Professor: M.

Rush
ECO 2023
SUMMER B 2012
MIDTERM 1
Read all instructions on this page
This test is governed by UFs academic honesty code. It is intended to have 33
multiple choice questions. Please check to be sure your copy has all 33. Choose
the best answer for each question.
The next is important: Unless you are specifically told otherwise, on this test do
not assume that demand or supply is either perfectly elastic or perfectly inelastic.
On the bubble sheet, please enter:
1. Your name and initials
2. Your UF ID number
3. Form code: A
4. Sign your name on the bubble sheet.
Check that the form code and UF ID number you bubbled-in are correct now. Also check
to be sure your name is correctdo it now. I have heard a rumor that the ability to
correctly record these had been mastered by a few students at FSU as well as a couple of
accounting and journalism students. While I have sincere doubts, nonetheless I will
investigate these rumors but in the meanwhile,
CHECK YOUR FORM CODE AND UF ID NUMBER. IF YOU GET EITHER OF
THESE WRONG, YOUR TEST MIGHT NOT BE GRADED AND IF IT IS GRADED,
YOU WILL LOSE 6 POINTS (which equals about 2 questions)!

TURN OFF ALL CELL PHONES AND OTHER
COMMUNICATION DEVICES

You may not use a cell phone, a Blackberry, or any other sort of device that allows for
communication as your calculator.
I have become increasingly concerned that some students are at a real disadvantage
because they are unwilling to ask questions during the exam while others ask a lot of
questions. Hence, to level the playing field, I have decided to eliminate all questions
during the test. I dont like this policy, but it seems the fairest policy.
Do not ask questions of me or the TAs; in the interest of fairness I
have instructed them not to answer any questions during the exam.
You will have one hour (60 minutes) to complete the exam and bubble in all your
answers. When the TAs say that time is up, you must hand in your exam. We will not
give extra time to finish bubbling in the answers, so be sure you are done when the 60
E CO 2023 MI DTE R M 1 S UMME R B 2012
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minutes are up. Of course, you may hand in your test at any time before the 60 minutes
are up.
An answer key will be posted on the class web page later this
evening at around 9:30 PM.
The test scores will be on class web page within a few days.
Once you see the answer key, you might have a question about why one answer
is right and another is wrong. For these questions, email me at
mark.rush@warrington.ufl.edu Do NOT email the grader about these questions!
After the scores are posted, if you think your posted score is incorrect, then email
the grader at eco2023.grader@warrington.ufl.edu If you email me about your test
score, I will not forward the email nor respond to youyou MUST email the
grader. You have one week after the curved score is posted to request a grade
check. After a week, the score will not be changed. If the web reports what you
bubbled in for each question and you ask the grader to check an answer because
you believe you bubbled in something other than what is reported and the
reported answer on the web is correct, you will lose 1 additional question.
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1) Which of the following increases the equilibrium price of a used car and also
increases the equilibrium quantity purchased?
i. A fall in income if used cars are an inferior good.
ii. An increase in the wage rate paid to used car salespeople.
A) i only.
B) ii only.
C) Both i and ii..
D) Neither of the above because the question suggests a violation of the law
of demand.
2) If the price of a burger decreases by 5 percent and as a result the quantity of
burgers demanded increases by 8 percent, the price elasticity of demand
equals
A) 0.60.
B) 0.40.
C) 1.60.
D) 0.625.
E) None of the above answers are correct.
3) If technological advances lower the price of computer chips, in the market
for computers the equilibrium price of a computer will ____ and the
equilibrium quantity of computers will ____.
A) fall; increase
B) fall; decrease
C) rise; increase
D) rise; decrease
4) Magazines are made from paper. If the price of paper rises, then the
equilibrium price of a magazine ____ and the equilibrium quantity ____.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
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5) The above figure shows the market for pizza. Which panel shows the effect
of a rise in the price of the tomato sauce used to produce pizza?
A) Figure A.
B) Figure B.
C) Figure C.
D) Figure D
6) When China builds a dam using few machines and a great deal of labor, it is
most directly answering the ____ question.
