Economics 102 Student Name:________________2/18/09 Section #:____________________First Midterm for 1:20 Lecture TA Name:____________________Student ID #:_________________First Midterm ExaminationVersion 1DO NOT BEGIN WORKING UNTIL THE INSTRUCTOR TELLS YOU TODO SOREAD THESE INSTRUCTIONS FIRST.You have 50 minutes to complete the exam. The exam consists of 12 binary choice and 15multiple choice questions. Each binary choice question is worth 3 points and each multiplechoice question is worth 4 points for a total of 96 points. Four points will be awardedbased upon your accurately recording your name, section #, TA name, student ID #, andexam version number on the exam booklet and the scantron sheet. We reserve the right todeduct 4 points from a total of 100 points for your failure to provide your name,student ID number, discussion section you’ve been attending or test version numbercorrectly on your scantron. Please answer all questions on the scantron sheet with a #2pencil.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, andfill 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. Theversion number is at 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 andthe issue will be addressed AFTER the examination is complete. No questions regarding the exam can beaddressed 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 theplace indicated by the instructors. Discussion sections are as follows:Nicola Branzoli Hon Ho Kwok Jungjae Park Scott Swisher353 Thur 8:50Van Hise 591352 Thur 8:50Van Hise 499351 Wed 3:30SS 6322350 Wed 3:30SS 4322361 Thur 2:25SS 5231357 Thur 9:55SS 6310360 Thur 9:55SS 4314354 Fri 8:50SS6112355 Fri 8:50SS 6228358 Fri 12:05SS 6102359 Fri 12:05SS 6240356 Fri 9:55Ingraham 120362 Fri 1:20Bascom 55363 1:20SS 52311Work Sheet2Use the information below to answer the next two questions. Italy and Hong Kong produce rice and alcoholic drinks. The table below shows inputrequirements per unit of rice and alcoholic drinks. Both countries have constantopportunity costs of production (i.e., both countries have linear production possibilityfrontiers with respect to these two goods).Rice Alcoholic DrinksItaly 10 units of labor 20 units of laborHong Kong 50 units of labor 10 units of labor1. The opportunity cost of producing 1 unit of alcoholic drinks for Italy isa.) 2 units of rice.b.) 1/2 unit of rice.c.) 5 units of rice.d.) 1/5 unit of rice.2. For the trade of alcoholic drinks between Italy and Hong Kong to be possible, therelative price (terms of trade) of alcoholic drinks should bea.) between 1/2 unit of rice and 5 units of rice.b.) between 1/5 unit of rice and 2 units of rice.c.) between 2 units of rice and 5 units of rice.d.) between 1/5 unit of rice and 1/2 unit of rice.3. Suppose a small country’s domestic demand and domestic supply curves for apples arerespectively represented by P = 16 – 2Q and P = 8 + 2Q. The market is opened tointernational trade, and the world price is $10. What is the quantity of apples that aredomestically supplied when this economy opens to trade?a.) 2b.) 3c.) 1d.) 03Answer the next two questions using the diagram below illustrating the market for agood in a small economy. Assume this economy as represented below is a closedeconomy.4. The figure above shows the domestic supply and domestic demand curves for orangesin a small country. The country opens the orange market to international trade and theworld price for oranges is $5. Suppose the government decides to impose a quota in themarket for oranges that restricts the level of imports to 40 units of oranges. The decreasein the domestic consumer surplus due to the import quota is equal to areas:a.) C + D + E + F + Gb.) D + E + F + G + H + Ic.) D + Gd.) H + I5. Assume the world price of the above good is $5. If this economy moves from being aclosed economy to an economy with free trade in the market for this good, thena.) all domestic producers of this product must be better off when this country decides tobecome an open economy.b.) all domestic consumers of this product must be better off when this country decides tobecome an open economy.c.) non-domestic consumers of this good will be better off when this country decides tobecome an open economy.d.) non-domestic producers of this good will be worse off when this country decides tobecome an open economy.597HBCJAIGFEDDomestic SupplyDomestic DemandQuantity80 100 120Price46. Consider the market for rapeseed oil (this oil is used in food preparation as well as abio-fuel). Holding everything else constant, an increase in the rate of growth of the worldpopulation and an increase in gasoline prices will causea.) a shift of both the demand and supply schedules that will increase the equilibriumquantity of rapeseed oil while having an indeterminate effect on the equilibrium price ofrapeseed oil. b.) a shift of the supply curve resulting in a decrease in the equilibrium price of rapeseedoil and an increase in the equilibrium quantity of rapeseed oil.c.) a shift in the demand curve that will cause an increase in the equilibrium quantity andthe equilibrium price of rapeseed oil.d.) a shift in the demand curve, but it is unclear whether the demand curve shifts to theright or to the left from the information given: thus, it is unclear what the effect of thesechanges are on the equilibrium price and equilibrium quantity of rapeseed oil.7. Which of the following is correct? Holding everything else constant, a) a change in tastes causes an increase in the supply schedule.b) a change in the price of a related good causes a shift in the demand schedule.c) a change in technology causes a movement along the supply schedule.d) a change in income causes a
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