1021 Peter V111 Practice Midterm Exam PDF

lOMoARcPSD|21970155 1021-Peter-v111 - practice midterm exam Intro to Microeconomics (The University of Western Ontario) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by Magnus Boehnke (magnus...

lOMoARcPSD|21970155 1021-Peter-v111 - practice midterm exam Intro to Microeconomics (The University of Western Ontario) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 Economics 1021-001 Peter Streufert First Midterm Examination October 15, 2023 Version 111 Directions Electronic Devices: The only electronic device allowed is a nonprogrammable and nongraphing calculator, without a lid. Thus cell phones, iPads, laptops, dictionaries, wristwatches, and timepieces are prohibited. Having on your person any electronic device other than the calculator will be understood as cheating. Other Items at your Desk: Students must bring their student ID and a pencil to the exam. Optional are additional writing instruments, an eraser, a water bottle without a sleeve, or medication. Prohibited are books, notes, pencil cases, and food. Students must place all backpacks and coats at the front or side of the exam room. Warning: In order to provide for a fair examination, it is the responsibility of the instructor to penalize students for disobeying these directions, for disobeying the proctors, or for otherwise misbehaving. Penalties range from deducting points on this examination to bringing charges of academic misconduct at the university level. Examples of misbehaviour include exposing your answers to your neighbours, not cooperating when asked to change seats, or continuing to write after the examination has ended. Additional Directions: (1) Make sure that you are in the right room. (2) Write your name and your student number at the top of the scantron sheet. (3) Fill in the bubbles to record your student number on the scantron sheet. Use a pencil. (4) Check that the scantron sheet is pre-printed with version 111. (5) Fill in the bubbles to record your answers on the scantron sheet. No one will read what you have written on this question sheet and on scratch paper. (6) Only the instructor can answer questions. If you cannot contact him, write your name, your student number, and your concerns on a sheet of paper and hand it in with your scantron sheet. (7) The examination will last for 90 minutes. All 37 questions have the same weight. (8) If you Þnish in less than 85 minutes, raise your hand and a proctor will come to collect your scantron sheet. (9) If you Þnish in the last 5 minutes, or stop when the examination ends, please wait in your seat until a proctor collects your scantron sheet. (10) Take this question sheet and your scratch paper with you when you leave. Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) When the price of good A rises, the supply curve of good B shifts rightward. Which of the 1) following statements are true? A) A and B are substitutes. B) A and B are complements. C) A and B are substitutes in production. D) A and B are complements in production. E) A is a factor used in the production of B. 2) The price of good A rises, and the demand curve for good B shifts leftward. We can conclude 2) that A) B is a normal good. B) A and B are complements. C) B is an inferior good. D) A and B are substitutes. E) A and B are normal goods. Use the figure below to answer the following question. 3) At price P3 in the figure, 3) A) there is a tendency for the price to rise. B) there is a shortage in the amount of Q5 - Q1. C) there is a surplus in the amount of Q5 - Q1. D) this market is in equilibrium. E) equilibrium quantity is Q5. 4) Which of the following is not a factor of production? 4) A) the management skill of a small business owner B) the wages paid to workers C) the effort of farmers raising cattle D) the water used to cool a nuclear power plant E) the land used by a farmer to grow wheat 1 Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 5) As a result of a poor growing season, the supply of apples decreases and total revenue falls. The 5) demand for apples is A) inferior. B) unit elastic. C) normal. D) elastic. E) inelastic. 6) Which of the following statements is normative? 6) A) Scientists should not make normative statements. B) Cigarettes cause cancer. C) There is more caffeine in a cup of tea than in a cup of coffee. D) If income increases, sales of luxury goods increase. E) If you are healthy, your happiness does not depend on money. Use the table below to answer the following question. Weekly production of economics professors Sheila and Bruce Sheila Bruce Lectures Assignments Lectures Assignments 8 0 20 0 6 1 15 2 4 2 10 4 2 3 5 6 0 4 0 8 7) Given the information in the table, choose the correct statement. 