Economics 101 Name _____________________________

Fall 2012 TA Name __________________________

10/16/2012 Discussion Section #_________________
First Midterm Student ID # _______________________
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1
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Si3ned __________________________________
ULTIPLE CHOICE !UESTIONS 456 WORTH 5.5 POINTS EACH7
1& 4at is te 3eneral $ur$ose o' EconomicsA
a& To stud, te coices indi!iduals ma/e *en 'aced *it scarce resources&
.& To come u$ *it $rescri$tions a.out acie!in3 $ersonal *ealt&
c& To con!ince te 3eneral $u.lic tat mar/ets are te .est *a, to $er'orm transactions&
d& To con!ince te 3eneral $u.lic tat te 3o!ernment sould not inter!ene in te econom,&
2& Su$$ose in te cit, o' Madison onl, tree $eo$le are interested in $urcasin3 cat 'ood& Tat is- te
mar/et 'or cat 'ood in Madison as onl, tree consumers : 0i$$i- Tomm,- and Anni/a& 7elo* are
3i!en te indi!idual demand cur!es o' te tree consumers- *ere te )uantit, is in $ounds o' cat
'ood and te $rice is in dollars $er $ound& (Hint: think about this-you can answer this question
without finding the equations for the market demand curve.)
0i$$iB C D 2 : 20
Tomm,B C D 8 : (0
Anni/aB C D # : 20
4ic o' te 'ollo*in3 statements is true 'or te total )uantit, demanded o' cat 'ood in MadisonA
a& At a $rice o' E1 $er $ound- te total )uantit, demanded in te mar/et is se!en $ounds o' cat
'ood&
.& I' cat 'ood *as 'ree- te tree consumers *ould demand an in'inite amount o' cat 'ood&
c& At a $rice o' E2 $er $ound- onl, one $ound o' cat 'ood *ould .e demanded in Madison&
d& At a $rice o' E2 $er $ound- no.od, demands cat 'ood in Madison&
2
Fse te 'ollo*in3 in'ormation to ans*er te ne%t #&ree )uestions&
In te cit, o' Frei.ur3- te mar/et 'or .ic,cles is descri.ed ., te 'ollo*in3 demand and su$$l,
e)uationsB 0 D 2# : 2C and 0 D 1 G C&
(& 4at is te !alue o' $roducer sur$lus i' te mar/et o$erates in e)uili.riumA
a& 0roducer sur$lus is e)ual to E(2&
.& 0roducer sur$lus is e)ual to E68&
c& 0roducer sur$lus is e)ual to E"2&
d& 0roducer sur$lus is e)ual to E129&
8& No* su$$ose te 3o!ernment o' Frei.ur3 decides to im$ose an e%cise ta% o' E( $er .ic,cle on te
$roducers o' .ic,cles& 4at is te !alue o' dead*ei3t loss under tis ta%A
a& Te !alue o' dead*ei3t loss is E1&00&
.& Te !alue o' dead*ei3t loss is E1&#0&
c& Te !alue o' dead*ei3t loss is E22&00&
d& Te !alue o' dead*ei3t loss is E22&#0&
#& A3ain- su$$ose te 3o!ernment *ants to im$ose an e%cise ta% on .ic,cles& 4at sould te amount
o' te ta% .e i' te 3o!ernment *ants to a!e 6 .ic,cles sold on te mar/et a'ter te ta% is im$osedA
a& Te ta% sould .e E8 $er .ic,cle&
.& Te ta% sould .e E# $er .ic,cle&
c& Te ta% sould .e E6 $er .ic,cle&
d& Te ta% sould .e E" $er .ic,cle&
(
Fse te 3ra$s .elo* to ans*er te ne%t #"o )uestions& Te le't and 3ra$ re$resents te linear su$$l,
cur!e in a mar/et *ile te ri3t and 3ra$ re$resents te linear demand cur!e in te same mar/et&
6& Te e)uili.rium )uantit, and e)uili.rium $rice in tis mar/et is
a& H"&# units- E10#I
.& H"&# units- E8#I
c& H2&# units- E100I
d& H22& # units- E##I
"& 4en te a.o!e mar/et is in e)uili.rium te amount consumers s$end on te 3ood can .e calculated
