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Final

Econ 1021A - Finals December 2007.pdf


Department
Economics
Course Code
ECON 1021A/B
Professor
Michael Parkin
Study Guide
Final

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Version
222
THE
UNIVERSITY
OF
WESTERN ONTARIO
LONDON CANADA
Michael
Parkin ECONOMICS 020-002/004 December
9,
2007
MID-YEAR EXAMINATION
INSTRUCTIONS:
1.
The
examination begins
at
10:00 a.m.
and
ends
at
12:00 p.m.
2.
Check that your examination paper contains
23
pages.
3.
Use a
BLACK PENCIL
to
complete
your
Scantron Form. Check
to
ensure
that
the
code
on
your
Scantron
sheet
matches
the
code
on the
paper.
Print your NAME
and
complete
your SIGNATURE.
Enter
your STUDENT NUMBER.
Enter your SECTION NUMBER, which
is
either
002 or
004.
4.
Please hand
in
Scantron Form only.
5.
You may use a
regular calculator
but you may not use a
programmable
or
graphing calculator.
6.
Your cell phone must
be
switched
off and
left
in
your
bag at the
front
of the
exam room.
NOTE:
QUESTIONS
ARE
PRINTED
AT THE
BACK
OF
EACH
PAGE

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Economics
020 -
002/004
Mid-
Year Examination
December
9,
2007
MULTIPLE
CHOICE.
Choose
the one
alternative
that
best
completes
the
statement
or
answers
the
question,
t*,t\
1)
Which
of the
following
is an
example
of a
positive statement?
COAA
M.
-r
--'41
f
-f'
A)
Canada should
cut
back
on its use of
carbon-based
fuels
such
as
coal
and
oil.
:
B)
Increasing
the
minimum wage results
in
more unemployment.
~"C)
The
Central Bank
of
Canada ought
to cut the
interest rate.
D)
Canada should decrease
the
rate
of
unemployment.
E)
Every Canadian should have equal access
to
health care.
2)
If an
economy produces
two
goods with increasing opportunity cost, then
the
production
possibilities frontier
___
^4).
will
be
bowed
out and
have
a
negative
slope.
B)
will
be
positively sloped.
p)
reflects
the
fact
that available resources
are
equally
useful
hi all
production activities.
D)
will
be
linear
and
have
a
negative slope.
1
uts-M"^"
? ^
' E)
will
be
bowed
out and
have
a
positive
slope.
3)
A
technological
advance
is
represented
by T
-t..\jtw'"j
$
f^Q^U.
L
point outside
the
production possibilities
frontier. -
-UlW'1'1^
i'"
Jltd'-*^-'^
'"
:
movement
from a
point
inside
the
production possibilities frontier
to a
point
on the
production possibilities
frontier.
.KJ^C.
rf
^yini/i
mfi {
s^ui
i/Hf
^"j
f
C) a1
rightward
shift
of the
production possibilities
frontier.
~^
^b-t-t
ti)
pQtU'Ut
rtll/vt
D) a
point inside
the
production possibilities frontier.
E) a
movement along
the
production possibilities
frontier.
4)
If
A and 5 are
complemenls.m_productipn
and the
price
of A
falls,
the
supply
of B
will
A)
decrease,
and the
price
of B
will increase.
p''"**-
'1 i,
^'-iV'-l
h ^'
'-'"^''1
l^
'.
B^lncrease,
and the
price
of 5
will
decrease.
pf '''
"'v*"
J^increase
or
decrease depending
on how
close
A and B are as
complements.
(T)) idecrease,
and the
price
of B
will decrease.
^ ^*, . . I
,rj.J -"•.
,
^B^lncrease,
and the
price
of B
will
increase.
B-l

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

5)
Suppose
we
observe
an
increase
in the
price
of
oranges. Which
one of the
following
is the
most
likely cause?
~~~
A)
a
technological
advance
in
the
production
of
oranges
-
'-AWM
: " * r-i
--t^^A
,\r
,x
'' '
-'
<'\-'-
Bj a
scientific discovery that oranges cause
hah
loss
.^^ '
—..-^
ft
/ .
..V^
' - f, 'J >.
(!''
\
C^good
growing weather
in
Florida
* V
~^~-
an
increase
in the
price
of
apples,
if
apples
and
oranges
are
substitutes
"
a
decrease
hi
income
if
oranges
are a
normal good
6)
Which
one of the
following will give
a
price elasticity
of
demand
of
5.0?
A 10
percent increase
in
price results
in a
A) 5
percent decrease
in
quantity demanded.
-j^ , 'B^ _ ^ r
P '
„-•'.-.
'
B) 0.5
percent decrease
hi
quantity demanded.
\(, ,
C)'
50
percent decrease
hi
quantity demanded.
D)
10
percent decrease
hi
quantity demanded.
E)
2
percent decrease
in
quantity demanded.
7)
At the
current price, both Bill
and
Ted.haye
an
inelastic demand
for
coffee
and
each consumes
14
coffees
a
week. Bill's demand
is/less
elastic,
than
Ted's. Given
this
information,
we
know that
all of
the
following arejrue^except
------
n\
v\^ ? - A)
Bill's willingness
to pay for the
13th
coffee
per
week
is
greater than Ted's.
vX
\A>V
jA
/
>
'•>*',-.
B)
Bili
is
willuig
to
spend more
on
coffee
than Ted.
j/
C)
Bill's willingness
to pay for the
14th
coffee
per
week
is
greater than
Ted's./7
D)
Bill's consumer surplus
from
coffee
is
greater than
Ted's.,/
'-
^ $u; "
E)
Bill's
marginal rate
of
substitution between other goods
and
coffee
diminishes
more"
rapidly
,-t
i-p j| , ..
8)
When demand
is
unit elastic, consumer surplus
is
infinity.
C) the
same
at
every price.
E)-greater
the
lower
is the
price.
B-2
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