Economics 2301-03 SAMPLE QUESTIONS FOR MIDTERM EXAM #2 Fall, 2011 Name___________________________________________ NetID _____________________ 1) In order to discourage consumers from eating unhealthy fast food, the government is considering placing a tax on all fast food sales. Which of the following statements is TRUE? A) Given the numerous alternatives, consumers' demand for fast food is relatively elastic and the tax will likely work to discourage fast food consumption. B) The tax on fast food will likely raise considerable revenue, but will be unlikely to reduce the consumption of fast food by consumers. C) The tax on fast food will likely increase the demand for homecooked meals. D) Both A and C are true. Refer to the information provided in Figure 5.4 below to answer the questions that follow. Figure 5.4 2) Refer to Figure 5.4. Along the given demand curve, which of the following is true? A) Demand is less elastic along the segment AB than the segment EF. B) All of the above are true. C) Since the demand curve is linear, the price elasticity of demand between each of the points is the same. D) Demand is less elastic along the segment EF than the segment AB. 1 Economics 2301-03 SAMPLE QUESTIONS FOR MIDTERM EXAM #2 Fall, 2011 Refer to the information provided in Figure 6.5 below to answer the questions that follow. Figure 6.5 3) Refer to Figure 6.5. Molly's budget constraint is BD. If the price of CDs decreases, her new budget constraint becomes A) EF. B) AD. C) AO. D) CD. 4) Jim has $600 a week to spend on clothing and food. The price of clothing is $30 and the price of food is $5. The clothing and food pairs in Jim's choice set include ________ units of clothing and ________ units of food. A) 20; 50 B) 0; 200 C) 15; 70 D) 10; 60 2 Economics 2301-03 SAMPLE QUESTIONS FOR MIDTERM EXAM #2 Fall, 2011 Refer to the information provided in Figure 7.4 below to answer the questions that follow. Figure 7.4 5) Refer to Figure 7.4. The average product of the E1>3 worker is A) 1. B) 2.5. C) 5. D) 11. 6) Which statement is NOT true regarding the total variable cost curve? A) The total variable cost curve starts at the origin. B) The total variable cost curve is a horizontal line. C) The total variable cost curve shows the variable costs of production given current factor prices. D) The total variable cost curve increases as output increases. 7) Related to the Economics in Practice on page 109: Which of the following best explains why demand is often less elastic in the short run than it is in the long run? A) In the short run, prices can change rapidly, but in the long run they are more stable. B) When demand is elastic, price increases reduce revenue because a small price increase will lead to a large decrease in quantity demanded. C) Consumers tend to postpone making purchasing decisions as long as possible. D) In the short run, consumers have less access to substitutes. 8) Price decreases will ________ a household's choice set. A) increase B) not change C) decrease D) sometimes increase and other times decrease 3 Economics 2301-03 SAMPLE QUESTIONS FOR MIDTERM EXAM #2 Fall, 2011 Refer to the information provided in Figure 7.4 below to answer the questions that follow. Figure 7.4 9) Refer to Figure 7.4. Diminishing marginal returns begin when the ________ worker is hired. A) E<=> B) second C) third D) E1>3 Refer to the information provided in Table 8.2 below to answer the questions that follow. Number of TVC MC Earnings 0 1 50 2 3 4 5 270 Table 8.2 AVC TFC TC AFC ATC 100 46.67 95 300 10) Refer to Table 8.2. If Sherry produces three pairs of earrings, her total variable costs are A) $26.67. B) $140. C) $175. D) $225. 4 Answer Key Testname: 2301MID2_CH5-8_SAMPLE 1) D 2) D 3) D 4) D 5) D 6) B 7) D 8) A 9) C 10) B 1