Name: ________________________________ NetID: _____________________

ECON-SHU3 Microeconomics S2023 Set

ECON-SHU3 Microeconomics (Set)

Midterm 3
April 27, 2023
Part I (abridged instructions)

The exam contains two parts. This first part is multiple choice and is worth 35% of the total
score (14 questions).

Your responses must be written on the multiple choice response sheet to be graded, but we
will use this booklet as a backup if there is an error. If you use a pen and wish to change your
answer, please cross out the unintended response on the Akindi response form.

For your student number on the Akindi form, please use your N-number for your ID, omitting
the N. So N12345678 becomes 12345678. See below for an example.
Name: ________________________________ NetID: _____________________

ECON-SHU3 Microeconomics S2023 Set

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Figure 1

1) Refer to Figure 1 above, where F1 is the amount of food at A, E is the amount of food at D, 1) _______
and F2 is the amount of food at B. Which of the following moves represents the income effect?
A) The move from F1 to F2 B) A move from F1 to F2 and then to E
C) The move from E to F2 D) The move from F1 to E

2) If a competitive firm's marginal cost curve is U-shaped, then: 2) _______

A) its short-run supply curve is the upward-sloping portion of the marginal cost curve that
lies above the short-run average total cost curve
B) its short-run supply curve is the upward-sloping portion of the marginal cost curve
C) its short-run supply curve is the downward-sloping portion of the marginal cost curve
D) its short-run supply curve is U-shaped too
E) its short-run supply curve is the upward-sloping portion of the marginal cost curve that
lies above the short-run average variable cost curve

Figure 2

3) Refer to Figure 2 above. The figure depicts the individual demands of the only three 3) _______
consumers in the market for good X. After constructing the market demand curve, we
determine that quantity demanded at a price of $10.000 is:
A) 30.000 units. B) 17 units.
C) 15 units. D) none of the above
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ECON-SHU3 Microeconomics S2023 Set

4) The market supply function is P = 10 + Q and the market demand function is P = 70 - 2Q. 4) _______
What is the change in consumer surplus associated with a minimum floor price of $30?
A) -$55 B) -$100 C) Zero D) -$30

Table 1
Q P TR MR TC MC
0 $30 $0 --- $15 ---
1 $30 $30 $30 $25 $10
2 $30 $60 $30 $40 $15
3 $30 $90 $30 $60 $20
4 $30 $120 $30 $85 $25
5 $30 $150 $30 $115 $30
6 $30 $180 $30 $150 $35

5) Refer to Table 1. The maximum profit available to the firm is: 5) _______
A) $35. B) $180. C) $155. D) $20. E) $30.

6) You operate a custom embroidery business with a fixed amount of machinery (capital), but 6) _______
you have recently altered the number of workers that you employ per hour. As you
increased the number of employees hired per hour from four to five, total output increased
by 5 cars to 15 cars per hour. What is the marginal product of labor?
A) MP = 4 cars per worker
B) MP = 3 cars per worker
C) MP = 5 cars per worker
D) None of the above.

7) When the market price is held above the competitive level, the deadweight loss is composed 7) _______
of:
A) There is no deadweight loss if the government uses a price floor policy to increase the
price.
B) consumer surplus losses associated with units that used to be traded on the market but
are no longer exchanged.
C) producer and consumer surplus losses associated with units that used to be traded on
the market but are no longer exchanged.
D) producer surplus losses associated with units that used to be traded on the market but
are no longer exchanged.

8) To simplify our consumption models, suppose U.S. consumers only purchase food and all 8) _______
other goods where food is plotted along the horizontal axis of the indifference map. If the
U.S. Congress passes an economic stimulus package that pays $1500 to each person, how
does this affect the budget line for each consumer?
A) Makes the budget line flatter
B) Makes the budget line steeper
C) Parallel outward (rightward) shift
D) Parallel inward (leftward) shift
E) none of the above
Name: ________________________________ NetID: _____________________

ECON-SHU3 Microeconomics S2023 Set

9) Suppose that the marginal cost of an additional ton of steel produced by a profit-maximizing 9) _______
Chinese firm is the same whether the steel is set aside for domestic use or exported abroad.
If the price elasticity of demand for steel is greater abroad than it is in China, which of the
following will be correct?
A) The Chinese firm will sell more steel in China than they will sell abroad.
B) The Chinese firm will sell more steel abroad than they will sell in China.
C) The Chinese firm will sell steel at a lower price abroad than they will charge domestic
users.
D) The Chinese firm will sell steel at a higher price abroad than they will charge domestic
users.
E) Insufficient information exists to determine whether the price or quantity will be higher
or lower abroad.

10) Suppose your utility from consuming X and Y is expressed as u(X,Y) = ln(XY) where ln() is 10) ______
the natural logarithm operator. Given this information, which of the following statements
is NOT true?
A) The marginal utility of X does not depend on the quantity of Y consumed.
B) The marginal utility of X may be positive or negative (depending on the quantity of X
and Y consumed).
C) The marginal utility of Y does not depend on the quantity of X consumed.
D) All of these statements are not true.

11) Due to the recent increase in the price of natural gas, the quantity of coal demanded by 11) ______
electric power generation plants has increased. Based on this information, coal and natural
gas are:
A) independent goods. B) substitutes.
C) complements. D) none of the above

12) A produces coffee drinks under the production function q = 5KL where q is the number of 12) ______
cups generated per hour, K is the number of coffee machines (capital), and L is the number of
employees hired per hour (labor). What is the average product of labor?
A) AP = 5K B) AP = 5K/L C) AP = 5 D) AP = 5L

13) The principle of revealed preference would say that if Bing chooses market basket A over 13) ______
market basket B then:
A) if A is less expensive than B, then Bing must prefer B over A.
B) if A is less expensive than B, then Bing must prefer A over B.
C) if A is more expensive than B, then Bing must prefer B over A.
D) if A is more expensive than B, then Bing must prefer A over B.

14) The formula Es/(Es - Ed) is used to calculate the: 14) ______
A) increase in consumer surplus from a price ceiling.
B) deadweight loss from price support programs.
C) fraction of a specific tax that is passed through to consumers.
D) none of the above
Name: ________________________________ NetID: _____________________

ECON-SHU3 Microeconomics S2023 Set

1) C
2) E
3) B
4) C
5) A
6) D
7) C
8) C
9) C
10) B
11) B
12) A
13) D
14) C