Version 222 THE UNIVERSITY OF WESTERN ONTARIO LONDON ...
Version 222 THE UNIVERSITY OF WESTERN ONTARIO LONDON CANADA Michael Parkin
ECONOMICS 020-002/004
December 9, 2007
MID-YEAR EXAMINATION
INSTRUCTIONS: 1. The examination begins at 10:00 a.m. and ends at 12:00 p.m. 2. Check that your examination paper contains 23 pages. 3. Use a BLACK PENCIL to complete your Scantron Form. Check to ensure that the code on your Scantron sheet matches the code on the paper. Print your NAME and complete your SIGNATURE. Enter your STUDENT NUMBER. Enter your SECTION NUMBER, which is either 002 or 004. 4. Please hand in Scantron Form only. 5. You may use a regular calculator but you may not use a programmable or graphing calculator. 6. Your cell phone must be switched off and left in your bag at the front of the exam room.
NOTE: QUESTIONS ARE PRINTED AT THE BACK OF EACH PAGE
Economics 020 - 002/004 Mid- Year Examination December 9, 2007 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question, t*,t\ 1) Which of the following is an example of a positive statement? — COAA M. -r --'41 f -f' A) Canada should cut back on its use of carbon-based fuels such as coal and oil. : B) Increasing the minimum wage results in more unemployment. ~"C) The Central Bank of Canada ought to cut the interest rate. D) Canada should decrease the rate of unemployment. E) Every Canadian should have equal access to health care. 2) If an economy produces two goods with increasing opportunity cost, then the production possibilities frontier ___
^4). will be bowed out and have a negative slope. B) will be positively sloped. p) reflects the fact that available resources are equally useful hi all production activities. D) will be linear and have a negative slope.
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' E) will be bowed out and have a positive slope. T -t..\jtw'"j
3) A technological advance is represented by
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11
L point outside the production possibilities frontier. - -UlW' ' ^ i'"
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: movement from a point inside the production possibilities frontier to a point on the production possibilities frontier. .KJ^C. rf ^yini/i mfi { s ^ u i i/Hf ^"j f C) a1 rightward shift of the production possibilities frontier. ~^
^b-t-t ti) pQtU'Ut rtll/vt
D) a point inside the production possibilities frontier. E) a movement along the production possibilities frontier. 4) If A and 5 are complemenls.m_productipn and the price of A falls, the supply of B will A) decrease, and the price of B will increase.
p''"**- '1 i,
^'-iV'-l
h
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^'
pf
'. B^lncrease, and the price of 5 will decrease.
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J^increase or decrease depending on how close A and B are as complements. (T)) idecrease, and the price of B will decrease. ^
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.
^B^lncrease, and the price of B will increase.
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.
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5) Suppose we observe an increase in the price of oranges. Which one of the following is the most likely cause? ~~~
A) a technological advance in the production of oranges - '-AWM :
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Bj a scientific discovery that oranges cause hah loss /
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.
C^good growing weather in Florida ~^~-
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an increase in the price of apples, if apples and oranges are substitutes " a decrease hi income if oranges are a normal good
6) Which one of the following will give a price elasticity of demand of 5.0? A 10 percent increase in price results in a A) 5 percent decrease in quantity demanded.
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B) 0.5 percent decrease hi quantity demanded.
'B^ _ ^ r „-•'.-. •' \(, ,
C)' 50 percent decrease hi quantity demanded. D) 10 percent decrease hi quantity demanded. E) 2 percent decrease in quantity demanded. 7) At the current price, both Bill and Ted.haye an inelastic demand for coffee and each consumes 14 coffees a week. Bill's demand is/less elastic, than Ted's. Given this information, we know that all of the following arejrue^except - - - - - - n\ v\^ ?• -• vX
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A) Bill's willingness to pay for the 13th coffee per week is greater than Ted's. B) Bili is willuig to spend more on coffee than Ted. j/
/
C) Bill's willingness to pay for the 14th coffee per week is greater than Ted's./7 D) Bill's consumer surplus from coffee is greater than Ted's.,/
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E) Bill's marginal rate of substitution between other goods and coffee diminishes more" rapidly ,-t
i-p
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,
8) When demand is unit elastic, consumer surplus is infinity. C) the same at every price. E)-greater the lower is the price.
