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Midterm

CAS EC 101 Midterm: EC101DDEEMidterm 21NoA 2017ExamPremium

5 pages54 viewsFall 2018

Department
Economics
Course Code
CAS EC 101
Professor
All
Study Guide
Midterm

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EC101 DD/EE Midterm 2 November 7, 2017 Version 01
Name (last, first): |__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
Student ID: |U|__|__|__|__|__|__|__|__| Discussion Section: |__|__|
Signature____________________________________
p. 1 v. 01
EC101 DD/EE F17 Midterm 2
INSTRUCTIONS (***Read Carefully***):
ON YOUR QUESTION BOOKLET:
Fill in your name, Student ID, Discussion Section Number (e.g. D5) and your signature.
ON YOUR SCANTRON:
Enter the Course Number (EC101 DD or EE) and date on the lines at the top-left. In the boxes below,
enter your Student ID, your DISCUSSION SECTION number (D1 - D9, E0 - E9), your NAME and
your EXAM VERSION. Be sure that you “bubble” all entries (fill in the small circles) . I will subtract
up to 5 points as punishment for errors in these data!
DURING THE EXAM:
Students who wish to leave the room for any reason must leave the Question Booklet and Scantron
sheet with the instructor or teaching fellow. Students in EC101DD MUST turn in both the Question
Booklet and the Scantron sheet at the end of the exam and exit from the front of the room. Students in
EC101EE should keep their Question Booklet and turn in only their Scantrons. All students must
show their BU Student IDs as they leave the exam room.
MULTIPLE-CHOICE QUESTIONS:
Choose the BEST answer for each of the multiple-choice questions. (Only ONE answer is allowed,
even when more than one of the answers are technically correct.) On the Question Booklet, CIRCLE
the letter that you chose, so that you have a record of your answers. Then BUBBLE it on the
Scantron.
NEVER CROSS OUT AN ANSWER ON YOUR SCANTRON. Use a PENCIL to bubble your
answers, and keep a good ERASER with you. If you bubble the wrong answer on the Scantron, erase
your mark COMPLETELY, and then bubble the correct answer.
YOU MAY NOT USE A CALCULATOR, CELL PHONE OR LAPTOP.
However, INTERNATIONAL STUDENTS may use electronic translators or dictionaries.
You have 60 minutes to complete the exam. Good luck!
Hint: the area of a triangle = base x height / 2
DO NOT OPEN THIS BOOKLET OR TURN IT OVER
[until told to do so]
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p. 2 v. 01
1. Private negotiation is most likely to solve problems
created by pollution when there are
a. high taxes on each unit of pollution.
b. a small number of people who produce the
pollution and who suffer from it.
c. laws that prohibit the pollution.
d. many people who suffer from the pollution.
Scenario TXE. The graph below shows supply and
demand in a perfectly competitive market for widgets.
Suppose that the government decides to impose a $3
excise tax on widgets.
2. See Figure TXE. The price that buyers pay after the
tax is imposed is
a. $5.
b. $8.
c. $7.
d. $6.
3. See Figure TXE. The part of the tax paid by buyers is
a. $1 per unit.
b. $1.50 per unit.
c. $2 per unit.
d. The answer depends on who sends the tax to
the government.
4. See Figure TXE. How much tax revenue is generated
in the market for widgets?
a. $250
b. $120
c. $150
d. The answer depends on whether the buyer or
the seller sends the tax to the government.
5. Which of the following outcomes is unlikely in an
unregulated free-market economy?
a. a market in human kidneys
b. many poor people
c. shortages of many goods
d. prostitution
6. Assume the US government passes a law making it
much easier for US firms to export beef. Which is
most likely to occur?
a. A large deadweight loss will be created.
b. The surplus of US beef producers will fall.
c. US beef producers will hire more workers.
d. American consumers will face lower prices for
food containing beef.
7. Which of the following is the best example of a
positive externality?
a. cigarettes with a low cost of production
b. a student who asks good questions in class
c. a box of chocolates of higher than average quality
d. a restaurant that serves excellent food
8. An international student spends $80 for a ticket to
game six of the baseball World Series. But after an
hour, she decides that baseball is extremely boring.
She is tired of watching the players spitting and
scratching their bodies. If she is economically
rational, she should
a. stay there, because $80 was an avoidable cost.
b. stay there, because she will lose consumer surplus
if she leaves.
c. stay there, because the $80 is a sunk cost.
d. leave and do something more fun.
9. Since air pollution creates a negative externality,
a. social welfare is maximized when all air pollution
is eliminated.
b. the free-market result maximizes social welfare.
c. governments should encourage private firms to
consider only private costs.
d. some, but not all, of the air pollution should be
eliminated.
10. Social surplus is equal to
a. consumer surplus minus producer surplus.
b. value to buyers minus profit to sellers.
c. value to buyers minus cost to sellers.
d. consumer surplus times producer surplus.
11. A Texas rancher owns a business that sells beef in a
perfectly competitive market, and he also eats beef
himself. Beef is a normal good. If the market price of
beef rises, then
a. he will eat the same amount of beef, because he
gets beef for free.
b. he will eat less beef, because the demand curve is
downward sloping.
c. he will eat more beef, because beef is a normal
good.
d. the answer will depend on the strengths of the
income and substitution effects.
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