ECO_211_09_Midterm_Fall_2022_V333

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Grand Valley State University *

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211

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Economics

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Apr 3, 2024

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MIDTERM EXAMINATION ECO 211 Instructor: Daniel Montanera Monday, Oct 17, 2022 Mackinac Hall, Rm B-2-118 VERSION 333 All exam materials must be submitted at the end of the exam. Without submitting a complete question booklet, you will not receive a grade. Turn cellular phones off before the test. No bathroom breaks Keep your eyes on your own papers Make a determined effort to keep your answers hidden from your classmates Good luck! Name: Student Number:
Potentially Useful Formulae: Resource cost of good X = ஺௠௢௨௡௧ ௢௙ ௥௘௦௢௨௥௖௘௦ ௨௦௘ௗ ஺௠௢௨௡௧ ௢௙ ௚௢௢ௗ ௑ ௣௥௢ௗ௨௖௘ௗ Opportunity cost of good X = ஺௠௢௨௡௧ ௢௙ ௚௢௢ௗ ௒ ௚௜௩௘௡ ௨௣ ஺௠௢௨௡௧ ௢௙ ௚௢௢ௗ ௑ ௚௔௜௡௘ௗ Opportunity cost of good Y for Country 1 = ை௣௣௢௥௧௨௡௜௧௬ ௖௢௦௧ ௢௙ ௚௢௢ௗ ௑ ௙௢௥ ஼௢௨௡௧௥௬ ଵ surplus = quantity supplied – quantity demanded shortage = quantity demanded – quantity supplied Price elasticity of demand = %∆ொ %∆௉ Price elasticity of demand (midpoint method) = %∆ொ %∆௉ = షೂ శೂ షು శು Price elasticity of demand (point elasticity) = %∆ொ %∆௉ = (𝑠𝑙𝑜𝑝𝑒 𝑜𝑓 𝑑𝑒𝑚𝑎𝑛𝑑) × ቀ Price elasticity of supply = %∆ொ %∆௉ Income elasticity of demand = %∆ொ %∆ூ Cross-price elasticity of demand = %∆ொ ವ,೉ %∆௉ Total Surplus = Total Benefit – Total Cost Consumer Surplus + Producer Surplus = Total Surplus
PART A: MULTIPLE CHOICE (15 points) Clearly CIRCLE the BEST ANSWER for each question directly onto this question booklet. FIGURE 1: Supply and Demand Model of a Market for Lobster 1) From Figure 1, A price floor of $8.00 would result in: a) A shortage of 25 thousand tons of lobster. b) A surplus of 50 thousand tons of lobster. c) No surplus or shortage. d) A surplus of 25 thousand tons of lobster. e) A shortage of 50 thousand tons of lobster. 2) A per-unit tax on the production of this good would cause: a) The demand curve to shift right. b) The supply curve to shift right. c) The supply curve to shift left. d) Both the supply and demand curves to shift right. e) The demand curve to shift left. 3) Suppose that government intervention causes the new equilibrium quantity of lobsters to be 𝑸 𝑬 = 𝟕𝟓 . If the new equilibrium price ( 𝑷 𝑬 ) is $2.00, the new Consumer Surplus would be: a) K + L + M. b) K + L + R. c) R + T + W. d) K + L + R + W. e) K. $ Q (thousand tons) 5.00 D O K 8.00 2.00 100 75 S 125 L M R T X U N V Y Z W
Investment Option: Expected profit (thousands): Bowling Alley $200 Restaurant $400 Electronics Store $300 Furniture Store $250 Table 1: An investment group’s options 4) From Table 1, for an investment group motivated by profits, what is the opportunity cost of opening a restaurant? a) $250 average profit from all the other options. b) $300 from opening an electronics store. c) $250 from opening a furniture store. d) $200 from opening a bowling alley. e) $750 total profit from all other options. 5) From Table 1, for an investment group motivated by profits, what is the opportunity cost of opening a furniture store? a) $900 total profit from all other options. b) $200 from opening a bowling alley. c) $300 from opening an electronics store. d) $300 average profit from all the other options. e) $400 from opening a restaurant. 6) Which of the following is likely to have the most elastic demand? a) Samsung Tablets. b) Tablets. c) Samsung Tablets with less than 12-inch screens. d) Computing devices. e) Computing devices with screens. 7) How are Total Surplus and Deadweight Loss related? a) Deadweight loss is the Total Surplus minus the Producer Surplus. b) Deadweight loss is the Total Surplus minus the Consumer Surplus. c) Deadweight loss is the difference between maximum and actual Total Surplus. d) Deadweight loss is the Total Surplus minus the Total Benefits. e) Deadweight and Total Surplus are the same. 8) Elastic Demand would appear as: a) A relatively flat, upward-sloping line. b) A perfectly vertical line. c) A perfectly horizontal line. d) A relatively steep, downward-sloping line. e) A relatively flat, downward-sloping line.
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