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ECON 1530
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YORK UNIVERSITY Department of Economics AS/ECON 1000 D,E Introductionto Microeconomics November 11, 2008 Professor A. Cohen TERM TEST #2 INSTRUCTIONS: 1. PRINT your name: ________________________ _________________ (LastName) (First Name) 2. Student Number: _____________________________ 3. WebCT / PassportYork User ID: _____________________________ 4. Signature: _____________________________ On the top of the pink computerizedanswer sheet, use an HB pencil to: 5. Printyourfull nameon the horizontal line provided. 6. Printyourstudent number in the vertical space provided andfill in the corresponding rectangles foreach digit. 7. The test has 2parts. Answers to Part I (Multiple ChoiceQuestions)must be entered onthe enclosed pink computerized answer sheet. Use only an HBpencil. Theanswer sheet will not be returned, but the rest ofthe test paper willbe returned. Answers to Part II (Problems) must be entered in theappropriate spaces on the problem pages.Where required,you must show your calculationstoreceive credit. Problem answers can bedone in pen or pencil, but pencil answers cannot be appealed. 8. The test is 50minutes, 90 marks. Insert (do NOT bendorfold) thepink computerized answer sheet in the middle of the test paper when you are finished. 9. NO CALCULATORS, DIGITIALDICTIONARIES, CELLPHONES ORANY ELECTRONIC DEVICES ALLOWED. DO NOT WRITE INTHIS SPACE M.C.x4 = Problems = Total = / 90 AS/ECON1000 D, E 2 Term Test #2, 2008 PARTI Multiple Choice Questions (64marks, 35minutes) For each question pick the one best answer. Each right answer is worth4 marks, eachwronganswer zero (16 questions (plus version), about 2 minutes per question). 1. Thisis VersionAof the test. For question 1 on thepink answer sheet,fill in answer rectangle A. 2. In economics, the long run is a time frame in which A) all resources are variable but plant size is fixed. B) one year or more elapses. C) all resources are variable. D) all resources are fixed. E) there is at least one fixed resource and at least one variable resource. 3. If the difference between ATC and AVC at 100 units of output is $1, at 200 units of output the difference betweenATC and AVC is A) $2. B) $1. C) 50 cents. D) zero. E) none of the above. AS/ECON1000 D, E 3 Term Test #2, 2008 4. Minimum efficient scale is A) the smallest output at which LRAC is at a minimum. B) the largest output at which LRAC is at a minimum. C) the output at which marginal product per dollar spent is equal for all inputs. D) any point of economic efficiency. E) any point of technological efficiency. 5. The “big tradeoff” is between A) current consumption and a higher future standard of living. B) fair results and fair rules. C) equality of income and equality of opportunity. D) efficiency and fairness. E) consumer surplus and producer surplus. 6. The proportion of a salestaxpaidby producers willbe greater the more 1 elastic is demand. 2 inelastic is demand. 3 elastic is supply. 4 inelastic is supply. A) 4 only B) 1 and 3 C) 1 and 4 D) 2 and 3 E) 2 and 4 AS/ECON1000 D, E 4 Term Test #2, 2008 Use the following to answer question 7: Figure 7.4 7. Refer to Figure 7.4. For each frisbee, the sellers’ share of the tax is A) $0.40. B) $0.60. C) $1.00. D) $5.60. E) $6.60. 8. When the price of an inferior good rises, the income effect A) is always larger than the substitution effect. B) decreases consumption of the good and the substitution effect increases consumption. C) and the substitution effect both increase consumption of the good. D) and the substitution effect both decrease consumption of the good. E) increases consumption of the good and the substitution effect decreases consumption. AS/ECON1000 D, E 5 Term Test #2, 2008 9. Bill and Ted consume 15 chocolate bars each at the current price. If Bill’s demand curve is less elastic than Ted’s demand curve, A) Bill’s willingness to pay for the last chocolate bar is greater than Ted’s. B) Ted’s willingness to pay for the last chocolate bar is greater than Bill’s. C) Bill’s consumer surplus is greater than Ted’s. D) Ted’s consumer surplus is greater than Bill’s. E) Bill’s consumer surplus equals Ted’s. 10. Constant returns to scale means that, as all inputs are increased, A) total output remains constant. B) long-run average cost remains constant. C) long-run average cost increases at the same rate as inputs. D) ATC remains constant. E) ATC increases at the same rate as inputs. 11. Shelley is maximizing her utility in her consumption of Porsches and mink coats. If the marginal utility of her last purchased Porsche is twice the marginal utility of her last purchased mink coat, then we know with certainty that A) Shelley buys twice as many mink coats as Porsches. B) Shelley buys twice as many Porsches as mink coats. C) Shelley buys more mink coats than Porsches, but we do not know how many more. D) the price of a mink coat is twice the price of a Porsche. E) the price of a Porsche is twice the price of a mink coat. AS/ECON1000 D, E 6 Term Test #2, 2008 12. Whenthe government setsa price that is not an equilibriumprice ina market, the quantity actually sold at that price A) is determined by the quantity demanded. B) is determined by the quantity supplied. C) is determined by whichever is less– quantity demandedor quantity supplied. D
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