Economics 0011A/B Lecture Notes - Lecture 11: Economic Equilibrium, Bundesautobahn 99, Perfect Competition
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ECO101H1 L301, L401: Principles of Microeconomics
Midterm 1, SAMPLE
University of Toronto, Faculty of Arts and Science
Instructor: Kripa Freitas
First Name (Write neatly using all capital letters)
Student ID (numbers only, no letters)
UofT email address
.100 points in total (50 for Multiple choice and 50 for short answers). Answer all questions. Points
for each given in brackets at the start of question.
.Duration: 100 minutes.
.Aids allowed: Non-graphing, non-programmable calculator. This is a closed book, closed notes
.Your answer must ﬁt into the space provided. Use a pencil, especially for the multiple choice
part. Ink can’t be erased if you change your mind.
Multiple Choice: Choose the best answer.
Marks based entirely on Bubble sheet, any work on the test will NOT be considered.
No deductions for incorrect answers.
Short Answers: All diagrams need to be clearly labeled and you must give arguments to support
your answers for full credit.
For True/False/Uncertain questions, ALL points are for the explanation.
Show your work clearly for full credit. No work, no partial credit.
Quantity 6= Quality/Correctness. We will not give you points for quantity if it is incorrect.
Do not give us multiple answers and expect us to pick the right one, that is your job.
If you must use the rough-work pages for an answer, indicate this clearly by writing “Continued
on last page”.
Unless stated otherwise, quantities do not have to be integers. Round to two decimal places.
Multiple Choice: Answer using Bubble Sheet
1) [2 points] You have Saturday oﬀ and have three ways to spend your time. You spend the same amount of time
(3 hours) and money on each option ($25). The table below lists your value from each option, expressed in
dollars. The opportunity cost of hiking is
Lunch Special Your beneﬁt
Street Festival $74
EUnable to calculate with the given information
2) [3 points] Assume a perfectly competitive market. Xenia is one consumer in the market. Her marginal willingness
to pay for the good is now $20 higher than before at every quantity. Because of this change
Amarket demand remains unchanged.
Bmarket demand increases
Cmarket demand decreases
DNone of the above
ENeed more information to answer this question.
3) [3 points] Assume quantities are integers. Table 1 gives total costs as a function of Quantity produced. At which
per-unit price do you produce exactly three units?
Q Total Cost
A. $24.50 per unit
B. $24 per unit
C. $14.5 per unit
D. $16 per unit
E. It is never rational to produce exactly three units.
4) [3 points] In April, you paid $50 for an October symphony concert tomorrow. If you don’t go, you can sell your
ticket for $60. If you don’t go to the concert, you will work an extra shift and earn $25. If you go to the
concert you have to pay $10 for transport.
A. Because you purchased the ticket, you will go to the concert.
B. You only go to the concert if you believe you will get $35 or more in enjoyment value.
C. You only go to the concert if you believe you will get $50 or more in enjoyment value.
D. You only go to the concert if you believe you will get $85 or more in enjoyment value.
E. You only go to the concert if you believe you will get $95 or more in enjoyment value.
5) [3 points] A plumber spends all of his time either unclogging toilets or installing faucets. What is the eﬀect of
purchasing a machine that reduces the time required to unclog each toilet?
A. Opportunity cost of toilet unclogging: increases; Opportunity cost of faucet installation: no change.
B. Opportunity cost of toilet unclogging: decreases; Opportunity cost of faucet installation: no change.
C. Opportunity cost of toilet unclogging: increases; Opportunity cost of faucet installation: decreases.
D. Opportunity cost of toilet unclogging: decreases; Opportunity cost of faucet installation: decreases.
E. None of the above.
6) [3 points] It takes Marco 20 minutes to fold a load of laundry and 2 minutes to change a diaper. It takes Ragan
30 minutes to fold a load of laundry and 4 minutes to change a diaper.
A. Marco has both an absolute and a comparative advantage in both chores.
B. Ragan does not have a comparative advantage in either chore.
C. Ragan has a comparative advantage in folding laundry.
D. Ragan has a comparative advantage in changing diapers.
E. In order to ﬁgure out who has the comparative advantage, we need to know how often diapers need to be
changed relative to the number of loads of laundry.
7) [3 points] Consider an economy with three producers, each of whom can produce either wine or cheese. Each
faces a constant opportunity cost of producing a unit of wine: 1 unit of cheese for producer 1; 2 cheeses for
producer 2 and 3 cheeses for producer 3. If current production is eﬃcient with 2 producers specializing in
wine, what is the opportunity cost of an extra unit of wine?
A. 3 units of cheese.
B. 2 units of cheese.
C. 1 unit of cheese.
D. Unable to determine with information given.
E. None of the above.