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Econ 101 Practice Mideterm 1 PDF
Econ 101 Practice Mideterm 1 PDF
True/False.
Mark box A for True and box B for False. Each correct answer adds
2 points to your score. Each blank answer gives you 1 point.
Multiple Choice.
Mark the box corresponding to the best answer. Each correct answer
adds 5 points to your score. Each blank answer gives you 1 point.
14. Suppose the demand for food products is price inelastic. One
implication of this is that:
P ($) ,
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10 25 40 55 70
Pounds of Cod
17. The diagram below shows the market for miniature candy bars.
Fearing that the general public is becoming increasingly
unhealthy, the government decides to impose a production
quota of 80 miniature candy bars. A result of this policy
is to
supply
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Q (millions of gallons)
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Q* Q (Lbs of Shrimp)
22. ___ Consider the market for cigarettes illustrated below. Suppose
that the demand for cigarettes increases by 100 packs. What
is the price elasticity of supply between the original and
new equilibrium? (Note: use the midpoint formula from
class. )
P ($) Supply
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(a) -2
(b) 0.73
(c) 0.5
(d) 1
(e) -1
Page # 10
23. The graph below shows the supply and demand curves in the soft
drink market. If the government decides to impose a $4 per
unit tax, then how much of the resulting tax revenue is a
transfer from consumer surplus?
P ($)
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40 60 80 100 Q
(a) $0
(b) $80
(c) $120
(d) $160
(e) $200
Page # 11
24. The graph below shows the PPF of an economy that produces
tables and chairs. Which of the following values CANNOT be
the opportunity cost at point B?
tables
45 r - - -__ A
40 ,
,
,,
,
,
20 70 80 chairs
(a) 1 table/chair
(b) 3.5 chairs/table
(c) 1.5 tables/chair
(d) 2 chairs/table
(e) 3 tables/chair
Page # 12
25. The graph below shows the market for moon rocks. Suppose the
government imposes a price ceiling of $2. The resulting
deadweight loss in the market will be
P ($ )
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MOon Rocks
(a) $12
(b) $16
(c) $0
(d) $24
(e) $4
Quantity
Marginal 1 2 3 4 5 6 7
Utility
Pounds of 80 50 30 20 15 10 5
Grape
Pounds of 90 75 X 20 10 5 2
Cherries
(a) 36
(b) 28
(c) 2a
(d) 12
(e) None of the above
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500 I I 1 I I I Itt I
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o 100 200 ~o
Q
30. Torrey spends all of her money on shoes and candy. Her
marginal benefit schedule for pairs of shoes is given
below. Which of the following tells the meaning of this
marginal benefit schedule?
31. A small town in the Farm Belt can use its water to irrigate
cornfields, produce ethanol, or for residents to drink and
take showers. The PPF illustrating the tradeoff in the
town between the bushels of corn grown and the gallons of
ethanol produced is outward bowed. Suppose more water is
used to produce ethanol, moving the town from point A to
point B on its PPF. The opportunity cost of an additional
gallon of ethanol, moving from point A to point B is:
(Note: Graph not included)
32. When the price of sunburst squash is 39 cents per pound, people
buy 200 pounds. When the price instead is 59 cents per
pound, people spend $88.50 on sunburst squash. This
implies that between the prices of 39 and 59 cents per
pound:
Number Answer
1 False
2 False
3 True
4 Fal$e
5 True
6 True
7 False
8 False
9 False
10 True
11 D
12 C
13 B
14 E
15 A
16 D
17 B
18 D
19 C
20 E
21 B
22 D
23 D
24 E
25 C
26 E
27 A
28 A
29 D
30 C
31 A
32 A
33 A