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York University Department of Economics Exam Cover Sheet

Name: Student Number: Course Code: AP/ECON Section (A, B, C, etc.):

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I will keep my responses out of sight of other students.

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I understand that all answers must be in my own words.

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I am aware that this test/exam material is the property of the Department of Economics and unauthorized dissemination or recording of the test is prohibited.

Any potential violation of the above will result in a charge of breaching academic honesty, and could result in a ‘0’ on the exam or more severe penalty. Student Signature: Date:

YORK UNIVERSITY Department of Economics AP/ECON 1000 Introduction to Microeconomics DATE:

Professor SAMPLE FINAL EXAM

INSTRUCTIONS: 1.

PRINT your name:

___________________________ (Last Name)

2.

Student Number:

_____________________________

3.

Signature:

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_______________________ (First Name)

On the pink SCANTRON form, use an HB PENCIL to: 4.

Fill in your Name only at the top right.

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At the top left, fill in your Student ID Number, and darken each number in the corresponding bubble to the left of each box. You will lose 3 marks if your student number is filled out wrongly or incompletely.

6.

All answers must be entered on the SCANTRON sheet to be counted. We will NOT transfer your answers to your scantron.

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The test is 150 minutes, 75 marks. Insert the SCANTRON sheet in the middle of the test paper when you are finished.

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NO ELECTRONIC AIDS (INCLUDING PHONES AND CALCULATORS) ARE ALLOWED.

Econ 1000 Sample Final Exam Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which Version of the Exam are you writing? A) Version A B) Version B

1) C) Version C

2) The two big economic questions include all of the following except A) how to produce. B) why to produce. C) what to produce. D) for whom to produce. E) can choices made in the pursuit of self-interest also promote the social interest.

2)

3) Which one of the following concepts is illustrated by a production possibilities frontier? A) consumption B) profit C) investment D) monetary exchange E) the tradeoff between producing one good versus another

3)

4) The principle of decreasing marginal benefit implies that the A) total benefit from obtaining more of a good or service decreases as more is consumed. B) additional benefit from producing one more unit of a good or service decreases as more of that good or service is produced. C) additional benefit from obtaining one more unit of a good or service decreases as more of that good or service is consumed. D) total benefit from obtaining more of a good or service remains the same as more is consumed. E) additional benefit from obtaining one more unit of a good or service increases as more of that good or service is consumed.

4)

5) Which one of the following events shifts the demand curve for grape jelly to the right? A) a decrease in the population B) an increase in the price of peanut butter, a complement of grape jelly C) a decrease in the price of strawberry preserves, a substitute for grape jelly D) a decrease in the price of grape jelly E) an increase in income if grape jelly is a normal good

5)

6) Which one of the following will shift the supply curve of good X leftward? A) a decrease in the cost of capital used to produce X B) a decrease in the wages of workers employed to produce X C) an increase in the cost of machinery used to produce X D) a situation where quantity demanded exceeds quantity supplied E) a technological improvement in the production of X

6)

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7) If a rise in the price of good B increases the demand for good A, then A) the demand for A is price elastic. B) A and B are complements. C) A and B are substitutes. D) the cross elasticity of demand between A and B is negative. E) A is a resource used in the production of B.

7)

8) Suppose the price of a television set rises by 10 percent. Which one of the following would we expect to be the most elastic following such a price change? A) the long-run supply of television sets B) the normal demand for television sets C) the momentary supply of television sets D) the short-run supply of television sets E) the momentary demand for television sets

8)

9) What is the consumer surplus for the market from the production of the 100th unit of a good? A) the marginal social benefit from the 100th unit minus the price paid for the 100th unit B) the marginal social cost of the 100th unit C) the marginal social benefit from the 100th unit minus the marginal social cost of the 100th unit D) the marginal social benefit from the 100th unit E) the opportunity cost of producing the 100th unit

9)

Use the table below to answer the following questions. Table 6.2.1 Wage Rate (dollars per hour) 7 6 5 4

Quantity Supplied (hours per week) 1,000 800 600 400

Quantity Demanded (hours per week) 200 400 600 800

10) Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City. Suppose the Genoa City Council sets a minimum wage of $6 per hour. Teenage unemployment is ________ hours a week. A) 600 B) 200 C) zero D) 400 E) 800

2

10)

Use the table below to answer the following question. Table 8.1.2 Units Consumed 1 2 3 4

Jim's Total Utility 12 22 30 36

Sally's Total Utility 16 26 34 40

11) Table 8.1.2 gives total utilities for Jim and Sally. Which one of the following statements is true? A) Jim has increasing marginal utility. B) Jim and Sally receive the same marginal utility from the third unit consumed. C) For Sally, the marginal utility of the third unit consumed is 6. D) If Sally consumes 2 units, her total utility is 10 units. E) If Jim consumes 2 units, his total utility is 34 units.

11)

12) Billy likes candy and popcorn. Candy sells for $0.50 a bag and popcorn sells for $1 per bag. Currently he is in consumer equilibrium. Then the price of candy rises to $1 a bag. Which statement is true in the new consumer equilibrium? A) Total utility will increase. B) Marginal utility per dollar on candy will be equal to 2. C) The marginal utility from candy will decrease. D) The marginal utility from popcorn will increase. E) The marginal utility from candy will be equal to the marginal utility from popcorn.