as te num.er o' units $urcased times te $rice $er unit& In tis $ro.lem- consumer e%$enditure in
e)uili.rium is e)ual to
a& E"9"&#0
.& E(("&#0
c& E2#0&00
d& E12("&#0
8
Fse te in'ormation .elo* to ans*er te ne%t #&ree )uestions&
Su$$ose te mar/et 'or corn in Fr.ana can .e descri.ed as 'ollo*sB
Te demand 'or corn is linear and *en te $rice o' corn is E900- Jero units o' te 3ood are
demanded& 4en te $rice o' corn is E0- ten 900 units o' corn are demanded&
Te su$$l, o' corn is linear and *en te $rice o' corn is E100- Jero units o' te 3ood are
su$$lied& 4en te $rice o' corn is E1000- ten +00 units o' corn are su$$lied&
9& ;i!en te a.o!e in'ormation- te e)uili.rium )uantit, and e)uili.rium $rice in tis mar/et is
a& H8#0 units- E##0 $er unitI
.& H+00 units- E1000 $er unitI
c& H(#0 units- E8#0 $er unitI
d& H#00 units- E800 $er unitI
+& Su$$ose a $rice ceilin3 o' E800 $er unit is im$osed in tis mar/et ., te 3o!ernment o' Fr.ana& Tis
*ill result in
a& No e''ect on tis mar/et since te $rice ceilin3 to .e e''ecti!e must .e set i3er tan te
e)uili.rium $rice&
.& No e''ect on tis mar/et since te $rice ceilin3 to .e e''ecti!e must .e set lo*er tan te
e)uili.rium $rice&
c& A sur$lus o' 100 units o' corn in tis mar/et&
d& A sorta3e o' 100 units o' corn in tis mar/et&
10& Su$$ose te 3o!ernment o' Fr.ana sets a $rice 'loor o' E600 $er unit in te corn mar/et& Assume tat
te 3o!ernment o' Fr.ana *ill $urcase Hand storeI an amount o' corn su''icient to /ee$ te $rice o'
corn at tis 'loor $rice& ?oldin3 e!er,tin3 else constant and assumin3 tat stora3e costs are e)ual to
E10 $er unit o' corn stored- te im$lementation o' tis $rice 'loor in te mar/et 'or corn results in
total costs to te 3o!ernment o'
a& E19-000
.& E19-(00
c& E190-010
d& E19(-000
#
Fse te 'ollo*in3 in'ormation to ans*er te ne%t #&ree )uestions&
Mil!an is a small- closed econom, tat $roduces tires& Te domestic demand and domestic su$$l, o' tires
in Mil!an is 3i!en ., te 'ollo*in3 e)uations *ere 0 is te $rice $er unit and C is te )uantit, o' tiresB
Domestic DemandB 0 D 1000 : H#/1000IC
Domestic Su$$l,B 0 D 200 G H1/600IC
You are also told tat te *orld $rice 'or tires is E(00 $er tire&
11& Su$$ose Mil!an is considerin3 o$enin3 its tire mar/et to international trade& ?oldin3 e!er,tin3 else
constant- *ic o' te 'ollo*in3 statements is trueA
a& Mil!an *ill im$ort 90-000 tires and domestic $roducers in Mil!an *ill 'a!or tis $olic,
can3e&
.& Mil!an *ill im$ort 180-000 tires and domestic consumers in Mil!an *ill 'a!or tis $olic,
can3e&
c& Mil!an *ill e%$ort 100-000 tires and domestic consumers in Mil!an *ill 'a!or tis $olic,
can3e&
d& None o' te a.o!e ans*ers is correct&
12& Su$$ose Mil!an o$ens its tire mar/et to international trade *ile simultaneousl, te 3o!ernment o'
Mil!an im$lements a tari'' tat raises te $rice $er tire to E800& ?oldin3 e!er,tin3 else constant and
com$arin3 te situation o' te tire mar/et in Mil!an .ein3 o$en to trade !ersus tis same mar/et
a!in3 te descri.ed tari''- te can3e in domestic consumer sur$lus on tires *it te tari'' is
a& An increase o' E"2 million relati!e to te le!el o' consumer sur$lus on tires *en te Mil!an
mar/et *as o$en to trade .ut ad no tari''&
.& A decrease o' E"2 million relati!e to te le!el o' consumer sur$lus on tires *en te Mil!an
