Economics 101 – Principles of Microeconomics Student Name:_______________________________ Korinna K. Hansen Section No: _________________________________ Fall 2019 – Second Midterm TA:_________________________________________ Version 1 DO NOT BEGIN WORKING UNTIL THE INSTRUCTOR TELLS YOU TO DO SO. READ THESE INSTRUCTIONS FIRST. You have 75 minutes to complete this exam. This exam consists of 33 multiple-choice questions. Each question is worth 3 points. Choose the best answer for each question. Please answer all questions on the scantron sheet you are given using a #2 pencil. You will receive 1 BONUS point for filling out the scantron sheet properly. If there is an error on the exam or you do not understand something, make a note on your exam booklet and we will address this issue after this examination is complete. You cannot ask any questions about the exam while the exam is administered. When you are finished, please bring both the scantron sheet and this exam booklet to the place indicated by the instructors. NO CELLPHONES, CALCULATORS, ELECTRONICS, FORMULA SHEETS ARE ALLOWED. CHOOSE THE BEST ANSWER FOR EACH QUESTION. GOOD LUCK! How to fill out the scantron 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 ID number in the space marked “Identification Number”. Fill in the bubbles. 3. Write the number of the discussion section you are registered for under “Special Codes” spaces ABC, and fill in the bubbles. For Discussion sections see the bottom section of 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. Lecture 1 – Morning Lecture Discussions Allie Greenman John Lazzarro Zau Aitkulova Manisha Jain Qin Lin 301 – R 3:30 302 – F 2:25 308 – F 08:50 313 – F 8:50 306 – R 4:35305 – F 12:05 303 – F 1:20 309 – F 11:00 314 – F 1:20 312 – F 9:55307 – F 11:00 304 – F 12:05 316 – F 9:55 315 – F 2:25 311 – F 9:55 310 – F 11:00 318 – R 4:35 317 – F 1:20 Lecture 2 – Afternoon Lecture Discussions Ilia Jonathon Laura Soojeong Xinyi 344 – F 08:50 345 – R 04:35 331 – F 09:55 336 – F 11:00 332 – R 04:35342 – F 09:55 334 – F 01:20 335 – F 11:00 339 – F 12:05 330 – F 08:50343 – F 11:00 337 – F 02:25 346 – F 01:20 338 – F 09:55 341 – F 12:05 347 – F 03:30 340 – F 02:25 333 – F 01:201. A teaching assistant spends all his $80 income on two goods, ramen (R) and coffee (C). The marginal utility from ramen is MUR=C and the marginal utility from coffee is MUC=R. The price of ramen is $4 per bowl and the price of coffee is $2 per cup. What are the quantities of ramen and coffee the TA will purchase? a. R=15, C=10 b. R=16, C=8 c. R=10, C=20 d. R=8, C=24 2. The marginal rate of substitution (MRS) is given by: a. The slope of an indifference curve b. The slope of the production possibilities frontier c. The slope of the demand curve d. The income elasticity of demand 3. Scott, a utility-maximizing individual with standard, convex indifference curves, consumes only two goods: pizza and soda. What must happen to his consumption bundle if the price of pizza falls? a. He will consume more pizza if pizza is a normal good. b. He will consume less soda if soda is an inferior good. c. Both (a) and (b) are true. d. Both (a) and (b) are false.Use the graph below to answer the next TWO (2) questions. 4. Which of the following statements is true: a. Good X is an inferior good, and good Z is normal. b. Good X is a Giffen good. c. Good X is a normal good, and good Z is inferior. d. Not enough information to determine the type of good X or Z. 5. The graph above depicts a price decrease for good X. After this price decrease, the substitution effect and income effects for good X are respectively: a. 3.5; 8.1 b. 0.9; 4.6 c. -3; -2 d. 0.9 ; 5.5Use the following information to answer the next FOUR (4) questions. Mary has $100 to spend on goods x, and y. The following graph gives Mary’s consumption after a price change. 6. Let B1 denote the budget line passing through E1. Similarly, let B2 denote the budget line through E2. What are the prices corresponding to the B1 and B2 budget lines, respectively? a. B1: Px = 100, Py = 100; B2: Px = 100, Py = 50. b. B1: Px = 1, Py = 1; B2: Px = 2, Py = 1. c. B1: Px = 1, Py = 1; B2: Px = 1, Py = 2. d. B1: Px = 2, Py = 1; B2: Px = 1, Py = 2. 7. Notice that as the price changed, Mary moved from consuming at E1 to E2. How much more does Mary have to be paid to enjoy the same level of utility as before, but at the new prices? a. $31 b. $41 c. $77 d. $1008. What are Mary’s substitution and income effects for good Y after this price change? a. -15 and -10 b. 35 and 25 c. +21 and -21 d. 15 and 10 9. If Mary has a linear demand for good Y, which one is Mary’s demand curve? a. Q = 3 – (1/25) P b. P= 5 – 2 Q c. P = 3 – (1/25) Q d. Q = 4 – (1/10) P10. A Giffen good, a. has an Engel curve with a positive slope b. has a substitution effect which does not follow the law of demand c. exhibits an income effect that is larger and overwhelms the substitution effect d. all of the above 11. The following table gives you information on hourly labor productivity in a car factory with fixed capital. Quantity of LaborTotal # of cars produced10 515 1320 2425 3240 4845 51Therefore, this car factory is experiencing: a. first increasing and then diminishing returns to labor b. first increasing then diminishing and then again increasing and diminishing returns to labor c. increasing returns to labor at all times d. diminishing returns to labor at all times12. There are 4 different technologies a shoe company can consider for the production of 200 pairs of shoes. All four combine labor and capital quantities in fixed proportions as displayed in the table below: Technology Units of Capital (K) Units of Labor (L) A 12 30B 20 25C 25 20D 25 10 If the unit price for capital is $20 and for labor is $10, which technology should the shoe company use for the production of 200 pairs of shoes? a. Technology A b. Technology B c.
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