B-2
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' -'•
ECONOMICS 020-002/004
December 9, 2007
MID-YEAR EXAMINATION
INSTRUCTIONS: 1. The examination begins at 10:00 a.m. and ends at 12:00 p.m. 2. Check that your examination paper contains 23 pages. 3. Use a BLACK PENCIL to complete your Scantron Form. Check to ensure that the code on your Scantron sheet matches the code on the paper. Print your NAME and complete your SIGNATURE. Enter your STUDENT NUMBER. Enter your SECTION NUMBER, which is either 002 or 004. 4. Please hand in Scantron Form only. 5. You may use a regular calculator but you may not use a programmable or graphing calculator. 6. Your cell phone must be switched off and left in your bag at the front of the exam room.
NOTE: QUESTIONS ARE PRINTED AT THE BACK OF EACH PAGE
Economics 020 - 002/004 Mid- Year Examination December 9, 2007 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question, t*,t\ 1) Which of the following is an example of a positive statement? — COAA M. -r --'41 f -f' A) Canada should cut back on its use of carbon-based fuels such as coal and oil. : B) Increasing the minimum wage results in more unemployment. ~"C) The Central Bank of Canada ought to cut the interest rate. D) Canada should decrease the rate of unemployment. E) Every Canadian should have equal access to health care. 2) If an economy produces two goods with increasing opportunity cost, then the production possibilities frontier ___
^4). will be bowed out and have a negative slope. B) will be positively sloped. p) reflects the fact that available resources are equally useful hi all production activities. D) will be linear and have a negative slope.
1
uts-M"^" ? ^
' E) will be bowed out and have a positive slope. T -t..\jtw'"j
3) A technological advance is represented by
$•
f^Q^U.
11
L point outside the production possibilities frontier. - -UlW' ' ^ i'"
Jltd'-*^-'^ '"
: movement from a point inside the production possibilities frontier to a point on the production possibilities frontier. .KJ^C. rf ^yini/i mfi { s ^ u i i/Hf ^"j f C) a1 rightward shift of the production possibilities frontier. ~^
^b-t-t ti) pQtU'Ut rtll/vt
D) a point inside the production possibilities frontier. E) a movement along the production possibilities frontier. 4) If A and 5 are complemenls.m_productipn and the price of A falls, the supply of B will A) decrease, and the price of B will increase.
p''"**- '1 i,
^'-iV'-l
h
'-'"^''1 l^™
^'
pf
'. B^lncrease, and the price of 5 will decrease.
'''
"'v*"
J^increase or decrease depending on how close A and B are as complements. (T)) idecrease, and the price of B will decrease. ^
^*,
.
^B^lncrease, and the price of B will increase.
B-l
.
I ,rj.J
-"•. ,
5) Suppose we observe an increase in the price of oranges. Which one of the following is the most likely cause? ~~~
A) a technological advance in the production of oranges - '-AWM :
"
,x
Bj a scientific discovery that oranges cause hah loss /
.^^
.
C^good growing weather in Florida ~^~-
* r-i
..V^
--t^^A
' —..-^
- f, 'J >
'
* V
an increase in the price of apples, if apples and oranges are substitutes " a decrease hi income if oranges are a normal good
6) Which one of the following will give a price elasticity of demand of 5.0? A 10 percent increase in price results in a A) 5 percent decrease in quantity demanded.
-j^ , P '
B) 0.5 percent decrease hi quantity demanded.
'B^ _ ^ r „-•'.-. •' \(, ,
C)' 50 percent decrease hi quantity demanded. D) 10 percent decrease hi quantity demanded. E) 2 percent decrease in quantity demanded. 7) At the current price, both Bill and Ted.haye an inelastic demand for coffee and each consumes 14 coffees a week. Bill's demand is/less elastic, than Ted's. Given this information, we know that all of the following arejrue^except - - - - - - n\ v\^ ?• -• vX
>•
\A>V
'•>*',-.
jA
A) Bill's willingness to pay for the 13th coffee per week is greater than Ted's. B) Bili is willuig to spend more on coffee than Ted. j/
/
C) Bill's willingness to pay for the 14th coffee per week is greater than Ted's./7 D) Bill's consumer surplus from coffee is greater than Ted's.,/
^
'-
$u; "
E) Bill's marginal rate of substitution between other goods and coffee diminishes more" rapidly ,-t
i-p
j|
,
8) When demand is unit elastic, consumer surplus is infinity. C) the same at every price. E)-greater the lower is the price.
B-2
,\r
' -'•
