ECON 111 (07) Midterm B KEY Fall2022

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Feb 20, 2024

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1. Refer to Figure 5-1. Graph B represents a demand curve that is relatively __________. Total expenditures __________ as the price decreases from $10 to $5. a. elastic; decreases b. elastic; increases c. inelastic; increases *d. inelastic; decreases 2. Which of the following would increase the supply of autos? *a. lower wage rates for the workers that assemble autos b. higher fuel prices used to operate automobiles c. lower fuel prices used to operate automobiles d. an increase in the price of autos. 3. An economy in which religious norms dictate the who, what, and how questions is _______? a. command b. communist c. socialist *d. traditional

4. Refer to the Figure 5.6. Higher taxes cause supply to shift to the left. Which of the following statement is correct? a. Consumers benefit in either case, from a greater quantity at a lower price, but the benefit is greater when demand is elastic *b. Consumers suffer in either case, from a lower quantity at a higher price, but the suffering is greater when demand is inelastic c. Consumers benefit in either case, from a greater quantity at a lower price, but the benefit is greater when demand is inelastic d. Consumers suffer in either case, from a lower quantity at a higher price, but the suffering is greater when demand is elastic 5. Refer to the Figure 3.10. What does area F tell us? a. the equilibrium price in the market was less than what many of the producers were willing to accept *b. the equilibrium price in the market was less than what many of the consumers were willing to pay. c. the equilibrium price in the market was greater than what many of the consumers were willing to pay. d. the equilibrium price in the market was greater than what many of the producers were willing to accept

6. Refer to Table 2.11. What is the opportunity cost to Husky Ville of increasing the production of basket balls from 1000 to 3000? a. 3000 volley balls *b. 1500 volley balls c. 2000 volley balls d. 4000 volley balls 7. Consider Table 2.9. Suppose this individual would not consume 6 units of gummies, what is the possible reason? *a. because the total utility is declining. b. because the marginal utility is positive. c. because the total utility is positive. d. because the marginal utility is diminishing. 8. Refer to the Figure 5.5. Cost-saving from technological improvement cause supply to shift out to the right from S 0 to S 1 . Which of the following statement is correct? *a. If demand is elastic, the result of the cost-saving technological improvement will be substantially greater quantity

b. If demand is inelastic, the result of the cost-saving technological improvement will be substantially greater quantity c. If demand is elastic, the result of the cost-saving technological improvement will be substantially lower prices d. If demand is inelastic, the result of the cost-saving technological improvement will be only slightly lower prices 9. If fishing and hiking are good substitutes for consumers, then it is likely that ________. a. their price elasticities of supply are less than one . b. their income elasticities are less than zero. *c. their cross-price elasticities are greater than zero. d. their price elasticities of demand are less than one. 10. Higher prices are a method of telling consumers about scarcity. In these cases, consumers typically respond in which way? a. shopping elsewhere b. buying in bulk *c. adjusting their consumption d. demanding lower prices 11. When quantity demanded decreases but there has been no change in price _________. a. the demand curve shifts to the right. b. there is a movement up along the demand curve. c. there is a movement down along the demand curve. *d. the demand curve shifts to the left. 12. The opportunity cost of producing an airplane in Canada is 500 cars, while in Japan, it is 200 cars. As a result, ___________ a. Canada has a comparative advantage over Japan in the production of airplane. b. there can be mutual gains from trade to the two countries if the Canada exports airplane to Japan in exchange for cars. c. Japan has a comparative advantage over Canada in the production of cars. *d. there can be mutual gains from trade to the two countries if Canada exports cars to Japan in exchange for airplane.

13. Refer to Figure 3.5. Using the graph above and beginning on D2, a shift to D1 would indicate a(n) __________. *a. Decrease in income and the good is normal. b. Decrease in price of a complementary good. c. Increase in price of a substitute good. d. Decrease in income and the good is inferior. 14. How do demand and supply for apple pie change if the price of apples increased? a. Both demand and supply decrease. *b. Demand does not change, and supply decreases. c. Demand increases, and supply does not change. d. Demand decreases, and supply increases. 15. Refer to the Figure 5.7. An excise tax introduces a wedge between the price paid by consumers (Pc) and the price received by producers (Pp). Which of the following statement is correct? a. When the demand is more elastic than supply, the tax incidence on consumers , Pc – Pe, is larger than the tax incidence on producers, Pe – Pp b. When the supply is more elastic than demand, the tax incidence on consumers, Pc – Pe, is lower than the tax incidence on producers, Pe – Pp. c. When the supply is more inelastic than demand, the tax incidence on consumers, Pc – Pe, is larger than the tax incidence on producers, Pe – Pp.

*d. When the supply is more elastic than demand, the tax incidence on consumers, Pc – Pe, is larger than the tax incidence on producers, Pe – Pp. 16. If the USA could produce 1 ton of potatoes or 0.5 tons of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year. We can conclude that _________ a. USA has a comparative advantage and absolute advantage of producing wheat *b. Ireland has a comparative advantage in producing wheat and USA has a comparative advantage in producing potatoes. c. USA has a comparative advantage and absolute advantage producing potatoes d. USA has a comparative advantage in producing wheat and Ireland has a comparative advantage in producing potatoes. 17. South Korea produces electronics with less labour than any other country; it therefore necessarily has __________ a. a comparative advantage in electronics production. *b. an absolute advantage in electronics production c. both a comparative and absolute advantage in electronics production. d. an absolute advantage and comparative disadvantage in electronics production. 18. Refer to Figure 19.3. The figure shows how quickly Erin and Kim can paint a house with different speeds inside and outside the house. We can conclude that ____________ *a. Erin has a comparative advantage in exterior painting. b. Kim has a comparative advantage in exterior painting. c. Kim has an absolute advantage in exterior painting. d. Kim has an absolute advantage in interior painting.

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