econ 2020 exam 2 actual test
econ 2020 exam 2 actual test Econ 2020
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This 7 page Study Guide was uploaded by Natalie Partain on Monday May 2, 2016. The Study Guide belongs to Econ 2020 at Auburn University taught by William M. Finck in Spring 2016. Since its upload, it has received 20 views. For similar materials see Principles of Economics: Microeconomics in Business at Auburn University.
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Date Created: 05/02/16
VERSION 1 Name________________ ECON 2020 Exam #2 Directions: Read each question and EVERY possible answer VERY carefully. Select the best answer from the alternatives. Good luck! 1. A producer faces a price elasticity of demand of 1.18 when the price of the good is $24 and the quantity demanded is 1400 units. Find the change in quantity demanded if the producer decreases price by $2. (Round to nearest unit.) A. 69 B. 117 C. 25 D. 138 E. 1088 2. The cross elasticity coefficient between a steak and a mystery good is 0.67. The mystery good is probably A. a baked potato (a complement) B. a pork chop (a substitute) C. a cow (an input) D. a tiger (a dangerous pet) 3. Alan faces the following production possibilities: Pagers: 200 180 150 110 60 0 Pay phones: 0 1 2 3 4 5 nd What is the opportunity cost of producing the 2 pay phone? A. 30 pagers B. 75 pagers C. 40 pagers D. 150 pagers E. 1 pager 4. Which of the following statements about the economy above is TRUE? A. The PPF is a downward-sloping bowed line. B. The PPF is a downward-sloping straight line. C. His opportunity cost of producing pagers increases as he produces more pagers. D. A and C only E. B and C only 5. A perfectly inelastic demand curve A. has an elasticity coefficient equal to infinity B. has an elasticity coefficient equal to zero C. is represented on a graph by a vertical line D. A and C only E. B and C only 1 VERSION 1 6. Using the midpoint formula, find the price elasticity of demand coefficient for a producer when a price decrease from $24 to $21 causes a rise in quantity demanded from 600 units to 660 units. A. 1.4 B. 0.71 C. 0.92 D. 1.09 E. 1.0 Use the following diagram to answer questions 7 – 8. Pianos 2 1 3 PPF 1 PPF 2 Tigers 7. Which of the following could cause a movement from point 1 to point 3? A. a technological improvement B. trade with another economy C. a decrease in the unemployment rate D. an increase in the unemployment rate E. A, B and C only 8. Which of the following would cause a shift from PPF 1o PPF ?2 A. a technological improvement B. trade with another economy C. a decrease in the unemployment rate D. an increase in the unemployment rate E. A, B and C only 9. A decrease in the demand for a product is most likely to result in a large equilibrium quantity decrease if A. “I'm not supposed to be within two hundred feet of a school... or a Chuck E. Cheese.” B. the good is being exported C. the good is being imported D. the supply curve of the product is relatively price inelastic E. the supply curve for the product is relatively price elastic 2 VERSION 1 10. At the midpoint of a linear demand curve, A. total cost is maximized B. marginal revenue is equal to 1 C. price elasticity of demand is equal to 1 D. A and B only E. A and C only Use the following graph to answer questions 11 – 12. Cinnamon 6 C 4 P Pepper 0 10 18 11. The above economy will export A. 10 units of pepper B. 8 units of pepper C. 2 units of cinnamon D. 4 units of cinnamon E. 18 units of cinnamon 12. One unit of cinnamon trades for A. “Tigers love pepper. They hate cinnamon.” B. 4 units of pepper C. 2.5 units of pepper D. 3 units of pepper E. 2 units of pepper 13. Dr. Stu’s Dentistry faces a price elasticity of demand of 1.15. If management increases prices, what will happen to Dr. Stu’s total revenue? A. “Not at the table, Carlos!” B. total revenue will not change C. total revenue will increase D. total revenue will decrease 3 VERSION 1 Use the following graph to answer questions 14 – 15. P Sd $17 A B C $13 Dw Dd Q 130 220 300 14. With free trade, the above economy will A. export 90 units B. export 170 units C. export 80 units D. import 170 units 15. The gained producer surplus is represented by area(s) A. A only B. A and B C. C only D. B and C E. A, B and C Use the following graph to answer question 16. P D1 D2 Q 16. Given the graph above, which of the following statements is TRUE? A. D1 is relatively more price inelastic than D2. B. For a given price change, the elasticity coefficient for D1 is bigger than that for D2. C. For a given price change, the change in Qd along D1 is bigger than the change in Qd along D2. D. A and C only E. B and C only 4 VERSION 1 17. Which of the following would cause a consumer’s demand to become relatively more price elastic? A. the good becomes a larger proportion of the consumer’s budget B. the consumer finds she has less time to make the purchase C. the consumer finds fewer substitutes are available D. all of the above E. B and C only Use the following information to answer questions 18 – 20. Satchels Cameras Alan 40 5 Doug 50 10 18. Alan’s opportunity cost of a camera is A. 35 satchels B. 5 satchels C. 0.125 satchels D. 35 satchels E. 8 satchels 19. Which of the following statements is TRUE? A. Doug has a comparative advantage in producing cameras. B. Alan has a comparative advantage in producing cameras. C. Alan has an absolute advantage in producing satchels. D. Alan has an absolute advantage in producing cameras. E. A and C only 20. Assume that one camera trades for 6 satchels. If Alan and Doug completely specialize, and the camera producer trades 3 units, which of the following quantities will Doug consume? A. 22 satchels and 3 cameras B. 68 satchels and 7 cameras C. 18 satchels and 7 cameras D. 32 satchels and 3 cameras 5 VERSION 1 Use the following graph to answer questions 21 – 25. 2 $25 D $1$ A C B C 1 60 130 190 230 21. How many units did the economy import before the tariff? A. 170 B. 60 C. 70 D. 40 E. 130 22. What is the value of the tariff? A. $60 B. $18 C. $25 D. $7 E. “What do tigers dream of when they take a little tiger snooze?” 23. When the government uses a tariff to restrict trade, the gained producer surplus is represented by A. area A B. area B C. areas C D. area D E. none of the above 24. If the government uses an import quota to restrict trade, then the area labeled ‘B’ represents A. gained producer surplus B. domestic producer revenue C. foreign producer revenue D. tax revenue 25. At which point would the Dd demand curve be relatively more price elastic? A. 1 B. 2 C. elasticity is constant along a demand curve 6 VERSION 1 7
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