mar/et *as o$en to trade .ut ad no tari''&
c& A decrease o' E1( million relati!e to te le!el o' consumer sur$lus on tires *en te Mil!an
mar/et *as o$en to trade .ut ad no tari''&
d& An increase o' E1( million relati!e to te le!el o' consumer sur$lus on tires *en te Mil!an
mar/et *as o$en to trade .ut ad no tari''&
1(& Su$$ose tat Mil!an institutes te tari'' descri.ed in te $re!ious )uestion& 4ic o' te 'ollo*in3
statements is trueA
a& Te tari'' *ill de'initel, increase domestic $roducer sur$lus com$ared to domestic $roducer
sur$lus i' te mar/et is sim$l, o$en to trade and no tari'' is in $lace&
.& Te tari'' *ill li/el, increase domestic consumer sur$lus com$ared to i' tis mar/et is closed
to trade&
c& Te tari'' *ill decrease 3o!ernment re!enue com$ared to te re!enue te 3o!ernment
recei!es *en tis mar/et is o$en to trade and no tari'' is in $lace&
d& Te 3o!ernment *ill al*a,s $re'er a mar/et o$en to trade to one in *ic a tari'' as .een
im$osed&
6
Fse te 'ollo*in3 in'ormation to ans*er te ne%t $o.r )uestions&
Ale% and 7o. are *or/in3 to3eter on a $roKect- *ic in!ol!es te sol!in3 o' multi$le mat and $,sics
$ro.lems& It ta/es Ale% 10 minutes to sol!e a mat $ro.lem and 20 minutes to sol!e a $,sics $ro.lem-
*ile 7o. can sol!e a mat $ro.lem in 1# minutes and a $,sics $ro.lem in 20 minutes& Te .o,s a!e
onl, 8 ours le't .e'ore teir $roKect is due&
18& 4ic o' te 'ollo*in3 statements is trueA
a& Ale% as te a.solute ad!anta3e in doin3 mat $ro.lems&
.& Ale% as te a.solute ad!anta3e in doin3 $,sics $ro.lems&
c& 7o. as te a.solute ad!anta3e in doin3 mat $ro.lems&
d& 7o. as te a.solute ad!anta3e in doin3 $,sics $ro.lems&
1#& 4ic o' te 'ollo*in3 statements is trueA
a& Neiter .o, as te com$arati!e ad!anta3e in doin3 mat $ro.lems&
.& Neiter .o, as te com$arati!e ad!anta3e in doin3 $,sics $ro.lems&
c& 7o. as te com$arati!e ad!anta3e in doin3 mat $ro.lems&
d& 7o. as te com$arati!e ad!anta3e in doin3 $,sics $ro.lems&
16& Is it attaina.le 'or 7o. alone to sol!e + $,sics $ro.lems and ( mat $ro.lems 3i!en tat e as 'our
ours le't .e'ore te $roKect is dueA
a& Yes- it is attaina.le and it is also e''icient&
.& Yes- it is attaina.le- .ut it is not e''icient&
c& No- it is not attaina.le&
d& Tere is not enou3 in'ormation to ans*er tis )uestion&
1"& Assume Ale% and 7o. *or/ to3eter and com.ine teir $ro.lems& Furtermore- assume te, are
*or/in3 e''icientl,& I' com.ined Ale% and 7o. sol!e 29 mat $ro.lems- ten *at is te ma%imum
num.er o' $,sics $ro.lems te, can sol!e 3i!en teir time constraintA
a& Te, can sol!e 16 $,sics $ro.lems&
.& Te, can sol!e 12 $,sics $ro.lems&
c& Te, can sol!e + $,sics $ro.lems&
d& Te, can sol!e 6 $,sics $ro.lems&
"
Fse te 'ollo*in3 in'ormation to ans*er te ne%t #"o )uestions&
6onsider te mar/et 'or $ri!ate tutors 'or E6LN 101- *ere te )uantit, is measured in tutor ours and
te $rice in dollars $er our& You a!e te 'ollo*in3 in'ormation a.out tis mar/etB
i& Mar/et demand and su$$l, are linear&
ii& Mar/et demand is 3i!en ., 0 D +0 : C/10&
iii& Te current e)uili.rium mar/et $rice and )uantit, are E80 $er our and #00 ours res$ecti!el,&
i!& No tutor ours are su$$lied *en te $rice 'alls to E1# $er our&
(Hint: You might find it helpful to draw a graph depicting all the information you have been provided.)
