Midterm Exam #1; Page 1 of 10 Economics 101 Professor Wallace Midterm #1, Version #2 October 12th, 2005. DO NOT BEGIN WORKING UNTIL YOU ARE TOLD TO DO SO. READ THESE INSTRUCTIONS FIRST. You have 75 minutes to complete the exam, which consists of 35 multiple-choice questions. Each question is worth the same number of points, so manage your time wisely. Please answer the questions on your scantron sheet with a #2 pencil. Be sure to fill in the scantron sheet carefully and accurately. How to fill in the scantron sheet: 1. Fill in the bubbles on your sheet with your last name, first name, and middle initial. 2. Fill in the bubbles so we know your student identification number. 3. Fill in the bubbles under "Special Codes" spaces ABC so we know the discussion section number for which you are officially registered. Discussion sections are listed below: 4. Finally, after filling in your section code, please put the exam version in the “Special Codes” spaces. You will end up with a 4-digit “Special Codes” number – a three digit section number followed by a one digit exam version number. Jonathan Hore John Morrow Dan Wei 371 R 8:50 357 F 11:00 358 F 12:05 372 R 12:05 359 F 12:05 363 F 2:25 361 W 9:55 365 F 3:30 362 F 2:25 366 M 8:50 Greg Whitten Jason Wu 356 F 11:00 360 W 9:55 364 F 3:30 369 M 11:00 367 M 8:50 370 M 12:05 368 M 11:00 373 W 8:50 If you have a question during the exam, stay seated and please raise your hand. All scantron sheets must be turned in as you leave the exam. If you finish early and want to leave, please bring your scantron to the front of the room as quietly as possible. We will post results on the website according to the last 4 digits of your ID. If there are duplicates in these last four digits, e-mail your TA who will have your score. The exam will be discussed in section next week. Relax. Stop, take a deep breath, and think carefully before you answer any questions. Good luck!Midterm Exam #1; Page 2 of 10 Answer these multiple choice questions on the scantron sheet, selecting the best answer. Consider the following information on the Production Possibilities for Cars and Airplanes when there are 2400 hours available: Hours needed to make one unit of: Cars Airplanes U.S 60 160 Japan 80 240 1. According to the table shown, Japan has a comparative advantage in: A) Airplanes and the United States has an absolute advantage in cars. B) Cars and the United States has an absolute advantage in airplanes only. C) Cars and the United States has an absolute advantage in both goods. D) Airplanes and the United States has an absolute in neither good. E) Airplanes and the United States has an absolute advantage in both goods. Suppose that the demand curve for using a toll road is given by P = 12 – 2Q. Answer the following 2 questions: 2. If the government decides not to charge any toll, then the number of crossings will be: A) 12 B) 6 C) 2 D) 10 E) 24 3. If a toll of $6 is introduced (and enforced rigidly), what is the loss in consumer surplus? A) $6 B) $9 C) $18 D) $27 E) $36 4. The greater that Ipods and Headphones complement each other, the ______ is the cross elasticity of demand between the two goods. If the number of substitutes for Ipods falls, the price elasticity of demand for Ipods will _____. A) more negative; decrease B) more negative; increase C) less negative; decrease D) less positive; increase E) Insufficient information for any of the aboveMidterm Exam #1; Page 3 of 10 Country A Country B Good X (units of X) Good Y (units of Y) Good X (units of X) Good Y (units of Y) 0 16 0 12 2 12 2 9 4 8 4 6 6 4 6 3 8 0 8 0 5. In the table above, country A is producing 2 units of X and 12 units of Y and country B is producing 6 units of X and 3 units of Y. The opportunity cost of producing more of: A) Good X is the same for both countries. B) Good Y is the same for both countries. C) Good X is lower in country A. D) Good Y is lower in country A. E) Either good cannot be determined from the information above. 6. In the table above, country A is producing 4 units of X and 8 units of Y and country B is producing 4 units of X and 6 units of Y. Regarding the production of good X A) Country A has an absolute advantage. B) Country B has an absolute advantage. C) Country A has a comparative advantage. D) Country B has a comparative advantage. E) Neither country has a comparative advantage. 7. Suppose there are two types of people, young and old. Everyone likes vacations and they are a normal good for both Old people and Young people. Old people vacation in Hawaii and Young people in Florida. The government enacts a tax that takes money from Young people and gives it to Old people. The demand curve for vacations to Hawaii ____ and the demand curve for vacations to Florida ____. A) shifts in; shifts out B) shifts in; shifts in C) shifts out; shifts in D) shifts out; shifts out E) None of the above.Midterm Exam #1; Page 4 of 10 Use the figure below to answer the next two problems: 8. Suppose that Mac and Izzie specialize and trade to reach point c. Then: A) Mac and Izzie should both produce at point a. B) Mac should produce at point b and Izzie should produce at point d. C) Mac should produce at point d and Izzie should produce at point b. D) Mac and Izzie should both produce at point c. E) Mac should produce only Television Sets, Izzie should produce only Computers. 9. Suppose that Mac and Izzie specialize and trade to reach point c. Mac sends Izzie A) 12 computers in exchange for 12 TVs. B) 12 computers in exchange for 6 TVs. C) 6 computers in exchange for 12 TVs. D) 6 computers in exchange for 6 TVs. E) 3 computers in exchange for 3 TVs. 10. The University of Wisconsin-Madison (UW) has recently hiked tuition fees by 8% in a bid to increase total revenue. So, UW is: A) Ignoring the law of demand. B) Assuming that the demand for university education is inelastic. C) Assuming that the demand for university education is elastic. D) Assuming that the supply for university education is inelastic. E) Assuming that the supply for university education is elastic.Midterm Exam #1; Page 5 of 10 11. In the graph above, D1 represents a linear demand curve and S1 is a linear supply curve. Suppose the equation of D1 is P=10-2Q. What must the slope of S1 have to be for point A to be at a price of $4? A) 1 B) 2 …
View Full Document
Unlocking...