A) what
B) how
C) where
D) for whom
7) If the demand curve for bottled water shifts leftward and the supply curve
of bottled water shifts leftward, the equilibrium
A) price of bottled water definitely rises.
B) price of bottled water definitely falls.
C) quantity of bottled water definitely increases.
D) quantity of bottled water definitely decreases.
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8) The PPF is bowed outward because
i. to produce more goods and services, unemployment must be
decreased.
ii. resources are not equally productive in producing all the different
goods and services.
iii. technology must advance in order to increase the production of all
goods and services.
A) i only.
B) ii only.
C) i and iii.
D) ii and iii.
E) i, ii, and iii.
9) Jane produces only corn and cloth and cloth is measured along the
horizontal axis. Jane prefers cloth to corn. Taking account of her preferences
for corn and cloth
A) makes her production possibilities frontier straighter.
B) makes her production possibilities frontier steeper.
C) makes her production possibilities frontier flatter.
D) does not affect her production possibilities frontier.
10) Taco Bells economists determine that the price elasticity of demand for their
tacos is 2.0. So, if Taco Bell raises the price of its tacos by 6.0 percent, the
quantity demanded will decrease by ____ percent.
A) 2.0
B) 3.0
C) 6.0
D) 12.0
E) None of the above answers are correct.
11) If the price of pizza is below the equilibrium price of a pizza, then
i. there will be a shortage of pizza.
ii. there will be a surplus of pizza.
iii. the supply curve will shift to the right to eliminate the shortage.
A) i only.
B) ii only.
C) i and iii.
D) ii and iii.
E) i, ii, and iii.
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12) Travel by plane is a normal good and peoples incomes rise. As a result, the
equilibrium price of plane travel ____ and the equilibrium quantity ____.
A) falls; decreases
B) falls; increases
C) rises; decreases
D) rises; increases
13) When the price of a pizza is $11, consumers buy 195 pizzas. When the price
of a pizza is $9, consumers buy 205 pizzas. Between these prices, the price
elasticity of demand for pizza is equal to
A) 5.0.
B) 4.0.
C) 17.7.
D) 0.20.
E) 0.25.

Point
Production
chocolate bars
Production
cans of cola
A 0 100
B 10 90
C 20 70
D 30 40
E 40 0
14) The above table shows production points on Sweet-Tooth Lands production
possibilities frontier. What is the opportunity cost of one chocolate bar if
Sweet-tooth Land moves from point B to point C?
A) 70 cans of cola
B) 1 chocolate bar
C) 90 cans of cola
D) 2 cans of cola
E) 10 chocolate bars.
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Price
(dollars per
pound)
Quantity
supplied
(pounds)
Quantity
demanded
(pounds)
3 1 7
4 2 5
5 4 4
6 5 2
7 6 1
15) The above table shows the demand schedule and supply schedule for
chocolate chip cookies. If the price is $4.00 per pound, there is a
A) shortage of 2 pounds of chocolate chip cookies.
B) shortage of 3 pounds of chocolate chip cookies.
C) shortage of 5 pounds of chocolate chip cookies.
D) surplus of 3 pounds of chocolate chip cookies.
16) When UF plays FSU, ticket scalpers outside the football stadium sell tickets
at prices higher than the price printed on the ticket. This observation
provides evidence that
A) there is a surplus of tickets at the printed ticket prices.
B) there is a shortage of tickets at the printed ticket prices.
C) the game is getting too much television exposure.
D) None of the above answers are correct.
17) People generally do more driving in the summer as many families go on
vacation. As a result, in the summer the equilibrium price of gasoline ____
and the equilibrium quantity ____.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
18) Pizza and soda are complements and soda falls in price. As a result, the
equilibrium price of a slice of pizza ____ and the equilibrium quantity ____.
A) rises; increases
B) rises; decreases
C) falls; decreases
D) falls; increases
E) None of the above answers are correct.
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19) The good whose demand curve is illustrated in the above figure is said to
have
A) perfectly inelastic demand.
B) perfectly elastic demand.
C) unit elastic demand.
D) elastic, inelastic and unit elastic demand.