19& Su$$ose te 3o!ernment decides to im$ose a $rice 'loor on te mar/et 'or $ri!ate tutors 'or E6LN
101& 4ic o' te 'ollo*in3 statements is trueA
a& I' te 3o!ernment im$oses a $rice 'loor o' E(#- tere *ould .e a sorta3e o' tutor ours in
te mar/et&
.& Tere *ould .e no e''ect on te e)uili.rium $rice and )uantit, i' te 3o!ernment im$oses a
$rice 'loor i3er tan E80&
c& I' te 3o!ernment im$oses a $rice 'loor o' E#0- tere *ould .e a sur$lus o' tutor ours in te
mar/et&
d& I' te 3o!ernment im$oses a $rice 'loor o' E#0- tere *ould .e a sorta3e o' tutor ours in
te mar/et&
1+& Su$$ose te 'irst midterm in E6LN 101 is a$$roacin3& As a result- more students need $ri!ate
tutors- so te demand 'or tutors increases ., (00 ours at an, 3i!en $rice& 4at are te ne*
e)uili.rium $rice and )uantit, in te mar/etA
a& Te ne* e)uili.rium $rice is E#0 $er our and te ne* e)uili.rium )uantit, is "00 ours&
.& Te ne* e)uili.rium $rice is E(0 $er our and te ne* e)uili.rium )uantit, is (00 ours&
c& Te ne* e)uili.rium $rice is E## $er our and te ne* e)uili.rium )uantit, is 900 ours&
d& Te ne* e)uili.rium $rice is E#0 $er our and te ne* e)uili.rium )uantit, is 800 ours&
9
20& 4ic o' te 'ollo*in3 statements is a normati!e statementA
a& In'lation and unem$lo,ment in 7raJil in 2002 are $ositi!el, correlated&
.& 7uildin3 additional irri3ation in'rastructure *ill increase te )uantit, o' cro$s ar!ested&
c& @ater tan tar3etin3 a "M economic 3ro*t- te 3o!ernment sould eradicate ine)ualit,
instead&
d& Te moon is made o' 4isconsin ceese&
21& 0eo$le *it i3 incomes o'ten .u, 'ull<$riced 3oods instead o' *aitin3 'or discounts and
$romotions& Lne reason te, do tis is .ecauseB
a& Te, are rational consumers&
.& Te time needed to searc 'or discounts re$resents a lar3e o$$ortunit, cost 'or tem&
c& Te, !alue mone, more tan $eo$le *it lo*er incomes&
d& Tere is no e%$lanation 'or suc .ea!ior&
22& Ar,a is considerin3 attendin3 a 'our<our lon3 concert *it a tic/et $rice o' E(#& Se estimates tat
te cost o' dri!in3 and $ar/in3 e)uals an additional E20& In order to attend te concert- Ar,a as to
ta/e 'i!e ours o'' er $art<time Ko.- *ere se earns E6 $er our& 4at is Ar,a5s o$$ortunit, cost o'
attendin3 te concertA
a& ?er o$$ortunit, cost is E26&
.& ?er o$$ortunit, cost is E##&
c& ?er o$$ortunit, cost is E61&
d& ?er o$$ortunit, cost is E9#&
2(& Su$$ose T,rion as a 'i%ed income to s$end on .eer and .read& 4en .ot .eer and .read cost E(
eac- T,rion .u,s 'i!e .eers& 4en te $rice o' .eer rises to E# and te $rice o' .read rises to E20-
T,rion still .u,s 'i!e .eers& You also /no* tat T,rion5s demand 'or .eer is do*n*ard slo$in3&
?oldin3 e!er,tin3 else constant- *ic o' te 'ollo*in3 statements is trueA
a& For T,rion- .eer and .read are su.stitutes&
.& For T,rion- .eer and .read are com$lements&
c& For T,rion- .eer and .read are normal 3oods&
d& For T,rion- .read and .eer are in'erior 3oods&
+
28& 6onsider a mar/et tat is initiall, in e)uili.rium and te e)uili.rium $rice and )uantit, are 0 and C
res$ecti!el,& Ten- te 3o!ernment decides to im$ose a $rice ceilin3 at a $rice o' 0N tat is less tan
0& 4ic o' te 'ollo*in3 statements is correctA
a& A'ter te $rice ceilin3 is im$osed- te )uantit, demanded is less tan te )uantit, su$$lied on
te mar/et&
.& A'ter te $rice ceilin3 is im$osed- te )uantit, actuall, sold in te mar/et is lo*er tan it *as
.e'ore te $rice ceilin3 *as im$osed&
c& 0roducer sur$lus in te mar/et increased a'ter te $rice ceilin3 *as im$osed&
d& Since 0N is less tan 0- te $rice ceilin3 is e''ecti!e and tere'ore- tere is no dead*ei3t loss
in te mar/et&
2#& 6onsider te mar/et 'or i0ones- *ic is initiall, in e)uili.rium& Ten- te $rice o' te ri!al cell
