnamon buns is 0.5. If John charges 2.50 per bun how many will he sell? (A) 750 (B) 1,250 (C) 1,000 (D) 875 (E) 1,125 2. As price of good 2 P c2anged from 50 to 40 dollars, quantity demanded of good 1 Q 1 changed from 100 to 110. The cross-price elasticity is and the goods are (A) -2, complements (B) -2, substitutes (C) 2, complements (D) .5, substitutes (E) -0.5, complements 3. Choose what is not true about consumer surplus. (A) it is di▯erence between what one is willing to pay and actually pays (B) the lower is the price the higher is consumer surplus (C) it exists because MV is diminishing (D) there is a negative relationship between consumer surplus and total value (E) it is di▯erence between the value and the cost of the good for a consumer 4. Choose a true statement regarding elasticity E of demand D: (A) if D is a straight line, E is constant along D curve (B) if D is horizontal E is in▯nite (C) if D is vertical E=1 (D) if D is vertical E is in▯nite (E) if D is relatively steep, it is called elastic 5. In one hour John can either bake 60 cookies or 45 mu▯ns. The opportunity cost of one mu▯n is cookies (A) 5/3 (B) 3/5 (C) 1 (D) 3/4 (E) 4/3 2 6. Choose a true statement (A) air is scarce because the amount of it is limited (B) in Canada food is not scarce because food banks give it out for free (C) in Vancouver sunny days in December are scarce because there are so few of them (D) air is not scarce because it’s free and there is no shortage 7. Demand for gas will increase if (A) price of cars increases (B) price of cars falls (C) price of bus fares falls (D) price of gas falls (E) (A) and (D) (F) (B), (C) and (D) 8. Sue sells roasted chestnuts in a park and she discovered that as she raises the price of chestnuts her sales revenue increases. This means that (A) higher price results in higher quantity sold (B) chestnuts are an inferior good (C) chestnuts are a normal good (D) demand for chestnuts is elastic (E) demand for chestnuts is inelastic 9. Price ceilings such as rent controls . (A) cause surpluses and therefore are ine▯cient (B) cause surpluses, but do not cause ine▯ciency (C) make landlords worse o▯ and therefore are ine▯cient (D) cause shortages and therefore are ine▯cient (E) create a shortage, but do not cause ine▯ciency 10. Demand is P = 30 ▯ :25Q and supply is ▯xed at Q = 60. If P = 10 we will observe (A) surplus of 20 untis (B) shortage
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