E) None of the above answers are correct.
20) The expected future price of corn rises. As a result, the current equilibrium
price of corn ____ and the current equilibrium quantity of corn ____.
A) rises; decreases
B) rises; increases
C) might rise, fall, or not change; decreases
D) does not change; increases
E) rises; might increase, decrease, or not change
21) The price elasticity of demand for wheat is 0.42. A drought cuts the supply
of wheat. What will happen to the farmers total revenue?
A) The total revenue will increase.
B) The total revenue will decrease.
C) The total revenue will not change.
D) There is not enough information to determine what happens to the total
revenue.
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22) Consider the PPF for milk and corn in the above figure. If currently no corn
is being produced, what is the total opportunity cost of producing another 2
bushels of corn?
A) 2 bushels of corn.
B) 4 gallons of milk.
C) 1 gallon of milk.
D) Nothing.
23) If the demand curve for a good is a downward sloping straight line, the
demand for the good will be more price elastic the higher is the
A) price of the good.
B) price of substitutes.
C) income of consumers.
D) income elasticity of demand for that good.
24) A 10 percent increase in income results in a 5 percent decrease in the
quantity demanded. The income elasticity is
A) 0.5.
B) 0.5.
C) 2.0.
D) 2.0.
25) The social arrangements that govern the ownership, use, and disposal of
property are referred to as
A) the double coincidence of wants.
B) capitalism.
C) private enterprise.
D) property rights.
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26) More people decide that eating fried chicken at a fast food restaurant (such
as KFC) is healthy. Simultaneously, the price of chickens increases. As a
result, the equilibrium price of fried chicken ____ and the equilibrium
quantity ____.
A) might rise, fall, or not change; does not change
B) falls; increases
C) rises; increases
D) might rise, fall, or not change; might increase, decrease, or not change
E) rises; might increase, decrease, or not change
27) Which of the following shifts a nations PPF outward?
i. An increase in a nations capital stock.
ii. A decrease in inefficiency.
iii. An increase in a nations technology.
A) i only.
B) ii only.
C) i and iii.
D) ii and iii.
E) i, ii, and iii.
28) During the last decade, the price of shoes rose substantially yet people
bought more pairs of new shoes each year. This experience suggests that
A) the supply curve of shoes shifted leftward.
B) the demand curve for shoes shifted leftward.
C) the supply curve of shoes shifted rightward.
D) the demand curve for shoes shifted rightward.
29) After you graduate, you have three job offers. You think all three are equally
desirable except for the differences in pay. You accept a position working at
the Bureau of Labor Statistics for $39,000.00 a year. The two other offers you
received were working for Walmart for $32,000 and working for Ernst and
Young consulting for $36,000. What is the opportunity cost of accepting the
position at the Bureau of Labor Statistics?
A) The $39,000 you are paid for working at the Bureau of Labor Statistics.
B) The $36,000 you would have been paid working for Ernst and Young.
C) The $32,000 you would have been paid working for Walmart.
D) The $36,000 you would have been paid working for Ernst and Young
and the $32,000 you would have been paid working for Walmart.
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30) The above figure shows the apartment rental market in Bigtown. At what
rent will there be neither a shortage nor a surplus of apartments?
A) $1250.00 per month
B) $1000.00 per month
C) $750.00 per month
D) $500.00 per month
31) The number of firms producing computer memory chips decreases. As a
result, the price of a memory chip ____ and the quantity of memory chips
____.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
32) The price elasticity of demand for gasoline is 0.4. If the quantity of gasoline
is decreased by 10 percent, the price of gasoline rises by
A) 40.0 percent.
B) 2.5 percent.
C 4.0 percent.
D) None of the above are correct.
33) After the scores are posted, if you have a question about your test score,
email the grader at ECO2023.Grader@warrington.ufl.edu and the director is
so stupid that (HINT: Be SURE to answer this question because youll get
credit for any answer.)
A) he was fired from his job at the M&M factory as a proofreader.
B) he tried to kill his toy poodle by putting batteries in it.
D) he cant make ice cubes because he lost the recipe.