summer+a+2012+midterm+1

8/11/2019 SUMMER+A+2012+Midterm+1

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Professor: M. Rush

ECO 2023

SUMMER A 2012

MIDTERM 1

Read all instructions on this pageThis test is governed by UFs academic honesty code. It is intended to have 33

multiple choice questions. Please check to be sure your copy has all 33. Choose

the best answer for each question.

The next is important: Unless you are specifically told otherwise, on this test do

notassume that demand or supply is either perfectly elastic or perfectly inelastic.

On the bubble sheet, please enter:

1. Your name and initials

2. Your UF ID number3. Form code: A

4. Sign your name on the bubble sheet.

Check that the form code and UF ID number you bubbled-in are correct now. Also

check to be sure your name is correctdo it now. I have heard a rumor that the ability

to correctly record these had been mastered by a few students at FSU as well as a couple

of accounting and journalism students. While I have sincere doubts, nonetheless I will

investigate these rumors but in the meanwhile,

CHECK YOUR FORM CODE AND UF ID NUMBER. IF YOU GET EITHER OF

THESE WRONG, YOUR TEST MIGHT NOT BE GRADED AND IF IT IS GRADED,

YOU WILL LOSE 6 POINTS (which equals about 2 questions)!

TURN OFF ALL CELL PHONES AND OTHER

COMMUNICATION DEVICES

Youmay notuse a cell phone, a Blackberry, or any other sort of device that allows for

communication as your calculator.

I have become increasingly concerned that some students are at a real disadvantage

because they are unwilling to ask questions during the exam while others ask a lot of

questions. Hence, to level the playing field, I have decided to eliminate allquestions

during the test. I dont like this policy, but it seems the fairest policy.

Do not ask questions of me or the TAs; in the interest of fairness I

have instructed them not to answer any questions during the exam.You will have one hour (60 minutes) to complete the exam andbubble in all your

answers. When the TAs say that time is up, you musthand in your exam. We will not

give extra time to finish bubbling in the answers, so be sure you are done when the 60


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E C O 2 0 2 3 M I D T E R M 1 S U M M E R A 2 0 1 2

2

minutes are up. Of course, you may hand in your test at any time before the 60 minutes

are up.

An answer key will be posted on the class web page later this

evening at around 9:30 PM.

The test scores will be on class web page within a few days.Once you see the answer key, you might have a question about why one answer

is right and another is wrong. For these questions, email me at

[email protected] Do NOT email the grader about these questions!

After the scores are posted, if you think your posted score is incorrect, then email

the grader at [email protected] If you email me about your test

score, I will not forward the email nor respond to youyouMUSTemail the

grader. You have one week after the curved score is posted to request a grade

check. After a week, the score will not be changed. If the web reportswhat you

bubbled in for each question and you ask the grader to check an answer because

you believe you bubbled in something other than what is reported and thereported answer on the web is correct, you will lose 1 additional question.


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1) When the percentage change in the quantity demanded is less than the

percentage change in the price, then

A) demand is elastic.

B) demand is unit elastic.

C) demand is inelastic.

D) the good is a normal good.E) the good is an inferior good.

2) If the United States can increase its production of automobiles without

decreasing its production of any other good and if itsPPFhas not shifted,

then

A) initially the United States must have been producing at a point within its PPF.

B) initially the United States must have been producing at a point on its PPF.

C) the what question has been solved in the United States but the opportunity

cost of automobiles is quite high.

D) None of the above are correct because increasing the production of one good

without decreasing the production of another good is impossible unless thePPFshifts.

3) Computers are a normal good and peoples incomes increase. At the same

time, the technology used to produce computers advances. The

equilibrium price of a computer ____ and the quantity ____.

A) rises; increases

B) does not change; increases

C) falls; might increase, decrease, or not change

D) might rise, fall or not change; increases

E) None of the above answers are correct.

4) Computers are a normal good and peoples incomes increase. At the same

time, the technology used to produce computers advances. The

magnitude of the change in demand exceeds the magnitude of the change

in supply. The equilibrium price of a computer ____ and the quantity

____.

A) rises; increases


C) falls; might increase, decrease, or not change

D) might rise, fall or not change; increases



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5) After you graduate, you have three job offers. You think all three are equally

desirable except for the differences in pay. You accept a position working at

the Bureau of Labor Statistics for $49,000.00 a year. The two other offers you

received were working for Walmart for $36,000 and working for Ernst and

Young consulting for $46,000. What is the opportunity cost of accepting the

position at the Bureau of Labor Statistics?A) The $49,000 you are paid for working at the Bureau of Labor Statistics.