12)

13) If the price of the good measured on the vertical axis increases, the budget line A) shifts leftward and becomes steeper. B) shifts leftward and parallel to the original budget line. C) shifts rightward and parallel to the original budget line. D) becomes steeper. E) becomes flatter.

13)

14) A consumer always has a cup of coffee with a tablespoon of sugar. What would the consumer's indifference curves for these two goods look like? A) upward sloping B) vertical along the entire length C) L-shaped D) horizontal along the entire length E) downward sloping with a constant slope

14)

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15) Jay has an income of $10 to buy peanuts and popcorn. The price of peanuts is $1 a bag and the price of popcorn is $2 a bag. He chooses to consume 5 bags of peanuts and 2 bags of popcorn. What can we say about this consumption choice? A) The consumption choice is on the budget line. B) It is the best affordable choice, and his marginal rate of substitution equals the slope of the budget line. C) It is not the best affordable choice. He should consume more peanuts, more popcorn, or more of both. D) The consumption choice is outside the budget line. E) both B and C

15)

Use the figure below to answerthe following questions.

Figure 9.3.4 Original equilibrium at A, new equilibrium at B 16) Refer to Figure 9.3.4. Which graphs show the case where good Y is an inferior good? A) (a) and (b) B) (c) and (d) C) (a) and (c) D) (b) and (d) E) none of the graphs

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16)

17) For a normal good, the income effect A) is equal and opposite to the substitution effect. B) reinforces the substitution effect. C) is zero. D) is positive and the substitution effect is negative. E) is negative and the substitution effect is positive.

17)

18) Suppose the marginal product of energy equals the average product of energy. This implies that A) the marginal product curve is upward sloping. B) marginal product is at its maximum value. C) marginal product is negative. D) average product is at its minimum value. E) average product is at its maximum value.

18)

19) Which one of the following statements is false ? A) The gap between the average total cost curve and the average variable cost curve narrows as output increases. B) The gap between the average total cost curve and the average variable cost curve equals marginal cost. C) The marginal cost curve intersects the average total cost curve at minimum average total cost. D) The average total cost curve and average variable cost curve are U-shaped. E) The marginal cost curve intersects the average variable cost curve at minimum average variable cost.

19)

20) If constant returns to scale are present, A) average total cost is increasing. B) the LRAC curve is downward sloping. C) the LRAC curve is upward sloping. D) average total cost is decreasing. E) the LRAC curve is horizontal.

20)

21) A firm shuts down if price is A) less than marginal cost. B) above minimum average fixed cost. C) below minimum average variable cost. D) above minimum average variable cost. E) below average total cost.

21)

22) In which one of the following situations will a perfectly competitive firm make an economic profit? A) MC > AVC B) ATC > MR C) ATC > MC D) MR > AVC E) MR > ATC

22)

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Use the figure below to answerthe following questions.

Figure 12.4.3 23) Refer to Figure 12.4.3, which shows the cost curves and marginal revenue curve of a firm in a perfectly competitive market. In the long run, A) industry output will remain constant. B) firms will enter the market. C) firms that remain in the market will expand production. D) firms will adopt labour-saving technology. E) market demand will increase.

23)

24) For a single-price monopoly, marginal revenue is less than price because A) total revenue always decreases as output increases. B) the revenue gained from the last unit sold is offset by further gains in price on units not sold at all. C) the revenue gained from the last unit sold is offset by a revenue loss on the units that previously had been sold at a higher price. D) the price does not need to be lowered on all previous units sold. E) demand is perfectly elastic.

24)

25) A monopoly ________ make positive economic profit in the long run because ________. A) can; demand constantly increases and price constantly rises B) cannot; eventually demand will decrease and prices will fall C) can; barriers to entry prevent other firms from entering the market and sharing the profit D) cannot; other firms will enter the market until all firms are making zero economic profit E) can; new technology constantly lowers costs for the monopoly firm and for its competitors

25)

6

Use the table below to answer the following questions. Table 15.2.1 Bob Confess Confess B: 10 years J: 10 years

Don't Confess B: 20 years J: 1 year

Don't Confess

B: Go free J: Go free

Joe B: 1 year J: 20 years

26) Refer to Table 15.2.1. This table includes the sentences that Bob and Joe will receive if convicted. They have been apprehended by the police under the suspicion of committing armed robbery. The two are immediately separated and questioned about the case. Which one of the following observations is correct? A) Joe would be smart not to confess no matter what Bob does. B) Bob would be smart to confess no matter what Joe does. C) Both Bob and Joe have a dominant strategy of not confessing. D) Both Bob and Joe would be better off "coming clean" and confessing to their crime. E) Both Bob and Joe would be better off not confessing if they both do not confess.

26)

27) For a monopoly able to practice perfect price discrimination, the market A) supply curve is horizontal. B) demand curve is the same as the marginal cost curve. C) supply curve is the same as the marginal revenue curve. D) demand curve is the same as the marginal revenue curve. E) demand curve is horizontal.

