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Midterm

01:220:102 Study Guide - Midterm Guide: French Wine, Midpoint Method, Economic EquilibriumExam


Department
Economic
Course Code
01:220:102
Professor
All
Study Guide
Midterm

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Page 1
Intro Micro MidTerm 1___________________ Date: Oct. 7, 2014_________
Student: ______________________
1.
When the United States and Mexico trade:
A)
the United States will be worse off because wages in Mexico are so low.
B)
Mexico will be worse off because the United States is a stronger economic power.
C)
both Mexico and the United States will be better off.
D)
both Mexico and the United States will be worse off.
2.
Abe starts exercising regularly, and after a few months he can do twice as much of
everything—in a single day Abe can now make 10 hamburgers or 8 milkshakes rather
than the 5 hamburgers and 4 milkshakes he made in the past. We now know that Abe's
production possibility frontier:
A)
has shifted right, but his opportunity costs of making milkshakes are unchanged.
B)
has shifted right, but his opportunity costs of making milkshakes have decreased.
C)
has not changed, but his opportunity costs of making milkshakes have increased.
D)
has not changed, but his opportunity costs of making milkshakes have decreased.
3.
In one hour, the United States can produce 25 tons of steel or 250 automobiles. In one
hour, Japan can produce 30 tons of steel or 275 automobiles. This information implies
that:
A)
Japan has a comparative advantage in the production of automobiles.
B)
the United States has an absolute advantage in the production of steel.
C)
Japan has a comparative advantage in the production of both goods.
D)
the United States has a comparative advantage in the production of automobiles.
4.
If the demand for tires goes down when the price of gas goes up, then tires and gas are:
A)
substitutes.
B)
complements.
C)
both expensive.
D)
both inexpensive.
5.
Which of the following always results in an increase in price and quantity?
A)
an increase in supply and a decrease in demand
B)
an increase in demand with no change in supply
C)
an increase in supply with no change in demand
D)
a decrease in demand and supply

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Page 2
6.
French fries and hamburgers are complements. Suppose the cost of the ingredients used
to make hamburgers rises, so that the price of a hamburger rises. Then the equilibrium
relative price of french fries ________ and the equilibrium quantity ________.
A)
rises; increases
B)
rises; decreases
C)
falls; increases
D)
falls; decreases
7.
Assume that corn is an input in the production of beef but not in the production of pork.
Further, beef and pork are substitutes. A decrease in the price of corn will:
A)
increase the supply of beef and increase the demand for pork.
B)
decrease the supply of beef and increase the demand for pork.
C)
decrease the supply of beef and decrease the demand for pork.
D)
increase the supply of beef and decrease the demand for pork.
8.
Which of the following would result in a movement along the demand curve?
A)
a change in preferences
B)
an increase in the number of buyers
C)
an increase in the number of suppliers
D)
a decrease in income
9.
A beneficial technological change enhances the production of cranberries. At the same
time, scientists discover the health benefits of cranberries. This will result in:
A)
an increase in both the equilibrium price and quantity in the cranberry market.
B)
an increase in the equilibrium quantity and an uncertain impact on the equilibrium
price of cranberries.
C)
a decrease in both the equilibrium price and quantity in the cranberry market.
D)
a decrease in the equilibrium price and an uncertain impact on the equilibrium
quantity of cranberries.
10.
Which situation would most likely cause a decrease in consumer surplus in the toy
market?
A)
The cost of shipping increases because of higher oil prices.
B)
Consumer income increases.
C)
There is an unexpected baby boom.
D)
A new assembly line design increases worker productivity.
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