7) A) Sheila has a comparative advantage in producing lectures. B) Bruce has a comparative advantage in producing lectures. C) The opportunity cost to Bruce of producing an additional lecture is 0.4 assignments. D) A and B are true. E) B and C are true. 2 Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 Use the figure below to answer the following question. 8) The figure shows the supply curve of Pizza House's pizzas in the left graph and the supply 8) curve of Pizza Club's pizzas in the right graph. If the price of a pizza is $20, what is the quantity supplied by the market if Pizza House and Pizza Club are the only firms? A) 75 B) 50 C) 20 D) zero E) 25 9) A marginal cost curve that is 9) A) vertical is derived from a PPF that has a bowed-out shape. B) a horizontal line is derived from a PPF that has a constant slope. C) a horizontal line is derived from a PPF that has a bowed-out shape. D) upward sloping is derived from a PPF that has a constant slope. E) downward sloping is derived from a PPF that has a bowed-out shape. 10) When the price of a good increases by 5 percent, the quantity demanded decreases by 10 10) percent. The price elasticity of demand is ________. A price rise will ________ total revenue. A) 2.0; decrease B) 0.5; decrease C) -2.0; decrease D) 0.5; increase E) 2.0; increase 11) Hector is buying an ice cream sundae in a shop near Lake Erie. He has the option of spending 11) an extra dollar to get either chocolate sauce or sprinkles. The opportunity of cost of getting sprinkles is A) the dollar B) the chocolate sauce C) the chocolate sauce and the dollar D) there is not enough information to answer 3 Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 12) What happens in the market for laptops if the expected future price of a laptop rises? 12) A) A shortage of laptops occurs and the supply curve of laptops shifts rightward to eliminate the shortage. B) The supply curve of laptops shifts leftward. C) A movement up along the supply curve of laptops occurs. D) The supply curve of laptops shifts rightward. E) A movement down along the supply curve of laptops occurs. Use the table below to answer the following question. Price Quantity demanded (dollars per night) (rooms per night) 200 10,000 250 8,000 400 5,000 500 4,000 800 2,500 13) Refer to the table. The demand for hotel rooms is ________ because ________. 13) A) decreasing as the price falls; the demand curve for hotel rooms is a straight-line demand curve B) unit elastic; a price cut leaves total revenue unchanged C) inelastic; if the price is set low enough, total revenue will increase D) inelastic; if the price is set low enough, total revenue will decrease E) elastic; if the price is set high enough, total revenue will decrease 14) Consider the market for smartphones. Suppose the price of a smartphone increases. Explain the 14) effect of this event on the quantity of smartphones demanded and on the demand for smartphones. A) The quantity of smartphones demanded is unchanged and the demand for smartphones decreases. B) The quantity of smartphones demanded decreases and the demand for smartphones is unchanged. C) The quantity of smartphones demanded increases and the demand for smartphones also increases. D) The quantity of smartphones demanded increases and the demand for smartphones is unchanged. E) The quantity of smartphones demanded is unchanged and the demand for smartphones increases. 15) Suppose that the supply for airplane travel one year in advance of the departure date is 15) unit-elastic. Then the elasticity of supply for airplane travel one day in advance of the departure date is most likely to be A) greater than 1. B) substantially lower than -1. C) between zero and 1. D) approximately equal to 1. E) between -1 and zero. 4 Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 Use the table below to answer the following question. w 2 4 6 8 10 u 15 12 9 6 3 16) Refer to the table. What type of relationship exists between w and u? 16) A) positive B) direct C) negative D) No consistent relationship exists. E) first a positive relationship, then a negative one 17) The flows in the market economy that go from firms to households are ________. The flows in 17) the market economy that go from households to firms are ________. A) all flowing through goods markets; all flowing through factor markets B) the real flows of goods and services and the income flows of wages, rent, interest and profits; the real flows of labour, land, capital and entrepreneurship and the flow of expenditure on goods and services C) the real flows of goods and services and the real flows of labour, land, capital and entrepreneurship; the income flows of wages, rent, interest, and profits and the flow of expenditure on goods and services D) the income flows of wages, rent, interest, and profits and the flow of expenditure on goods and services; the real flows of goods and services and the real flows of labour, land, capital and entrepreneurship E) all flowing through factor markets; all flowing through goods markets 18) The demand curve is P = 800 - 25QD. The supply curve is QS = (P/25) - 20. The equilibrium 18) quantity is A) less than 5. B) more than 35 but less than 60. C) more than 60. D) more than 15 but less than 35. E) more than 5 but less than 15. 