27)

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Use the figure below to answerthe following questions.

Figure 16.2.1 28) Refer to Figure 16.2.1. The figure shows the marginal private cost curve, the marginal social cost curve and the market demand curve. To promote an efficient allocation of resources, the government could impose a constant per unit tax equal to B) P 3 - P 1. C) P 3 - P 2. D) zero. E) P 4 - P 1. A) P 1.

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28)

Use the figure below to answerthe following questions.

Figure 16.3.1 29) Refer to Figure 16.3.1. The figure shows the marginal private benefit curve, the marginal social benefit curve, and the market supply curve. If production is left to the private market, then A) the quantity produced is greater than the efficient quantity. B) the quantity produced is less than the efficient quantity. C) price is greater than marginal social benefit quantity. D) the quantity produced is zero. E) the marginal cost curve is horizontal.

29)

30) If the marginal social cost of producing a public good is greater than the marginal social benefit, then A) less than the efficient quantity of the public good is being produced. B) the efficient quantity of the public good is being produced. C) more than the efficient quantity of the public good is being produced. D) the public good is being produced by a private firm. E) the public good must be a common resource.

30)

31) Governments provide public goods such as national defence because A) of external costs. B) of the potential that private firms will make excess profit. C) of the free -rider problem, which results in underproduction by private firms. D) governments are more efficient than private firms at producing public goods. E) people do not value national defence very highly.

31)

32) A technological improvement is represented by A) a point inside the production possibilities frontier. B) an outward shift of the production possibilities frontier. C) a movement from a point inside the production possibilities frontier to a point on the production possibilities frontier. D) a movement along the production possibilities frontier. E) a point outside the production possibilities frontier.

32)

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Use the information below to answer the following questions. Fact 2.4.2 Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. 33) Given Fact 2.4.2, the opportunity cost of producing a unit of Y is A) 1 hour for Agnes and 2 hours for Brenda. B) 1 hour for Agnes and 1/2 hour for Brenda. C) 1 unit of Y for Agnes and 2 units of Y for Brenda. D) 1 unit of X for Agnes and 1/2 unit of X for Brenda. E) 1 unit of Y for Agnes and 1/2 unit of Y for Brenda.

33)

34) Complete the following sentence. Given Fact 2.4.2, A) there will be gains from trade, no matter what Brenda and Agnes specialize in, as long as they specialize. B) there will be no gains from trade because Agnes has an absolute advantage. C) there will be gains from trade only if Agnes specializes in the production of Y and Brenda in X. D) there will be gains from trade if Agnes specializes in the production of X and Brenda in Y. E) there will be gains from trade only if Agnes becomes faster at producing X.

34)

35) The main functions of markets include A) promoting the self-interest, but not the social interest. B) selling goods, but not factors of production. C) enabling buyers and sellers to get information about each other. D) promoting the social interest, but not the self-interest. E) establishing a physical location for business transactions.

35)

36) The demand and supply model determines A) money prices. B) demand prices. C) relative prices. D) absolute prices. E) supply prices.

36)

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Use the table below to answer the following questions. Table 3.1.1 Year 2012 2013 2014

Coffee Price $1.25 $1.50 $1.25

Tea Price $1.10 $1.00 $1.20

Cola Price $0.80 $1.00 $1.00

37) Refer to Table 3.1.1. In 2014, the relative price of coffee in terms of cola is A) 1.25. B) 1.56. C) 0.67. D) 1.00. E) unknown without more information.

37)

Use the figure below to answerthe following questions.

Figure 3.4.1 38) At price P 3 in Figure 3.4.1,

38)

A) equilibrium quantity is Q 5 . B) this market is in equilibrium. C) there is a shortage in the amount of Q 5 - Q 1. D) there is a surplus in the amount of Q 5 - Q 1. E) there is a tendency for the price to rise.

11

Use the table below to answer the following questions. Table 3.5.3 Demand and supply schedules for designer sport t-shirts at CoolU Price (dollars per t-shirt) 3 4 5 6 7 8 9 10 11 12

Quantity Supplied (t-shirts per month) 150 160 170 180 190 200 210 220 230 240

Quantity Demanded (t-shirts per month) 300 280 260 240 220 200 180 160 140 120

39) Refer to Table 3.5.3. In a television interview, Joe Cool shows off his designer sport t-shirt, setting off a new craze that doubles business at the sportswear establishments. The quantity of t-shirts demanded doubles at each price. The new equilibrium price is $________ and the new equilibrium quantity is ________ t-shirts per month. A) 12; 240 B) 16; 200 C) 16; 400 D) 12; 120 E) 8; 400

39)

40) The demand curve is P = 700 - 20 Q D . The supply curve is P = 300 + 20 Q S . At market

40)

equilibrium, the equilibrium quantity is ________ and the equilibrium price is ________. A) 0.10; 20 B) 400; 40 C) 500; 10 D) 20; 0.10 E) 10; 500 41) The price of oranges rises by 3 percent and quantity of oranges demanded decreases by 3 percent. We conclude that the demand for oranges is A) ...