Sample Midterm for Microeconomics

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Department of Economics

ECON 201
Instructor: Ivan Tchinkov
Exam duration: 60 min.

Version 1
1. Write your answers on the IBM SHEET ONLY.
2. Use a PENCIL.
3. Put your NAME and ID on the IBM sheet.
4. Put the EXAM VERSION on the top right corner of the IBM sheet.

Multiple Choice Questions (2 marks each).
1.Which of the following statements is correct for a society that emphasizes the production of capital goods over consumer goods? A)The society could enjoy the same quantity of capital goods and a larger quantity of consumer goods in the future. B)The society would have to save more now than a society that did not emphasize the production of capital goods. C)The society will grow faster than a society that emphasizes the production of consumer goods. D)All of the above are correct.

2.The opportunity cost of attending college is likely to be highest for a high school graduate: A)who has access to student loans.
B)whose family is extremely wealthy.
C)who will attend a more expensive college.
D)who started a successful business in high school.

3.Benny has one hour before bedtime and he can either watch TV or listen to his new Korn CD. He chooses to listen to the CD. The scarcity problem's influence on Benny is seen in: A)a the decision to listen to music.

B)the decision not to watch TV.
C)the fixed amount of time before bed.
D)the decision to choose between TV and music.

4.Amy is thinking about going to the movies tonight. A ticket costs $7 and she will have to cancel her baby-sitting job that pays $30. The cost of seeing the movie is therefore: A)$7.

D)$37 minus the benefit of seeing the movie.

5.When considering an economy producing only two goods, economic growth can be illustrated by: A)a movement along its production possibilities frontier. B)a movement of its production possibilities frontier toward the origin. C)moving to a point beneath its production possibilities frontier. D)an outward shift of its production possibilities frontier.

6.Normative economics reflect:
A)society's laws.
B)economic analysis based on facts and evidence. C)empirical and significant economic observations. D)subjective values.

7.Which one of the following statements does not characterize an economic model? A)Models are controlled experiments with the economy. B)Models should contain a set of stated assumptions. C)Models may very well omit some important economic relationships. D)Models may be an imprecise representation of the real world.

8.A basket of goods in 1987 cost $783, while the value of the same basket in 1997 was $1133. The value of this price index in 1997, based on 1987 = 100, was: A)144.7.

9.If the weekly earnings index for the construction industry was 340 for 1987 (1970 = 100): A)workers in the construction industry earned $340 per week. B)they earned 340 per cent as much in 1987 as they did in 1970. C)workers earned $100 per week in 1970 and $340 in 1987. D)real weekly earnings fell by 3.4 percent.

10.All of the following except one are true of economic theories or models. Which one is the exception? A)They attempt to establish cause and effect between economic variables. B)They always reflect reality.

C)They are built with assumptions and then tested with facts. D)They are generalizations used to give context to our observations. 11.Why is...
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