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1 | |
If the government put a tax on shelter and then lowered the income tax, how would that be shown using a budget line model? |
| | A) | The budget line would shift parallel to the right because of the tax on X and then rotate counterclockwise because of the income tax reduction. |
| | B) | The budget line would shift parallel to the left because of the tax on X and then rotate clockwise because of the income tax reduction. |
| | C) | The budget line would rotate counterclockwise because of the tax on X and then shift parallel to the right because of the income tax reduction. |
| | D) | The budget line will rotate clockwise because of the tax on X and then shift parallel to the right because of the income tax reduction. |
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2 | |
If Scott's demand curve for theatre tickets is P = 100 - 5Q and the price per ticket is $40, how much consumer surplus does Scott receive from buying theatre tickets? |
| | A) | $40 |
| | B) | $60 |
| | C) | $360 |
| | D) | $480 |
| | E) | $1000 |
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3 | |
In question 5-2 above, If the theater were giving away tickets on a "first come, first serve" basis instead of charging admission, and if Scott's time were worth $100 per hour, how many hours would Scott be willing to wait in line for free tickets, if he were assured of getting the number he wanted from the wait. Assume there is no limit on the number of tickets he can have when he gets to the ticket window. |
| | A) | 3.6 hours |
| | B) | 4 hours |
| | C) | 10 hours |
| | D) | no hours |
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4 | |
In a 2-period world, the upward bias of the consumer price index would not exist if |
| | A) | people consumed the same market basket no matter what the relative prices of the goods. |
| | B) | all consumers made market choices as rational choice optimizers. |
| | C) | the second year market basket rather than the first year market basket was used as the base. |
| | D) | all goods were used in the market basket instead of just a limited selection of consumer items. |
| | E) | a or c is the case. |
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5 | |
When Fly-by-Night Airlines had a monopoly on the Calgary-Vancouver route, they charged $154/trip and carried 550 passengers/period. When Easy Rider Airlines entered the market, the price dropped to $92/trip and 2100 passengers flew each period. After Easy Rider went bankrupt, the price went back up to $132/trip, and 1100 tickets/period were sold. Given this information, we can say that if the demand for air travel between Calgary and Vancouver was unchanged over this period, then it can be represented reasonably accurately by a straight line with a vertical intercept of approximately _____ and a slope of approximately ______. |
| | A) | 154, -0.08 |
| | B) | 176, -0.04 |
| | C) | 2200, -2.5 |
| | D) | 4400, -25 |
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6 | |
From the information given in the problem above, the elasticity over the entire specified range of the demand function is |
| | A) | elastic. |
| | B) | inelastic. |
| | C) | unitary |
| | D) | partially elastic and partially inelastic. |
| | E) | not possible to discern from the information given. |
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7 | |
From the information given in question 1 above, which of the three alternative prices per trip would be the best for Fly-by-Night Airlines if it were the only airline flying the route? |
| | A) | $154 |
| | B) | $132 |
| | C) | $92 |
| | D) | The answer can not be determined from the information given. |
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8 | |
The intertemporal tradeoff function drawn below shows two years with the incomes of those years given. Borrowing and saving is possible. The only two people in this economy, Sam and Joe, have identical incomes shown as 100 in year one and 110 in year 2. The following two questions relate to the graph.
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From the information given, what should be the numerical value of X, rounded to the nearest whole number? |
| | A) | 221 |
| | B) | 210 |
| | C) | 200 |
| | D) | 199 |
| | E) | 190 |
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9 | |
Given the intertemporal preferences of Joe and Sam we can say that |
| | A) | Joe is more patient than Sam and Joe would not seek to borrow. |
| | B) | Sam would like to borrow but Joe does not want to lend money. |
| | C) | Neither Joe nor Sam is willing to save. |
| | D) | The interest rate in this community of two people is likely to go up. |
| | E) | All of the above are true. |
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10 | |
Which statement is true? |
| | A) | The desire for growth and improvement tends to bias people toward a negative time preference. |
| | B) | Wars and feelings of an uncertain future tend to bias people toward a positive time preference. |
| | C) | Positional concerns tend to bias people toward a positive time preference. |
| | D) | Weak commitment devices related to one''s financial planning tend to bias people toward exhibiting a positive time preference. |
| | E) | All of the above are true. |
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2002 McGraw-Hill Higher Education