$one Samsun3 ;ala%, dro$s si3ni'icantl,& At te same time- im$ro!ements in tecnolo3, allo*
A$$le to $roduce i0ones at a lo*er cost& ?oldin3 e!er,tin3 else constant- o* do te ne*
e)uili.rium $rice and )uantit, in te mar/et 'or i0ones com$are to te initial e)uili.rium $rice and
)uantit, in tis mar/etA
a& Te ne* e)uili.rium $rice and )uantit, are .ot lo*er tan te, *ere .e'ore te can3es&
.& Te ne* e)uili.rium $rice and )uantit, are .ot i3er tan te, *ere .e'ore te can3es&
c& Te ne* e)uili.rium $rice is lo*er- .ut te e''ect on )uantit, cannot .e determined&
d& Te ne* e)uili.rium )uantit, is lo*er- .ut te e''ect on $rice cannot .e determined&
10
26& You are as/ed to anal,Je t*o sets o' data& Te 'irst dataset contains in'ormation on te annual
salaries o' a random sam$le o' *or/ers in te F&S& in 2011& Te second dataset contains in'ormation
on te num.er o' Economics maKors in F4 'or eac semester in te $eriod 1+9# : 2010& 4ic
statement .est descri.es te t*o datasetsA
a& Te 'irst dataset contains cross<sectional data and te data in te second dataset cannot .e
caracteriJed&
.& 7ot datasets contain cross<sectional data&
c& 7ot datasets contain time<series data&
d& Te 'irst dataset contains cross<sectional data and te second dataset contains time<series
data&
2"& You are a student in E6LN 101 and eac o' te tree e%ams ,ou a!e to ta/e is *ort a ma%imum o'
100 $oints& Su$$ose tat ,ou score 80 $oints on te 'irst e%am& Te $ro'essor tells ,ou tat in order to
3et te 3rade ,ou desire- ,ou need to score 2#M more on te second e%am tan ,ou did on te 'irst
and 80M more on te tird e%am tan ,ou did on te second& 4at score do ,ou need to 3et on te
tird e%am in order to earn ,our desired 3radeA
a& You need to 3et ## $oints on te tird e%am&
.& You need to 3et "0 $oints on te tird e%am&
c& You need to 3et "6 $oints on te tird e%am&
d& You need to 3et 96 $oints on te tird e%am&
29& 4en Tom5s income rises- is demand cur!e 'or a$$les si'ts to te le't& 4ic o' te 'ollo*in3
statements is trueA
a& For Tom a$$les are a normal 3ood&
.& For Tom a$$les are an in'erior 3ood&
c& For Tom a$$les are com$lements&
d& For Tom a$$les are su.stitutes&
11
2+& Assume 6anada and te F&S& .ot $roduce ma$le s,ru$ and lo3s and tat .ot countries a!e linear
00Fs 'or tese t*o 3oods& Furtermore- it ta/es 6anada ( *or/ers to $roduce 1 $ound o' ma$le s,ru$
and + *or/ers to $roduce 1 ton o' lo3s& It ta/es te F&S& 10 *or/ers to $roduce 2 $ounds o' ma$le
s,ru$ and 8 *or/ers to $roduce 2 tons o' lo3s& I' te t*o countries *ere to trade- *at is te ran3e o'
acce$ta.le tradin3 $rices 'or 1 ton o' lo3s in terms o' ma$le s,ru$A
a& Te acce$ta.le ran3e is .et*een 2/+ $ounds and 0&6 $ounds o' ma$le s,ru$&
.& Tere is no acce$ta.le ran3e : te countries *ill ne!er trade *it eac oter&
c& Te acce$ta.le ran3e is .et*een 1/( $ounds and 2&# $ounds o' ma$le s,ru$&
d& Te acce$ta.le ran3e is .et*een 0&8 $ounds and ( $ounds o' ma$le s,ru$&
(0& In te cit, o' Tro,an- $eo$le *or/ as eiter .uilders or $ainters& Su$$ose ,ou are told tat te 00F o'
Tro,an is linear& 4ic o' te 'ollo*in3 conclusions can ,ou dra* 'rom tis 'actA
a& Tat al' o' te $o$ulation o' Tro,an *or/s as .uilders and te oter al' *or/s as $ainters&
.& Tat te o$$ortunit, cost o' .uildin3 in terms o' $aintin3 is i3er tan te o$$ortunit, cost
o' $aintin3 in terms o' .uildin3&
c& Tat te o$$ortunit, cost o' mo!in3 $eo$le 'rom .uildin3 to $aintin3 is te same no matter
*ere ,ou are on te 00F o' Tro,an&
d& Tat Tro,an 'aces no tradeo'' .et*een .uildin3 and $aintin3&
12
ANS4E@S
1& A
2& 6
(& A
8& 7
#& 6
6& D
"& D
9& 6
+& D
10& D
11& D
12& 6
1(& A
18& A
1#& D
16& 7
1"& 6
19& 6
1+& A
20& 6
21& 7
22& D
2(& A
28& 7
2#& 6
26& D
2"& 7
29& 7
2+& D
(0& 6
1(