mock midterm - fall

8/13/2019 Mock Midterm - Fall

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4. Suppose that when the price of corn is $2 per bushel, farmers can sell 10 million bushels. When the priceof corn is $3 per bushel, farmers can sell 8 million bushels. Which of the following statements is true?a. The demand for corn is income inelastic, and so an increase in the price of corn will

increase the income of corn farmers.b. The demand for corn is income elastic, and so an increase in the price of corn will increase

the income of corn farmers.

c. The demand for corn is price inelastic, and so an increase in the price of corn will increasethe income of corn farmers.

d. The demand for corn is price elastic, and so an increase in the price of corn will increasethe income of corn farmers.

Figure 2

5. Refer to Figure 2. At the market-clearing equilibrium, total producer surplus is represented by the areaa. F.b. F + G.c. D + E + F.d. D + E + F + G + H.

Figure 3


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6. Refer to Figure 3 on the previous page. The price buyers pay after the tax isa. P1.b. P2.c. P3.d. impossible to determine.

7. Orange juice and apple juice are substitutes. Bad weather that sharply reduced the orange harvest would

a. increase consumer surplus in the market for orange juice but decrease producer surplus inthe market for apple juice.

b. increase consumer surplus in the market for orange juice and increase producer surplus inthe market for apple juice.

c. decrease consumer surplus in the market for orange juice but increase producer surplus inthe market for apple juice.

d. decrease consumer surplus in the market for orange juice and decrease producer surplus inthe market for apple juice.

Figure 4

8. Refer to Figure 4. Consumer surplus in this market before trade isa. Ab. A + Bc. A + B + Dd. C

9. Refer to Figure 4Producer surplus in this market after trade isa. Ab. A + Bc. C + B + Dd. C


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Figure 5

10. Refer to Figure 5. With a price ceiling present in this market, when the supply curve for gasoline shiftsfrom S1 to S2a. the price will increase to P3.

b. a surplus will occur at the new market price of P2.c. the market price will stay at P1 due to the price ceiling.d. a shortage will occur at the price ceiling of P2.

11. Refer to Figure 5. Without the price ceiling in this market for gasoline, when the supply curve shiftsfrom S1 to S2 the price willa. increase to P3, but a shortage will still exist.b. increase to P3 and the market will clear.c. remain at P1 and a shortage will still exist.d. eventually move to P2 without government assistance.

Figure 6

12. Refer to Figure 6. As price falls from PAto PB, which demand curve is most elastic?a. D1b. D2c. D3d. All of the above are equally elastic.


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Figure 7

13. Refer to Figure 7. The elasticity of demand from point A to point B, using the midpoint method wouldbea. 0.4.b. 1.c. 1.5.d. 2.e. 2.5.

14. Refer to Figure 7. The elasticity of demand from point B to point C, using the midpoint method wouldbea. 0.5.b. 0.75.c. 1.0.d. 1.3.e. 1.5.

15. If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price would result in aa. 4.0 percent decrease in the quantity demanded.b. 10 percent decrease in the quantity demanded.c. 40 percent decrease in the quantity demanded.d. 400 percent decrease in the quantity demanded.e. Not enough information is provided to answer this question.

16. Because the demand for wheat tends to be inelastic, the development of a new, more productive hybridwheat would tend toa. increase the total revenue of wheat farmers.b. decrease the total revenue of wheat farmers.c. weaken the demand for wheat.

d. weaken the supply of wheat.


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Figure 8

17. Refer to Figure 8. In which market will the majority of a tax be paid by the buyer?a. market (a)b. market (b)c. market (c)d. All of the above are correct.

18. Refer to Figure 8. In which market will the majority of a tax be paid by the seller?a. market (a)b. market (b)c. market (c)d. All of the above are correct.

19. If a shortage exists in a market we know that the actual price isa. below equilibrium price and quantity demanded is greater than quantity supplied.b. above equilibrium price and quantity demanded is greater than quantity supplied.c. above equilibrium price and quantity supplied is greater than quantity demanded.d. below equilibrium price and quantity supplied is greater than quantity demanded.


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Figure 9

20. Refer to Figure 9. If the government imposes a binding price ceiling in this market at a price of $5.00,the result would be aa. shortage of 20 units.

b. shortage of 10 units.c. surplus of 10 units.d. surplus of 20 units.e. surplus of 30 units.

Figure 10

21. Refer to Figure 10. The section of the demand curve labeled B represents thea. elastic section of the demand curve.b. inelastic section of the demand curve.c. unit elastic section of the demand curve.d. perfectly elastic section of the demand curve.

22. A decrease in resource costs to firms in a market will result ina. a decrease in equilibrium price and an increase in equilibrium quantity.b. a decrease in equilibrium price and a decrease in equilibrium quantity.c. an increase in equilibrium price and no change in equilibrium quantity.d. an increase in equilibrium price and an increase in equilibrium quantity.


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Figure 12

26. Refer to Figure 12. Which point or points are inefficient?a. A, C

b. D, Cc. Cd. D

27. Refer to Figure 12. The economy CANNOT produce at which point or points?a. Ab. Cc. A, Cd. A, C, D,

Figure 13


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28. Refer to Figure 13. Which of the four graphs represents the market for peanut butter after a majorhurricane hits the peanut-growing south?a. Ab. Bc. Cd. D

29. Refer to Figure 13. Which of the four graphs represents the market for winter boots in June?a. Ab. Bc. Cd. D

30. Refer to Figure 13. Which of the four graphs represents the market for cars after new technology wasinstalled on assembly lines?a. Ab. Bc. C

d. D

mock midterm - fall

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