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econ1000vbMT2012.pdf

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Department
Economics
Course
ECON 1540
Professor
Rebecca Jubis
Semester
Winter

Description
York University — Economics Department — Faculty of Liberal Arts and Professional Studies ECON1000.03 Midterm — Professor Lanfranco Version B Name___________________________________________ Student Number:____________________________________ INSTRUCTIONS: This exam is 3 hours long, and you should finish early. Put all of your answers to be graded on the Scantron “bubble page ” answer sheet. Use the “white space” on front and back of these exam pages to draw diagrams and do calculations to assist in arriving at your answers. Do not leave answers blank. Your grade is based on the number of correct answers. It is smart to first record your answers on these exam pages, and then transfer them neatly to your Scantron answer sheet. Write your name and student number on this exam page, and in the appropriate spaces on the Answer Sheet. There are three (3) places for your student number there, including the “bubble” format at the upper left side. Lastly, write the Version of this exam on the top center of your Scantron answer sheet. Turn in BOTH this EXAM and your SCANTRON ANSWER SHEET. You will get no grade if the Scantron sheet is not accompanied by this signed copy of the exam. --------------------------------------------------------------------------------------------------------------------------------------------------------------- MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Complete the following sentence. A price floor set below the equilibrium price results in 1) _______ A) a decrease in demand. B) a shortage. C) the equilibrium price. D) an increase in supply. E) a surplus. 2) A country opens up to trade and becomes an importer of some good. Consumer surplus 2) _______ ________, producer surplus ________, and total surplus ________. A) decreases; increases; increases B) decreases; decreases; decreases C) increases; decreases; increases D) increases; decreases; decreases E) increases; increases; increases 3) Individuals A and B can both produce goods X and Y. Individual A has a comparative 3) _______ advantage in the production of X if A) B has superior knowledge about how to produce X. B) the amount by which A must reduce production of Y is more than the amount by which B must reduce production of Y to produce an additional unit of X. C) the amount by which A must reduce production of Y is less than the amount by which B must reduce production of Y to produce an additional unit of X. D) A is faster than B at producing X. E) A has a preference to consume X. 4) A subsidy 4) _______ A) raises marginal social benefit above marginal social cost. B) makes marginal social cost equal marginal social benefit. C) results in efficient production. D) makes world prices higher than domestic prices. E) raises marginal social cost above marginal social benefit. 5) Complete the following sentence. Capital is 5) _______ A) money in the bank. B) tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services. C) stocks and bonds. D) land. E) "gifts of nature." 6) Choose the statement or statements that are correct. 6) _______ I. The value of one more unit of a good or service is its marginal benefit. II. Marginal benefit equals the total amount we spend on a good or service. III. Marginal benefit is the maximum amount willingly paid for another unit of a good or service. A) III only. B) I and III. C) II only. D) I only. E) I, II, and III. Use the figure below to answer the following question. Figure 2.1.5 7) The graph in Figure 2.1.5 shows Maryanne's PPF for food and sunscreen. Maryanne faces 7) _______ ________ opportunity cost of food and ________ opportunity of sunscreen, which can be seen by the shape of the PPF. A) a decreasing; a decreasing B) an increasing; an increasing C) an increasing; a decreasing D) a decreasing; an increasing E) a constant; a constant 8) Governments tend to tax items with inelastic demand because 8) _______ A) these goods yield the most tax revenues. B) buyers pay most of the tax in these cases. C) sellers pay most of the tax in these cases. D) governments wish to avoid big rises in after-tax prices. E) none of the above. Use the figure below to answer the following questions. Figure 3.2.2 9) Which one of the following would result in the demand curve shifting from D to D in Figure 9) _______ 1 2 3.2.2? A) a rise in the price of Coke, a complement of pizza B) a rise in the price of hamburgers, a substitute for pizza C) a rise in the price of pizza D) an increase in the supply of pizza E) a fall in the price of pizza Use the figure below to answer the following question. (Okay, this is a harder question) Figure 4.3.1 10) The two supply curves in Figure 4.3.1 are parallel. Between $7 to $8, 10) ______ A) S is more elastic than S . 1 2 B) S1is more inelastic than S2. C) S1and S h2ve the same elasticity. D) S1is steeper than S 2 E) S1is flatter than 2 . 