# Equilibrium: Problem Set on Supply, Demand, and Price

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Test Version A SEMESTER I EXAMINATIONS Mid-Term Assessment ECON 30110 Microeconomics II Time Allowed: 50 minutes Instructions for Candidates This exam counts for 30% of the Module Grade. All questions carry equal marks. Note there is NO negative marking Correct answer is worth 1 mark. No answer or more than one answer, will both receive a 0 mark. Incorrect answer will receive a 0 mark. Attempt all 20 questions. Shade in the box in the appropriate space with a HB pencil on the RESPONSE SHEET. Write the test version at the top of the RESPONSE SHEET You may use the paper provided to make notes or calculations to help you. Instructions for Invigilators Foreign language/English dictionaries are…show more content…
This means that the price of good Y will rise and/or the price of good X must fall. Process continues until all excess demand and supply are eliminated, and IC tangent to each other (on the Contract curve) and to the price line (which will now be flatter. So in the competitive equilibrium all markets clear, MRSA = MRSB = PX/PY. (see lecture overheads) 5. Suppose the production possibilities for two countries, A and B, producing two goods, X and Y, are as follows: | A | B | X | 2 | 7 | Y | 4 | 7 | They can each produce any linear combination as well. Measuring X on the horizontal axis, the joint production possibility frontier: a) will kink away from the origin at 7 units of X. b) will kink toward the origin at 7 units of X. c) will kink away from the origin at 2 units of X d) will kink toward the origin at 2 units of X e) will not have a kink answer: a jointly the countries can produce either a total of 9X or 11Y. MRT of A is – 4/ 2= -2 MRT of B is - 7/7 = -1 Country B has comparative advantage