5 Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 Use the figure below to answer the following question. 19) Refer to the figure. If theory predicts that a rise in the wage rate (x) leads to a rise in the amount 19) of labour supplied in the economy (y), which graph represents this relationship? A) (a) B) (b) C) (c) D) (d) E) (a) or (c) Use the table below to answer the following question. Production Possibilities Possibility Kilograms of Butter Snowshoes A 8 0 B 6 1 C 0 3 20) Refer to the table. In moving from combination B to combination C, the opportunity cost of 20) producing one additional snowshoe is A) 6 kilograms of butter. B) 2 kilograms of butter. C) 3 kilograms of butter. D) 1/6 kilogram of butter. E) 1/2 kilogram of butter. 6 Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 Use the table below to answer the following question. Ethanol Food crops (barrels per day) (tonnes per day) 70 and 0 64 and 1 54 and 2 40 and 3 22 and 4 0 and 5 21) A country produces ethanol and food crops. The table shows the country's PPF. The marginal 21) benefit of food crops in terms of ethanol A) equals 70 barrels of ethanol. B) increases as the quantity of food crops produced increases from 1 tonne a day to 2 tonnes a day. C) remains constant as the quantity of food crops produced increases from 1 tonne a day to 2 tonnes a day. D) equals the marginal cost of food crops in terms of ethanol. E) cannot be calculated from the table. Use the information below to answer the following question. 22) Consider the demand and supply curves in the figure. If the market is at the competitive 22) equilibrium, which area in the diagram indicates the cost of producing the quantity sold? A) AEC B) 0ECD C) 0BCD D) EBC E) ABC 7 Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 Use the figure below to answer the following question. 23) Consider the demand curve in the figure. What is the consumer surplus when the price is $4 a 23) unit? A) $4 B) $56 C) $98 D) $196 E) $126 24) Some producers are chatting. Which one of the following quotations refers to a movement along 24) the supply curve? A) "New competitors in the industry are causing prices to fall." B) "Our new, sophisticated equipment will enable us to undercut our competitors." C) "Raw material prices have sky-rocketed; we will have to pass the cost on to our customers." D) "Wage increases have forced us to raise our prices." E) "We anticipate a big increase in demand. Our product price should rise, so we are planning for an increase in output." 25) The opportunity cost of shifting the production possibilities frontier outward is 25) A) reduced current consumption. B) technological change. C) reduced future consumption. D) capital accumulation. E) increased future consumption. 8 Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 Use the figure below to answer the following question. 26) Given the data in the following table, which one of the graphs in the above figure correctly 26) represents the relationship among x, y, and z? x 120 100 80 140 120 100 160 140 120 y 10 12 14 10 12 14 10 12 14 z 4 4 4 5 5 5 6 6 6 A) (a) B) (b) C) (c) D) (d) E) (a) and (d) 27) A technological improvement lowers the cost of producing coffee. At the same time, preferences 27) for coffee decrease. The equilibrium quantity of coffee A) increases. B) decreases. C) remains the same. D) increases or decreases depending on whether the price of coffee falls or rises. E) increases, decreases, or remains the same depending on the relative shifts of the demand and supply curves. 