11) At West, recognized as the "jewel in Vancouver's culinary crown", reservations are essential. At 11) ______ Le Bistro Chez Michel, a restaurant in North Vancouver, reservations are recommended. At Vij's, a restaurant not too far from the University of British Columbia, reservations are not accepted. West allocates scarce table resources by ________, Le Bistro Chez Michel allocates scarce table resources by ________, and Vij's allocates scarce table resources by ________. A) personal characteristics; personal characteristics and first-come, first-served; first-come, first-served B) a command system; a combination of a command system and first-come, first-served; first-come, first-served C) first-come, first-served; first-come, first-served; first-come, first-served D) personal characteristics; personal characteristics; first-come, first-served E) market price; market price and force; force 12) On a graph of a production possibilities frontier, opportunity cost is represented by 12) ______ A) a point on the horizontal axis. B) a ray through the origin. C) the slope of the production possibilities frontier. D) a point on the vertical axis. E) the x-axis intercept. Use the figure below to answer the following questions. Figure 6.3.3 13) Refer to Figure 6.3.3. Suppose a tax of $1 is imposed. In which market would the seller pay the 13) ______ highest portion of the tax? A) (a) B) (b) C) (c) D) (d) E) all markets equally 14) During the next hour John can choose one of the following three activities: playing basketball, 14) ______ watching television, or reading a book. The opportunity cost of reading a book A) is the value of playing basketball and the value of watching television. B) depends on how much the book cost when it was purchased. C) is the value of watching television if John prefers playing basketball to watching television. D) is the value of playing basketball if John prefers that to watching television. E) depends on how much John enjoys the book. 15) You are told that a 5 percent increase in the price of a good increases the quantity supplied by 1015) ______ percent after one month. Supply of this good is ________. This good is most likely produced using productive resources that are ________. A) elastic; plentiful or easily obtained B) elastic; unique or rare C) unit elastic; unique or rare D) inelastic; plentiful or easily obtained E) decreasing; unique or rare 16) What will happen to the equilibrium price and quantity of coffee if it is discovered to help 16) ______ prevent colds and, at the same time, Brazil and Vietnam emerge in the global market as massive producers of coffee? A) The equilibrium quantity will increase and the equilibrium price will remain unchanged. B) The equilibrium quantity will increase and the effect on the equilibrium price is uncertain. C) The equilibrium price will rise and the effect on the equilibrium quantity is uncertain. D) The equilibrium quantity will decrease and the equilibrium price will rise. E) The equilibrium price will fall and the effect on the equilibrium quantity is uncertain. Use the table below to answer the following questions. Table 3.4.1 Price Quantity Quantity (dollars per Demanded Supplied (units) unit) (units) 1 1,100 50 2 800 200 3 600 420 4 500 500 5 420 580 6 350 640 7 320 680 8 300 700 17) Refer to Table 3.4.1. At a price of $3 a unit 17) ______ A) there is a 180-unit surplus. B) the market is in equilibrium. C) there is a 180-unit shortage. D) there is a tendency for the price to rise. E) C and D. 18) Canada produces both lumber and wine. Canada exports lumber and imports wine. The rest of 18) ______ the world imports Canadian lumber and exports wine to Canada. If Canada did not trade with the rest of the world, then the equilibrium price of lumber would be ________ in Canada than the rest of the world, and the equilibrium price of wine would be ________ in Canada than the rest of the world. A) lower; higher B) the same or lower; the same or higher C) higher; lower D) lower; lower E) higher; higher 19) If a turnip is an inferior good then 19) ______ A) a small decrease in income decreases the quantity of turnips demanded at the current price by a large amount. B) an increase in income decreases the quantity demanded at the current price. C) turnips taste awful. D) an increase in income increases the quantity demanded at the current price. E) a large decrease in income decreases the quantity of turnips demanded at the current price by a small amount. Use the figure below to answer the following questions. Figure 3.5.1 20) Initially, the demand curve for good A is D in Figure 3.5.1. Suppose good B is a substitute for 20) ______ 2 good A. If the price of B falls A) the price of A will rise. B) there will be a surplus of good A at P2. C) the equilibrium quantity of good A will increase. D) the demand curve for good A will shift from D to2D . 3 E) all of the above are true except B. 21) When the efficient quantity is produced 21) ______ A) the quantity demanded equals the quantity supplied. B) marginal social benefit equals marginal social cost. C) resources are used in the activities in which they are most highly valued. D) the sum of consumer surplus and producer surplus is maximized. E) all of the above. 22) Trade is organized using the social institutions of 22) ______ A) firms. B) property rights. C) markets. D) money. E) all of the above. 23) Which of the following statements is normative? 23) ______ A) If income increases, sales of luxury goods fall. B) As e-book prices fall, people buy mo
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