Economics 102 3 3 08 First Midterm Student Name Section TA Name Student ID First Midterm Examination Version 1 DO NOT BEGIN WORKING UNTIL THE INSTRUCTOR TELLS YOU TO DO SO READ THESE INSTRUCTIONS FIRST You have 50 minutes to complete the exam The exam consists of 10 binary choice and 20 multiple choice questions Each binary choice question is worth 2 points and each multiple choice question is worth 4 points for a total of 100 points We reserve the right to deduct 3 points from your final score for failure to provide your name student ID number discussion section you ve been attending and test version number correctly on your scantron Please answer all questions on the scantron sheet with a 2 pencil No cell phones calculators or formula sheets are allowed PICK THE BEST ANSWER FOR EACH QUESTION How to fill in the scantron sheet and other information 1 Print your last name first name and middle initial in the spaces marked Last Name First Name and MI Fill in the corresponding bubbles below 2 Print your student ID number in the space marked Identification Number Fill in the bubbles 3 Write the number of the discussion section you ve been attending under Special Codes spaces ABC and fill in the bubbles You can find the discussion numbers below on this page 4 Write the version number of your exam booklet under Special Codes space D and fill in the bubble The version number is on the top of this page 5 If there is an error on the exam or you do not understand something make a note on your exam booklet and the issue will be addressed AFTER the examination is complete No questions regarding the exam can be addressed while the exam is being administered 6 When you are finished please get up quietly and bring your scantron sheet and this exam booklet to the place indicated by the instructors Discussion sections are as follows 1 John Gent ry 330 12 0 5F 215 Ingr aha m 333 2 25 W 52 Basc om 335 1 20 F 4308 Soc Sci 340 8 50 Tu 6240 Soc Sci Kaitl in Janu sz 328 3 30 W 55 Basc om 334 2 25 W 222 Ingr aha m 336 7 45 Th 6310 Soc Sci 338 7 45 Tu 6310 Soc Sc i 34 1 3 30 Th 62 28 So c Sc i H on H o K w ok 32 7 3 30 W 58 Ba sc o m 33 2 8 50 F 61 02 So c Sc i F 23 In gr ah a m 33 1 8 50 F 62 03 So c Sc i 33 7 8 50 Th 62 24 So c Sc i 33 9 8 50 Tu 11 6 In gr ah a m Sa ad Q ua yy u m 32 9 12 0 5 2 Work Sheet 3 Binary Choice 2 points for each question 1 Suppose a small closed economy supplies bananas to their domestic consumers at a constant price of 50 a pound and that domestic suppliers are willing to supply bananas at this price over the entire relevant range of consumption Suppose the country moves from a closed economy to an open economy and that the world price of bananas is 40 a pound Then a the domestic demand for bananas will be satisfied through a combination of domestic production and imports b the country will import bananas and the domestic production of bananas will fall to zero units of the good Use the information below to answer the next two questions Suppose there are two countries A and B and they both produce basketballs and tennis racquets Labor is the only input these countries use in the production of these two goods The table below presents the units of labor required to produce a single unit of output Basketballs Tennis Racquets A 2 units of labor 4 units of labor B 9 units of labor 3 units of labor 2 Which of the following statements is true a Country A has a comparative advantage in producing basketballs and country B has a comparative advantage in producing tennis racquets b Country A has a comparative advantage in producing tennis racquets and country B has a comparative advantage in producing basketballs 3 Which of the following statements is true a For international trade to be possible the relative price of basketballs with respect to tennis racquets must be between unit of tennis racquets and 3 units of tennis racquets b For international trade to be possible the relative price of basketballs with respect to tennis racquets must be between 1 3 unit of tennis racquets and 2 units of tennis racquets 4 4 Which of the following statements is false for a country that is open to trade Assume the country is currently importing baseball caps a If the government imposes a tariff on a baseball caps the consumer surplus will not change b If the government imposes a tariff on a baseball caps the producer surplus will change 5 Is the following statement true or false Measures of GDP tend to underestimate the total amount of economic production because they add up the value of only the final goods that are produced not the intermediate goods and raw materials that are used in production a True b False 6 Suppose the government of a country wants to encourage home ownership so the government offers a cash subsidy to all those who purchase a house Holding everything else constant this policy will a shift the demand for houses to the right b decrease the price received by sellers of houses 7 Which of the following statements is true a There is a deadweight loss associated with international trade and the size of the deadweight loss depends on the shapes of the demand and supply curves in each market b There is a deadweight loss associated with tariffs and import quotas The size of the deadweight loss depends on the shapes of the demand and supply curves in each market 8 Which of the following statements is true a Transactions of securities that is the value of purchases and sales of stocks and not the brokerage fees in the stock market are not counted in the GDP of a country b Transactions of securities that is the value of purchases and sales of stocks and not the brokerage fees in the stock market are counted in the GDP of a country 5 9 The demand curve for cigarettes is represented by the equation Q 6 P Suppose that cigarette smokers in this market grow more concerned about their health and they decide to consume fewer cigarettes Which of the following equations could represent this change in the preferences of cigarette consumers a Q 5 P b Q 12 2P 10 A country reports that its environment has gotten dirtier over the past year Will this country s GDP figure for the year overstate or understate the degree of change in the broad standard of living a It will overstate the degree of change …
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