Version #1Econ 101-Spring 2009 Professor KellyMidterm exam 1 February 19, 2009Version #1Student Name: ______________________ ID# ___________ Discussion # _________You have 75 minutes to answer the exam. The exam contains 12 binary choice questions worth 2 points each and 25 multiple choice questions worth 3 points each. You will get 1 point for filling in your name, student ID number, number of the discussion section that you are enrolled in, and version number correctly. Please answer all questions on the scantron sheet with a #2 pencil. Be sure to fill in the scantron carefully and accurately.No cell phones, calculators, or formula sheets are allowed. Cheating will not be tolerated.Pick the best answer for each question.How to fill in the coding sheet: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 identification number in the spaces marked “Identification Number.”Fill in the bubbles.3. Write the discussion section number for which you are officially registered under“Special Codes” spaces ABC, and fill in the bubbles. Discussion sections are at thebottom of page:4. Finally, after filling in your section code, please put the exam version number in the“Special Codes” spaces. You will end up with a 4-digit “Special Codes” number – a threedigit number followed by a one digit exam version number.Jin Yan Michael (eVaar) Anderson Atsuko Tanaka Chu-An Liu328 W 12:05 334 F 8:50 340 Th 2:25 329 W 12:05330 W 1:20 333 F 12:05 344 Th 3:30 331 W 1:20335 W 2:25 343 F 1:20 342 F 1:20 336 W 2:25341 Th 2:25 339 F 2:25 338 F 2:25Ker Zhang345 F 8:50332 F 12:05If there is an error on the exam or you do not understand something, make a note on yourexam booklet and the issue will be addressed AFTER the examination is complete. Noquestions regarding the exam can be addressed while the exam is being administered.When you are finished, please get up quietly and bring your scantron sheet and this exambooklet to the place indicated by the instructors.Page 1/13Version #1Page 2/13Version #1Binary Choice Section (each question is worth 2 points)1. Suppose the domestic market of TVs has a typical downward sloping demand curveand an upward sloping supply curve. Furthermore, suppose the world price is belowthe closed domestic equilibrium price. The government wants to reduce the quantityof TVs imported to X amount. The government’s economic advisor says, “Only aquota can achieve this goal and the use of a tariff will not be able to reduce the levelof imports to X amount.” Is the advisor correct or incorrect?a. Correctb. Incorrect2. Atsuko likes two types of spread on her toasted bread. She likes to use either Nutella or Vegemite and she does not like to mix the two. What is the relationship between the two products?a. Substitutesb. Complements3. Suppose that both the demand for the good and the supply of the good increase. We know with certainty that: a. The quantity demanded for the good will increase.b. The price of the good will increase.4. In the line described by the equation y=(2/7)x+(1/3), x and y are negatively related.a. Trueb. False5. Consider the market for paper textbooks. Suppose teachers begin to rely less on textbooks and more often make slides of lecture notes available on the internet. At thesame time, the cost of paper increases. Which of the following regarding the equilibrium price and quantity of paper textbooks is true?a. Equilibrium price decreases and equilibrium quantity is ambiguous.b. Equilibrium price is ambiguous and equilibrium quantity decreases.6. Irrespective of whether a country is an importer or an exporter of a product, thecountry’s total surplus under an open economy is always at least as big as it is under aclosed economy.a. Trueb. FalsePage 3/13Version #17. Fill in the blank: When the production possibility frontier between two goods is bowed out from the origin, the opportunity cost of producing a good _________ as more of the good is produced.a. Decreasesb. Increases8. If you are studying Microeconomics, then you are interested in:a. How firms set the price of goods in particular markets.b. The growth in GDP from 2002 to 2003.9. Consider two countries, Bigski and Littleski. Bigski is very large, rich in naturalresources and has a highly trained workforce. Littleski is very small, has few naturalresources and an unskilled workforce. Is it possible that Bigski can benefit from tradewith Littleski?a. Yesb. No10. You are at the airport waiting for your flight which will arrive in Denver at 4pm (afterone stop). The ticket agent announces that they are looking for a volunteer to give uptheir seat on your flight. The person who volunteers will be given a seat on the nextplane (nonstop to Denver arriving at 4pm), and $100 in compensation. Suppose youdecide not to volunteer. How does your decision affect the economic cost of yourflight?a. Your flight to Denver just got $100 more expensive.b. Your opportunity cost remains unchanged.11. “The Federal Reserve ought to utilize all its resources to reduce inflation.”. This statement is:a. Positiveb. Normative12. The demand for a good increases when the price of a substitute ___ or when the price of a complement ___.a. Increases, decreasesb. Decreases, increasesPage 4/13Version #1Multiple Choice Section (each question is worth 3 points)Use the following information to answer the next 3 questions: We’ll consider 2 cities (Mikeville and Jinsberg) which each produce 2 goods: pencils anderasers. Both cities have linear production possibility frontiers.13. The equation for Jinsberg’s PPF is P=8000–4E (where P=pencils, E=erasers). Whatis the opportunity cost of producing a pencil in Jinsberg?a. 2 erasersb. ¼ of an eraserc. 4 erasersd. ½ of an eraser14. At maximum efficiency, Mikeville is capable of producing 500 erasers and 7,500pencils, or 0 pencils and 1000 erasers. What is the equation for Mikeville’s PPF?a. P = 10,000 – 10Eb. P = 10,000 – 15E c. P = 15,000 – 10Ed. P = 15,000 – 15E15. Using the information from the above two questions, fill in the blanks: _______ hasthe absolute advantage in producing pencils. _______ has the comparative advantagein producing pencils.a. Jinsberg, Jinsbergb. Jinsberg, Mikevillec. Mikeville, Jinsbergd. Mikeville, MikevillePage 5/13Version #116. Consider the market for oil. Suppose the demand
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