# EC120 Study Guide - Midterm Guide: Average Cost, Average Variable Cost, Marginal Revenue

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15 Feb 2016
School
Department
Course
Professor
1
-Economics 120
Test 2 Friday, November 7th, 8:00pm
1) On the front of your computer card, use a dark lead pencil to PRINT the following:
a. Your section letter and instructor’s name (see the class schedule below)
b. WLU ID number - starting at the far LEFT column (leave the last column blank)
i. UW students add a 0 to the end of your 8-digit UW ID number
ii. Fill in the boxes corresponding to your ID number
c. Last name, empty space, first name starting at the far LEFT column
i. Fill in the boxes corresponding to your name
2) On the back of the computer card, use a dark lead pencil to
a. Answer all 55 questions by completely filling in the bubble. If you change an answer, you must
3) You have 90 minutes. No student may leave before 8:30pm. Hand in the computer card but you may keep the
question paper.
4) There are 55 multiple choice questions on 16 pages (including this cover sheet). You will receive one mark for
each correct answer, and zero marks for missing, incorrect or multiple answers.
5) Non-programmable calculators are allowed. Dictionaries are not allowed.
Section
Date/Time
Instructor
A
Tu/Th 8:30am
Jackson
B
M/W 2:30pm
Sinclair
C
Tu/Th 11:30am
Sinclair
D
Tu/Th 10:00am
McLeod
E
M/W 11:30am
Jackson
F
M 7:00pm
Mortazavi
G
Tu 7:00pm
Mortazavi
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2
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. The demand for ice cream is price elastic. When technology improves in the ice cream industry, what
happens to consumer surplus?
a.
It increases.
b.
It decreases.
c.
It does not change, since technology affects suppliers and not consumers.
d.
It increases then decreases.
____ 2. When a tax is imposed on a product, what happens to quantity demanded and quantity supplied?
a.
Quantity demanded will increase and quantity supplied will decrease.
b.
Quantity demanded will decrease and quantity supplied will increase.
c.
Quantity demanded and quantity supplied will both increase.
d.
Quantity demanded and quantity supplied will both decrease.
____ 3. When will buyers of a product pay the majority of a tax placed on a product?
a.
when the tax is placed on the seller of the product
b.
when demand is more elastic than supply
c.
when supply is more elastic than demand
d.
when the tax is placed on the buyer of the product
____ 4. What happens if a government increases the tax rate?
a.
As the tax rate increases, tax revenue continually rises and deadweight loss
continually falls.
b.
As the tax rate rises, tax revenue rises for a while, but eventually begins to fall;
deadweight loss rises but also begins to fall as tax revenue falls.
c.
As the tax rate rises, tax revenue rises for a while, but eventually begins to fall;
d.
As the tax rate rises, tax revenue rises for a while, but eventually begins to fall;
deadweight loss falls for a while, but begins to rise as tax revenue falls.
____ 5. Suppose the government places a tax on a product. How does the cost of the tax compare with the
revenue raised?
a.
The cost of the tax to buyers and sellers is less than the revenue raised from the tax
by the government.
b.
The cost of the tax to buyers and sellers equals the revenue raised from the tax by the
government.
c.
The cost of the tax to buyers and sellers exceeds the revenue raised from the tax by
the government.
d.
Without additional information, such as the elasticity of demand for this product, it
is impossible to compare tax cost with tax revenue.
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3
____ 6. When a country allows trade and becomes an importer of a good, what happens to consumer surplus
and producer surplus?
a.
Consumer surplus and producer surplus will increase.
b.
Consumer surplus and producer surplus will decrease.
c.
Consumer surplus will increase, and producer surplus will decrease.
d.
Consumer surplus will decrease, and producer surplus will increase.
Figure 9-11
____ 7. Refer to Figure 9-11. Before the tariff is imposed, how many carnations will this country
import/export?
a.
import 200 carnations
b.
import 400 carnations
c.
export 200 carnations
d.
export 400 carnations
____ 8. Refer to Figure 9-11. When a tariff is imposed in the market, how much do producers gain or lose?
a.
lose \$100
b.
gain \$100
c.
gain \$200
d.
gain \$300
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