Economics 101 Name _____________________________Fall 2011 TA Name __________________________10/18/11 Discussion Section #_________________First Midterm Student ID # _______________________Version 1DO NOT BEGIN WORKING UNTIL THE INSTRUCTOR TELLS YOU TODO SOREAD THESE INSTRUCTIONS FIRSTYou have 75 minutes to complete the exam. The exam consists of 33 multiple choicequestions. Each multiple choice question is worth 3 points for a total of 99 points. Youwill receive one point on the exam for completely and correctly filling out allidentification information on your scantron and your exam booklet. - Answer all questions on the scantron sheet with a #2 pencil NO CELL PHONES, CALCULATORS, OR FORMULA SHEETS ARE ALLOWED.PICK THE BEST ANSWER FOR EACH QUESTION.How to fill in 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 thebubbles. 3. Write the number of the discussion section you’ve been attending under "Special Codes"spaces ABC, and fill in the bubbles. You can find the discussion numbers below on thispage. 4. Write the version number of your exam booklet under "Special Codes" space D, and fillin the bubble. The version number is on the top of this page. If 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.Discussion sections are as follows: MatthewFriedmanBrandonHoffmanTomConklingSean Lewis-FaupelAndrewKiddThur 3:30 301 Fri 11:00 309Fri 8:50 317Fri 9:55 312Fri 12:05 315Fri 1:20 314Thur 4:35 307Fri 9:55 311Fri 11:00 310Fri 2:25 302Thur 3:30 304Fri 12:05 316Fri 1:20 319Fri 2:25 313Thur 4:35 306Fri 8:50 318Fri 1:20 305 1Work Sheet 2I, __________________________________, agree to neither give nor receive any help on this examfrom other students. Furthermore, I understand that use of a calculator is an academic misconductviolation on this exam.Signed ____________________________________1. Hotdogs and buns are complements. What will happen to the equilibrium price and quantity in the market for buns if hotdogs become less expensive? The equilibrium price for buns willa. Increase and the equilibrium quantity will decrease.b. Increase and the equilibrium quantity will increase.c. Decrease and the equilibrium quantity will decrease.d. Decrease and the equilibrium quantity will increase.2. Which of the following statements is FALSE?a. Good A and good B are complements. When the price of good A decreases, the demand for good B increases.b. Good A and good B are complements. When the price of good A increases, thedemand for good B decreases.c. Good A and good B are substitutes. When the price of good A decreases, the demand for good B increases.d. Good A and good B are substitutes. When the price of good A increases, the demand for good B increases.3. Demand for good Z is given byQD = 20 – P.Income falls for individuals in this market, and demand for good Z is now given by QD = 30 – (½)P.Holding everything else constant, from this information we know that good Z isa. A normal goodb. An inferior goodc. A complementd. A substitute 34. Consider the guitar market. The market demand for guitars is given by P = -2Q + 12. The market supply of guitars is given by P = Q. P is price and Q is the amount of gui-tars. The government mandates a price floor for guitars of $6 each. Holding every-thing else constant, which of the following statements is true?a. There will be a surplus of 3 guitars.b. There will be a shortage of 3 guitars.c. 4 guitars are traded in this market.d. There will be no exchange of guitars in this market when this price floor is imple-mented.e. Answers (b) and (c) are both correct.Use the following diagram to answer the next two (2) questions.5. Suppose that initially the above market is in equilibrium and the government decides to impose a minimum price of P = $30 (a price floor). The change in consumer sur-plus induced by this price floor policy can be measured as a(n)a. Decrease of (area A + area B + area F + area G)b. Decrease of (area A + area B)c. Increase of (area F – area B)d. Decrease of (area B + area C)6. What is the Deadweight Loss from this new minimum price rule?a. Area A + Area B + Area F + Area Gb. Area H + Area Ic. Area A + Area Bd. Area B + Area G 302010PSDA BCF G50 100150H I47. What is the y-intercept of the line given by the equation 20x + 40y = 10?a. 10b. 1/4c. 40d. 18. The following two points are on a line: (1,2) and (5,14). If there is a third point on that line (x,-7), what does x equal?a. 2b. -1c. -2d. 39. You read in the Friday newspaper that consumers have a linear demand for coffee mugs, wanting 50 coffee mugs at a price of $5/mug and 70 mugs at a price of $3/mug.On Sunday, however, you read that a change in preferences on Saturday has made it so consumers still have a linear demand, but want 4 fewer coffee mugs at a price of $8/mug and 12 fewer mugs at a price of $4/mug than they wanted initially. What is the new market demand equation for coffee mugs? (Hint: Although both demand curves are linear they are not necessarily parallel to one another.)a. Q = 100 – 10Pb. Q = 100 – 1/8Pc. P = 10 – 1/10Qd. P = 10 – 1/8Q10. You have $2000 you must either spend on chickens ($10 each) or pigs ($60 each). If the number of chickens you buy is y and the number of pigs you buy is x, which of the following lines describes the relationship between the money you have to spend and your purchases of chickens and pigs?a. y = 200 – 6xb. x = 300 – 5yc. y = 100 – 3xd. x = 200 – 3y11. The average of 7 numbers is 7. In addition to those 7 numbers, we now add 0, 51, and 90. What is the new average?a. 7b. 19c. 20d. 49Use the information below to answer the next three (3) questions. 5Consider a hypothetical example using
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