B) The $46,000 you would have been paid working for Ernst and Young.

C) The $36,000 you would have been paid working for Walmart.

D) The $46,000 you would have been paid working for Ernst and Young plus the

$36,000 you would have been paid working for Walmart.


6) All points on a production possibilities frontier,PPF, are

A) production efficient but not necessarily allocatively efficient.

B) unattainable.

C) inefficient.

D) allocatively efficient but not necessarily production efficient.

E) both allocatively and production efficient.

Possibility Robots Pizza

A 0 40

B 1 39

C 2 37

D 3 34

E 4 30

F 5 20G 6 0

7) The table above shows a nations production possibilities frontier. If the

nation chooses to move from point Eto point F, then

A) the opportunity cost of a robot is 30 pizzas.

B) the opportunity cost of a robot is 25 pizzas

C) the opportunity cost of a robot is 20 pizzas

D) the opportunity cost of a pizza is 1/9thof a robot

E) None of the above answers is correct.

8) Which of the following increases the equilibrium price of a used car and

also decreases the equilibrium quantity purchased?i. A fall in income if used cars are a normal good.

ii. An increase in the wage rate paid to used car salespeople.

A) i only.

B) ii only.

C) Both i and ii.D) Neither of the above statements are correct because the question describes a violation

of the law of supply.


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9) If the marginal social benefit of another cup of coffee exceeds the

marginal social cost of another cup of coffee, then societys totalsurplus

_____ if another cup of coffee is produced.

A) decreases

B) does not change

C) increases

D) might increase, decrease, or not change

E) None of the above answers are correct because more information is needed to

determine if the total surplus increases or does not change but it definitely will

not decrease.

10) Consumers consider that tacos and pizzas are substitutes. If the price of

a taco rises, then the equilibrium price of pizza ____ and the quantity of

pizza ____.

A) rises; increases


C) falls; increasesD) rises; decreases

E) falls; decreases

11) Any production point outside the production possibilities frontier

A) is not attainable.

B) means there are unused resources at the point.

C) is attainable only if equilibrium prices fall.

D) is attainable only if equilibrium prices rise.

12) Suppose the quantity demanded is 23 when the price is $9.00. If the price

rises to $11.00, the quantity demanded falls to 17. The price elasticity ofdemand is

A) 3.0.

B) 0.33.

C) 1.50.

D) 0.67


13) Jake is willing to pay a maximum of $18 for the second pizza he buys

from Pizza Hut. The price he pays is $12. Pizza Hut is willing to produce

the pizza if it receives a price of at least $8. Jakes consumer surplus for

this pizza isA) $0.

B) $2.

C) $4.

D) $6.

E) $10.


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14) Most of the worlds hard drives (used in computers) are assembled in

Thailand. Last year there was significant flooding in Thailand. This

flooding caused the price of hard drives to ____ and the quantity to ____.

A) rise; increase

B) rise; decrease

C) fall; increase

D) not change; decrease

E) fall; decrease

15) The above figure illustrates the marginal social benefit and marginal

social cost for chicken sandwiches. When the market is at its

equilibrium, the total consumer surplus is equal to

A) $2.

B) $6.C) $4.

D) $12.

E) $24.

16) The above figure illustrates the marginal social benefit and marginal

social cost for chicken sandwiches. If the quantity of chicken sandwiches

is 3, then the deadweight loss is equal to

A) $2.

B) $6.

C) $3.

D) It is not possible to calculate the answer because more information is needed.E) Though it is possible to calculate the answer, none of the answers given are

correct.


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17) Which of the following statements are correct?

i. A price ceiling set below the equilibrium price creates a shortage.

ii. A price ceiling set above the equilibrium price creates a surplus

A) i only

B) ii only

C) Both i and iiD) Neither i nor ii

18) In the market for books, the supply curve of books shifts leftward if any

of the following occurs EXCEPT

A) an increase in the future expected price of a book.

B) a decrease in the number of book publishers.

