Exam #1Principles of Microeconomics - Eco n1.a].4Spring 2013YeIIow versionil. Do not open this exam or begin writing untilyou are told to begin.ll. Make sure your student tD and exam version are on your scantron formand your name and student !D are bubbled in before you begin the exam.You will not be given time to do this at the end of the exam.lll. Be sure to read directions carefully, use your exam copy to help you solvethe problems and transfer all your answers to the scantron form. Onlvscantron form before time isaccepted. No work on the exam copy itself will be graded.lV. You will not be given time to fill in any scantron answers after time iscalled, so make sure to do this before time is calted.V. You are allowed to use only a pencil, eraser and ruler for the exam. Anyother materials used or in sight are prohibited. ln particular, vou are NOTallowed the use of a calculator or anv translation device. Faiture to followthese directions is considered cheating and wilt resutt in a grade of zerofor this exam.Vl. You must stop writing and put down your pen or pencit immediately whenyou are told it is time to stop the exam. Failure to foltow these directionsis considered cheating and will result in a grade of zero for this exam.Figure A: Market for CakesUse this graph to answer the following S questions.,*."JIllu 5u 4u 5u bu 70 g0 g0 100 110Quantity1. Re-fpr to figure A: According to this graph, if the price of cake is currently $8, producers will wantto sell _ cakes and consumers will want to buy _ cakes.-1. 10;30( 2) 10;60'3. 30;304. 30;605. 50;302. Refer to figure A: According to the graph, if producers charge $8 per cake, they will earn totalrevenue equal to - and consumers will have total expenditures equal toL. S8o; Saso-21'5qao;iqao-*- 58; 58(t, S8o;5ss*S---*Ione of the above24222Ci181611,),jI642013. Refer to figure A: According to this graph, if the price of cake is currently $20, the market will be:1.., Experiencing an excess supply of cakes in the amount of 20 cakes.1. Experiencing an excess supply of cakes in the amount of S0 cakes.',/3. Experiencing an excess demand for cakes in the amount of 30 cakes.4. ln equilibrium.5. None ofthe above4. Refer to figure A: According to the graph, when price rises from $B to $14:1. The supply of cakes rises from 10 to 30 cakes. ;2. The demand for cakes falls from 50 to 30 cakes3. , Quantity of cake supplied rises from 10 to 30 cakes.4. All of the above5. None ofthe above5. Refer to figure A: According to this graph, the equilibrium price of cake will be _ and theequilibrium quantity of cake bought and sold will be _.1. S14x30=S420 per cake;30 cakes2. S1al30=S0.47 per cake; 30 cakes3..' S14 per cake; 30 cakes4. lmpossible to determine with the information given5. Noneofthe above6. In order to achieve production efficiency. an economy must achieve which of the following?1. Produce the goods and services that people most want.l. Produce goods and services without wasting resources.(1. 7 eroduce the goods and services that people most want, produce them in a way that doesn't\_ ,/,/ waste resources and make sure they go to the people who want them the most.-'4. Produce the goods and services that people most want and produce them in a way that doesn'twaste resources.5. Make sure the goods and services that are produced go to the people who want them the most.7. The more necessary consumers consider a good to be, generally the:1. Less price elastic and the steeper its demand.2. More price elastic and steeper its demand.3,:-., More unitary elastic and stable its demand.(4./ Less price elastic and flatter its demand,til None ofthe above8. According to the article "How Much Is Your Time Worth", when you make a decision about doing aproject yourselfrather than hiring a professional to do the project, what should be taken into account?1. How much you earn per hour.2. How many hours of time you will save if you hire a professional.3. How much would it cost to hire a professional.4.... How much you enjoy or dislike doing the project yourself.,'5. ,rAll of the above.Y -,./39. Suppose you see an advertisement for a concert this weekend. you want to attend but you findthatthe concertsold outwithin an hourof tickets goingon sale.Approximately 150 p"opl"-"r.turned away from the box office, unable to get tickets before the concert sold out \Mhat does thistell us?..f Official ticket price was set too low.fl) fnis market is not in equilibrium.-,i. n higher ticket price would increase economic efficiency.i & All of the above5. None ofthe above I10. \ttlhich of the following is the best definition of economics, according to your textbook?7. Economics is the study of how businesses make profit maximizing deciiions."q Economics is the study of how people make choices when faced with scarcity."3. Economics is the study of how economies function.4- Economics is the study of how markets function to allocate goods and services.5. Economics is the study of how producers, consumers and the government interact to regulatemarket activity.11. B$;itive statements _while normative statements,'{1 Are facts; are opinions" t Are true; are fulseO Are potentially testable and provable; are subjective4. Are optimistic; are pessimistic5. Noneoftheabove12. According to the articles, which of the following is true with respect to how government agenciesvalue a human life saved?l._-They each place exactly the same value on a life saved.-4 They each use the same method of calculating the value of a life saved.i.- 3. They each use a different method of calculating the value of a life saved and as a result place a' different value on a life saved.4- They sometimes determine that the value of a life saved is priceless, although they sometimesplace a monetary value on improving a person's health or riducing injury.5. None ofthe above.13. In tnre free market system, the way goods and seryices get rationed is through _..1. The price system2'. Government regulation3. Cost benefit analysis4. Models5. None ofthe above14. Aecording to an economist, which of the following is a ,,need,,?. 7,/ Ahouse2. An education3. Government4. All of the above5. None ofthe above415. Economists generally believe the most efficient way to deal with a positive externality is to:1. Mandate the purchase of the product so that the amount of the positive externality reachesmaximum value.2. Tax producers or consumers of the product in the amount of the externality1. Ban the use of the product so