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econ1000veMT2012.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 E 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) Suppose a hurricane causes extensive devastation, destroying houses, roads, schools and 1) _______ factories. What would be the effect of this hurricane on a production possibilities frontier consisting of consumption goods and capital goods? A) There would be a movement from the existing production possibilities frontier inwards towards a point with unused or misallocated resources. B) It would shift inward at all points. C) There would be a movement along the existing production possibilities frontier towards a more capital-intensive point. D) There would be a movement along the existing production possibilities frontier towards a less capital-intensive point. E) It would shift outward at all points. Use the table3.4.1 below to answer the following question. Price Quantity (dollars per Demanded Quantity 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 2) Refer to Table 3.4.1. At a price of $3 a unit 2) _______ 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. 3) The ________ principle is the proposition that people should pay taxes equal to the benefits they 3) _______ receive from the services provided by government. The ________ principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax. A) equality; fairness B) ability-to-pay; benefits C) benefits; ability-to-pay D) services; burden E) efficient; inefficient 4) Which one of the following events shifts the demand curve for grape jelly to the right? 4) _______ A) a decrease in the price of strawberry preserves, a substitute for grape jelly B) an increase in income if grape jelly is a normal good C) a decrease in the price of grape jelly D) an increase in the price of peanut butter, a complement of grape jelly E) a decrease in the population 5) On a graph of a production possibilities frontier, opportunity cost is represented by 5) _______ A) the slope of the production possibilities frontier. B) the x-axis intercept. C) a ray through the origin. D) a point on the vertical axis. E) a point on the horizontal axis. 6) At West, recognized as the "jewel in Vancouver's culinary crown", reservations are essential. At 6) _______ 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) a command system; a combination of a command system and first-come, first-served; first-come, first-served B) market price; market price and force; force C) personal characteristics; personal characteristics; first-come, first-served D) first-come, first-served; first-come, first-served; first-come, first-served E) personal characteristics; personal characteristics and first-come, first-served; first-come, first-served Use the figure5.3.2. below to answer the following question. 7) Refer to Figure 5.3.2. If the level of output is 100 units, the deadweight loss is area 7) _______ A) BCF. B) DCE. C) HCG. D) ACG. E) ACH. 8) You are told that a 5 percent increase in the price of a good increases the quantity supplied by 10 8) _______ percent after one month. Supply of this good is ________. This good is most likely produced using productive resources that are ________. A) unit elastic; unique or rare B) elastic; unique or rare C) inelastic; plentiful or easily obtained D) decreasing; unique or rare E) elastic; plentiful or easily obtained 9) When a market price allocates a scarce resource 9) _______ A) only those who are willing and able to pay get the resource. B) willingness-to-pay is not an issue. C) only those who show interest can use the resource. D) everyone in the economy can use the resource. E) ability to pay for the resource is less important than willingness-to-pay. 10) A country opens up to trade and becomes an importer of some good. Consumer surplus 10) ______ ________, producer surplus ________, and total surplus ________. A) increases; decreases; increases B) increases; decreases; decreases C) decreases; decreases; decreases D) decreases; increases; increases E) increases; increases; increases 11) Suppose the price of a football is $20.00 and the price of a basketball is $10.00. The ________ of a 11) ______ football is ________. A) relative price; 2 basketballs per football B) opportunity cost; $15.00 C) relative price; $10 D) relative price; 1/2 basketball per football E) opportunity cost; $10.00 12) A fall in the price of a good from $10.50 to $9.50 results in an increase in the quantity demanded 12) ______ from 18,800 to 21,200 units. The price elasticity of demand is A) 1.25. B) 2.4. C) 0.8. D) 8.0. E) 1.2. 13) Choose the statement or statements that are correct. 13) ______ 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 only. C) II only. D) I and III. E) I, II, and III. 14) A price elasticity of demand of 2 means that a 10 percent increase in price will result in a 14) ______ A) 5 percent decrease in quantity demanded. B) 20 percent increase in quantity demanded. C) 2 percent decrease in quantity demanded. D) 20 percent decrease in quantity demanded. E) 2 percent increase in quantity demanded. 15) When the efficient quantity is produced 15) ______ A) the sum of consumer surplus and producer surplus is maximized. B) the quantity demanded equals the quantity supplied. C) marginal social benefit equals marginal social cost. D) resources are used in the activities in which they are most highly valued. E) all of the above. Use the figure 3.2.2 below to answer the following question. 16) Which one of the following would result in the demand curve shifting from D to D in Figure 16) ______ 1 2 3.2.2? A) a fall in the price of pizza B) a rise in the price of Coke, a complement of pizza C) an increase in the supply of pizza D) a rise in the price of hamburgers, a substitute for pizza E) a rise in the price of pizza Use the figure below to answer the following question. 17) In Figure 2.2.1, when 2,000 bicycles are produced each month 17) ______ A) the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. B) more bicycles must be produced to reach the efficient level of output. C) fewer bicycles must be produced to reach the efficient level of output. D) the economy is efficient at this level of production of bicycles. E) both A and B. 18) A subsidy 18) ______ A) raises marginal social benefit above marginal social cost. B) raises marginal social cost above marginal social benefit. C) results in efficient production. D) makes world prices higher than domestic prices. E) makes marginal social cost equal marginal social benefit. Use the figure 2.1.5 below to answer the following question. 19) The graph in Figure 2.1.5 shows Maryanne's PPF for food and sunscreen. Maryanne faces 19) ______ ________ opportunity cost of food and ________ opportunity of sunscreen, which can be seen by the shape of the PPF. A) a decreasing; an increasing B) an increasing; a decreasing C) an increasing; an increasing D) a decreasing; a decreasing E) a constant; a constant Use the figure 4.1.3 below to answer the following question. 20) Given the relationship shown in Figure 4.1.3 between total revenue from the sale of a good and 20) ______ the quantity of the good sold, then A) demand for this good is perfectly elastic. B) the price elasticity of demand is zero. C) this is an inferior good. D) the price elasticity of demand is 1. E) this is a normal good. 21) If a turnip is an inferior good then 21) ______ A) a large decrease in income decreases the quantity of turnips demanded at the current price by a small amount. B) an increase in income decreases the quantity demanded at the current price. C) turnips taste awful. D) a small decrease in income decreases the quantity of turnips demanded at the current price by a large amount. E) an increase in income increases the quantity demanded at the current price. 22) Governments tend to tax items with inelastic demand because 22) ______ A) buyers pay most of the tax in these cases. B) governments wish to avoid big rises in after-tax prices. C) these goods yield the most tax revenues. D) sellers pay most of the tax in these cases. E) none of the above. Use the figure 6.2.1 below to answer the following question. 23) Refer to Figure 6.2.1. If the minimum wage is set at $2 per hour, what is the level of 23) ______ unemployment in millions of hours? A) 20 B) 10 C) 50 D) 0 E) 40 24) Complete the following sentence. A price floor set below the equilibrium price results in 24) ______ A) an increase in supply. B) a decrease in demand. C) a shortage.
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