C) a decrease in the price of a book.

D) an increase in the price of paper.

E) None of the above are correct because the supply curve shifts leftward for all

the answers given.

19) Adam Smiths book, Wealth of Nations, written in 1776, describes the

markets invisible hand representing the

A) King of Englands control over the colonies.

B) control all governments have in organizing the market.

C) efficiency the market achieves without the interference of governments.

D) inefficiency of markets when governments do not organize them.

20) The expected future price of oil rises. As a result, the current price of oil

A) definitely rises.

B) definitely falls.

C) definitely does not change.D) might rise or might not change.

E) More information is needed to determine whether the price rises, falls,

or does not change.

21) The price of jet fuel rises. The equilibrium price of airline trips ____ and

the equilibrium quantity of trips ____.

A) rises; increases

B) rises; decreases

C) falls; increases

D) falls; decreases


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Price (dollars

per disc) Quantity

demanded

Price

(dollars

per disc)

Quantity

supplied

4 36,000 4 4,000

8 32,000 8 8,000

12 28,000 12 12,000

16 24,000 16 16,000

20 20,000 20 20,000

24 16,000 36 24,000

22) The above table gives the demand and supply schedules for blu-ray discs.

If the price of a blu-ray disc is $8, there is a ____ and the price of a disc

will ____.

A) shortage; rise

B) shortage; fall

C) surplus; riseD) surplus; fall

23) Natural gas is used to heat homes and the winter is much colder than

normal. Simultaneously there is a technological advance in producing

natural gas. The equilibrium price of natural gas ____ and the

equilibrium quantity ____.

A) might rise, fall, or not change; does not change

B) falls; increases

C) rises; increases

D) might rise, fall, or not change; might increase, decrease, or not change

E) might rise, fall, or not change; increases

24) A price floor set above the equilibrium price ____ a surplus of the good

and ____ a deadweight loss.

A) creates; creates

B) creates; does not create

C) does not create; creates

D) does not create; does not create

25) Suppose the marginal cost of producing a good falls. Then the efficient

quantity to produce of that product

A) increases.B) does not change.

C) decreases.

D) could increase, stay the same, or decrease.


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26) Resource use is allocatively efficient when

A) marginal social benefit exceeds marginal social cost.

B) marginal social cost is decreasing.

C) marginal social benefit equals marginal social cost.

D) marginal social benefit is increasing.

E) marginal social benefit exceeds marginal social cost by as much as possible.27) When China builds a dam using few machines and a great deal of labor,

it is most directly answering the ____ question.

A) what

B) how

C) where

D) for whom

28) The above figure shows the market for pizza. Which panel shows the

effect of an increase in income if pizza is a normal good?

A) Figure A.

B) Figure B.

C) Figure C.

D) Figure D


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29) In the market for purses, the most anyone is willing to pay for another

purse is $70. Currently the price of a purse is $50, and the cost of

producing another purse is $40. Hence the marginal social benefit of

another purse is

A) $70.

B) $50.

C) $40.

D) $20.

E) An amount not given in the answers above

30) People do more driving in the summer as many families go on vacation.

As a result, in the summer the equilibrium price of gasoline ____ and the

equilibrium quantity ____.

A) rises; increases

B) rises; decreases

C) falls; increases

D) falls; decreases

31) In the 1990s, many producers of frozen yogurt closed. Hence the supply

curve of frozen yogurt ____ and the demand curve for frozen yogurt ____.

A) shifted leftward; shifted rightward

B) shifted rightward; shifted leftward

C) did not shift; shifted leftward

D) shifted leftward; shifted leftward

E) shifted leftward; did not shift

32) The price of a rutabaga rises by 10 percent. The price elasticity of

demand for rutabagas is 2.00. Hence, the quantity demanded of

rutabagas decreases by

A) 20 percent.

B) 12 percent.

C) 5 percent.

D) None of the above answers are correct.

33) (HINT: Be SURE to answer this question because youll get credit for any

answer.) After the scores are posted, if you have a question about your test

score, email the grader at [email protected] and the

director is so fat that

A) hes the same height lying down as standing up.B) when he ran away, they had to use all 4 sides of the milk carton.

C) the elephants at the zoo throw peanuts to him.

summer+a+2012+midterm+1

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