9 Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 28) When the price of a box of cereal is $5, the quantity demanded is 800 boxes. When the price of a 28) box of cereal is $7, the quantity demanded is 400 boxes. Calculate the price elasticity of demand. A) 0.5 B) 2.0 C) 1.0 D) 0.005 E) 200 29) In the nation of Transporta, the income elasticity of demand for used cars is -2.66. If incomes in 29) this nation increase by 10 percent A) used cars will be normal goods. B) the demand curve for used cars shifts rightward. C) the quantity of used cars demanded decrease by 26.6 percent. D) the supply curve of used cars shifts rightward. E) the quantity of used cars demanded increase by 26.6 percent. Use the table below to answer the following question. Price of Jolt Price of Coke Income Level Jolt Sales 2017 $1.00/can $1.00/can $25,000 15,000 cases 2018 $1.00/can $1.40/can $25,000 25,000 cases 2019 $1.00/can $1.40/can $35,000 15,000 cases 2020 $1.40/can $1.40/can $35,000 5,000 cases 30) Refer to the table. The cross elasticity of demand for Jolt with respect to the price of Coke is 30) A) 10. B) 0.75. C) 1.5. D) 0.40. E) -1.5. Use the table below to answer the following questions. The planets of Vulcan and Romulus each produce spaceships and satellites. The following table gives points on their production possibilities frontiers. Vulcan Romulus Spaceships Satellites Spaceships Satellites 0 16 0 12 2 12 2 9 4 8 4 6 6 4 6 3 8 0 8 0 31) Refer to the table. Each country gains from trade if 31) A) Vulcan specializes in both goods. B) Romulus specializes in both goods. C) Vulcan specializes in spaceships and Romulus specializes in satellites. D) Romulus specializes in spaceships and Vulcan specializes in satellites. E) In this example, there cannot be any gains from trade. 10 Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 32) Lisa's demand for sushi increases this week. This week when she goes out for sushi, she eats 10 32) pieces. Last week when she went out for sushi, she ate 8 pieces. The price of sushi has not changed. A) The consumer surplus Lisa receives from her 10th piece of sushi this week is less than the consumer surplus she received from her 8th piece of sushi last week. B) The consumer surplus Lisa receives from her 10th piece of sushi this week equals the consumer surplus she received from her 8th piece of sushi last week. C) Lisa's marginal benefit curve of sushi is the same last week and this week. D) Lisa's total consumer surplus from sushi this week equals her total consumer surplus from sushi last week. E) The consumer surplus Lisa receives from her 10th piece of sushi this week is greater than the consumer surplus she received from her 8th piece of sushi last week. 33) An outcome is considered efficient if 33) A) as many people as possible are happy about the outcome. B) the number of people liking the outcome is least as high as the number of people liking any other outcome C) it is not possible to make someone better off without making someone else worse off. D) there is the smallest difference possible between the highest income earned and the lowest income earned. E) a majority of people like it better than the next-best outcome. Use the table below to answer the following question. Abby's Barry's Price quantity quantity (dollars per demanded demanded slice) (slices per (slices per month) month) 2.50 25 50 3.00 20 40 3.50 15 30 4.00 10 20 4.50 5 10 5.00 0 0 34) The table shows the demand schedules for pizza for Abby and Barry who are the only buyers in 34) the market. What is the marginal social benefit of the 45th slice of pizza? A) $4.50 B) $3.50 C) $2.50 D) $4.00 E) $5.00 11 Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 Use the figure below to answer the following question. 35) Consider the following information on cola sales by number of cases for a typical university 35) residence floor: Price (dollars per case) Temp. (¡C) 10.00 12.50 15.00 17.50 15 50 40 30 20 20 60 50 40 30 25 70 60 50 40 30 80 70 60 50 35 90 80 70 60 Refer to the above figure. Which one of the following represents what happens when the temperature rises from 20¡C to 25¡C? A) The curve shifts from A to B. B) The curve shifts from B to C. C) The curve shifts along line B. D) The curve shifts from C to B. E) The curve shifts along line C. 12 Downloaded by Magnus Boehnke ([email protected])  lOMoARcPSD|21970155 Use the figure below to answer the following question. 36) Complete the following sentence. In the figure, z is 36) A) negatively related to x and positively related to y. B) positively related to x and negatively related to y. C) negatively related to both x and y. D) positively related to both x and y. E) related to y but not related to x. 37) A pizza parlour that is production efficient produces pizza and panzerotti along a straight-line 37) PPF. One point on its PPF is 10 pizzas and 2 panzerotti. Another point on its PPF is 8 pizzas and 5 panzerotti. If the pizza parlour increases the quantity of pizza it produces from 8 to 10, what is the opportunity cost of producing one of the additional pizzas? A) 2 panzerotti B) 5 panzerotti C) 3 panzerotti D) 1.5 panzerotti E) zero panzerotti 13 Downloaded by Magnus Boehnke ([email protected])