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40 Midterm Exam Questions with Answers - Principles Microeconomics | ECON 101, Exams of Economics

Material Type: Exam; Class: PRIN MICROECONOMICS; Subject: ECONOMICS; University: Iowa State University; Term: Spring 2003;

Typology: Exams

Pre 2010

Uploaded on 09/02/2009

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Midterm Exam #2 7 March 2003 Econ sections 1 & 4
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
1) A price ________ is a regulated ________ that must be set below the equilibrium price to have an
effect.
A) floor; quantity B) ceiling; price
C) floor; price D) ceiling; quantity
2) Suppose the government has declared beer to be an illegal substance and imposes a fine on any person
caught selling a beer. Buying beer, however, remains legal. Using the above figure, in which
๏ƒ๏ƒ๏ƒ
is the cost
of breaking the law, what is the equilibrium price and quantity with this new law in effect?
A) $1 per quart and 300 quarts of beer B) $5 per quart and 300 quarts of beer
C) $3 per quart and 500 quarts of beer D) $3 per quart and 100 quarts of beer
3) When demand is perfectly ________ a sales tax will ________.
A) inelastic; decrease the quantity sold
B) elastic; not change the price of the good
C) inelastic; increase the after-tax price by less than the amount of the tax
D) elastic; increase the after-tax price by the amount of the tax
4) The amount of a tax paid by the seller will be smaller
A) the more elastic the demand and the more inelastic the supply.
B) the more inelastic the demand and the more elastic the supply.
C) the more elastic are both the supply and demand.
D) the more inelastic are both the supply and demand.
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Midterm Exam #2 7 March 2003 Econ sections 1 & 4

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

  1. A price ________ is a regulated ________ that must be set below the equilibrium price to have an effect. A) floor; quantity B) ceiling; price C) floor; price D) ceiling; quantity
  2. Suppose the government has declared beer to be an illegal substance and imposes a fine on any person caught selling a beer. Buying beer, however, remains legal. Using the above figure, in which ๏ƒ๏ƒ๏ƒ is the cost of breaking the law, what is the equilibrium price and quantity with this new law in effect? A) $1 per quart and 300 quarts of beer B) $5 per quart and 300 quarts of beer C) $3 per quart and 500 quarts of beer D) $3 per quart and 100 quarts of beer
  3. When demand is perfectly ________ a sales tax will ________. A) inelastic; decrease the quantity sold B) elastic; not change the price of the good C) inelastic; increase the after-tax price by less than the amount of the tax D) elastic; increase the after-tax price by the amount of the tax
  4. The amount of a tax paid by the seller will be smaller A) the more elastic the demand and the more inelastic the supply. B) the more inelastic the demand and the more elastic the supply. C) the more elastic are both the supply and demand. D) the more inelastic are both the supply and demand.
  1. The above figure shows the market for anti-freeze. The government imposes a sales tax on anti-freeze. How much tax revenue does the government raise from this tax? A) $6,000 B) $3,000 C) $2,000 D) $4,
  2. The largest share of the U.S. private economy is A) oligopolistic. B) in manufacturing. C) competitive or monopolistically competitive. D) monopolistic. Pizza Hut Labor (workers) Total Product (pizzas produced per hour) 0 0 1 5 2 9 3 12 4 14 5 15
  3. Using the data in the above table, what is the marginal product of the third employee? A) 2 pizzas per hour B) 3 pizzas per hour C) 4 pizzas per hour D) 12 pizzas per hour
  1. The indifference curves in the above figure could represent your indifference curves between A) eyeglass frames and eyeglass lenses, which you think are perfect complements. B) Coke and Pepsi, which you consider perfect substitutes. C) hot dogs and textbooks, which you think are neither perfect substitutes nor perfect complements. D) none of the above
  2. When Bob is on the upward sloping portion of his labor supply curve, between points ๏ƒ and ๏ƒ in the above figure, his substitution effect from a wage rate increase is A) in the same direction as his income effect. B) less than his income effect. C) greater than his income effect. D) exactly equal to his income effect.
  1. In the above figure, which of the following would happen to Jane's budget line if there were an increase in her monthly dining-out budget? A) It would shift rightward and not change its slope. B) It would bend away from the origin, becoming more concave. C) It would bend toward the origin, becoming more convex. D) It would shift leftward and not change its slope.
  2. The effect of a change in price on the quantity bought, keeping the consumer on the same indifference curve, is called the A) price effect. B) income effect. C) real effect. D) substitution effect.
  3. When a firm links its employees' compensation to the performance of the firm, the firm is using A) an agency system. B) a cooperative system. C) an incentive system. D) a command system.
  4. Which market type has characteristics as follows: one firm, good or service produced has no close substitutes, barriers to entry prevent new firms from entering into the industry? A) monopolistic competition B) oligopoly C) perfect competition D) monopoly
  5. Which market type has characteristics as follows: many buyers and sellers, identical product, no restrictions on the entry of firms into the industry, complete information on price? A) monopolistic competition B) oligopoly C) perfect competition D) monopoly

A) needs equally. B) has readily available. C) can afford. D) does not care which combination he or she receives.

  1. Jane spends her monthly dining-out budget of $300.00 on either steak or lobster dinners. Using the above figure, what is the opportunity cost of a lobster dinner in terms of steak dinners? A) 2.0 steak dinners per lobster dinner B) 10.0 steak dinners per lobster dinner C) 0.5 steak dinners per lobster dinner D) 5.0 steak dinners per lobster dinner
  2. A company does not need to know the price of each resource it employs if it wants to determine whether or not it is achieving A) technological efficiency. B) economic efficiency. C) accounting efficiency. D) managerial efficiency.
  3. When the marginal and average products of labor are equal to each other, A) the average product must be at its maximum value. B) the marginal product must be at its maximum value. C) the total product must be at its maximum value. D) all of the above
  4. In the short run, a perfectly competitive firm might A) adjust the size of its fixed inputs. B) set its price above marginal revenue. C) set its price above marginal cost. D) operate even though it is incurring an economic loss.
  1. The above figure shows Sam's budget line and one of his indifference curves. What combination of coffee and gasoline will Sam select? A) Combination ๏ƒ because it is on his budget line and on the highest attainable indifference curve. B) Combination ๏ƒ because that contains all the coffee he needs and some gasoline. C) Combination ๏ƒ๏ƒ because that contains all the gasoline he needs and still has some coffee. D) none of the above
  2. An incentive system is a A) set of rules that induce an agent to act in the best interest of a principal. B) method of production that implements an assembly-line process. C) method of organizing production that uses a managerial hierarchy. D) method of organizing production that uses a market-like mechanism inside the firm.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

  1. B
  2. B
  3. B
  4. B
  5. B
  6. C
  7. B
  8. B
  9. B
  10. B
  11. C
  12. B
  13. C
  14. C
  15. A
  16. D
  17. C
  18. D
  19. C
  20. A
  21. D
  22. B
  23. D
  24. B
  25. A

26) D

27) D

28) A

29) A

30) A

31) D

32) A

33) D

34) D

35) C

TRUE/FALSE. Write 'A' on answer sheet if the statement is true and 'B' if the statement is false.

  1. FALSE
  2. FALSE
  3. FALSE
  4. FALSE
  5. FALSE