Econ 201 Midterm 1

Econ 201 Midterm 1

Study Flashcards On Econ 201 Midterm #1 at Cram.com. Quickly memorize the terms, phrases and much more. Cram.com makes it easy to get the grade you want! ECON 201: Microeconomics February 1, 2018 Instructions: The mid-term exam consists of two parts. Part A and Part B. You have 50 minutes to work on the midterm. Write your answers on the answer sheet provided. Econ 201 Midterm 1 (chap 2,3,4) None Pages: 11 year: 2018/2019. Chapter 6 Supply, Demand, and Gov't Policies. None Pages: 2 year: 2018/2019. Chapter 1 The Principles of Economics. None Pages: 2 year: 2018/2019.
Econ 201 Midterm 1 Quizlet
Econ 201 Midterm 1
Econ 201 midterm 1 2017-04-19; exam 1 2013-04-22; econ 201 2020-03-02; chapter 12: aggregate demand and supply 2015-06-07; final exam questions from quizzes 2015-06-03; midterm 1 2013-04-20; econ 201 midterm 2 2016-02-23; econ 201 midterm 1 2014-04-22; chapter 18: open-economy macroeconomics: basic concepts 2011-07-16; chapter 17: money growth. Study Flashcards On Econ 201 Midterm #1 at Cram.com. Quickly memorize the terms, phrases and much more. Cram.com makes it easy to get the grade you want!
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Cards Return to Set DetailsTerm
Why is an economy's total income equal to its total expenditure?
Definition
Every transaction has a seller and buyer
Total expenditure = total income
Term
What is GDP?
Definition
Measures economy's total expenditure, total income, total production of goods and services
Term
Consider two cars manufactured by Chevrolet in
2007. During 2007, Chevrolet sells one of the two
cars to Sean for $24,000. Later in the same year,
Sean sells the car to Kati for $19,000. The second
automobile, with a market value of $30,000, is
unsold at the end of 2007 and it remains in
Chevrolet's inventory. The transactions just
described contribute how much to GDP for 2007?
Definition
$54,000
Term
What are the componenets of GDP
Definition
Y = C + I + G + NX
(C) consumption, 
(I) investment, 
(G) government purchases, 
(NX) Net Exports
Term
How does nominal GDP differ from real GDP
Definition
Nominal - uses current prices to value goods and services
Real - uses constant base year prcies to measure goods and services
Term
What is the GDP deflator
Definition
GDP deflator = 100 * (nominal GDP / real GDP)
Term
What is CPI
Definition
Measures the consumer's typical cost of living
oCPI = 100 * (cost of basket in current year) / (cost of basket in base year)
Term
Why is CPI an imperfect measure of the cost of living?
Definition
Substitution bias
Introduction of new goods
Changes in the quality of goods and services
CPI overstates inflation
Term
Comparing CPI to GDP deflator
Definition
Imported consumer goods (i.e. foreign oil)
oIncluded in CPI
oExcluded from GDP Deflator
Capital Goods
oExcluded from CPI
oIncluded in GDP deflator (if produced domestically)
The basket
oCPI uses fixed basket
oGDP Deflator uses basket of currently produced goods & services
Term
Using price index to compare dollar figures from different times
Definition
Amount in today's dollar = (amount in T years) * (Price level today / Price level in T years)
Term
Real Interest Rate
Definition
Real interest rate = nominal interest rate - rate of inflation
Term
Nominal Interest Rate
Definition
The rate of growth in the dollar value of a deposit or debt
Not corrected for inflation
Term
Real interest rate
Definition
The rate of growth in the purchasing power of a deposit or debt
Corrected for inflation
Term
The value of the consumer price index increased
from 140 to 147 during 2006. Nathan opened a
bank account at the beginning of 2006, and at the
end of 2006 his account balance was $12,840.
Assuming no other transactions during the year.
The purchasing power of Nathan's account
increased by 2 percent during the year. How
much did Nathan deposit when he opened his
account.
Definition
$12,000
Term
Why is productivity the key to a country's standard of living?
Definition
Productivity determines the economy's ability to produce goods and services
Term
What is the production function?
Definition
Y = A F(L,K,H,N)
Term
Constant Return to Scale
Definition
Y/L = A F(1,K/L,H/L,N/L)
Term
What is the financial system?
Definition
institutions that match the saving of one person with the investment of another
Term
What does the financial market consist of?
Definition
Bond Market
Stock Market
Term
What is the financial market?
Definition
institutions where savers can directly provide funds to borrowers
Term
What is a financial intermediary?
Definition
institutions where savers can indirectly provide funds to borrowers
Ex. Banks, Mutual Funds
Term
What is private saving?
Definition
Private Saving = Y – T – C


Term
What is Public Saving?
Definition
Public Saving = T – G
Term
What is a budget surplus?
Definition
§When Public Saving (T – G) is positive 
Term
What is a budget deficit?
Definition
§A shortfall of tax revenue from government spending
When public saving (T-G) is negative
Term
What is national saving?
Definition
Private saving + Public Saving
(Y – T – C) + (T – G)
National saving = (Y – C – G)
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Pages:9School:Drexel UniversityCourse:Econ 201 - Principles of MicroeconomicsSign up for free to view:Econ 201 Midterm 1This document and 3 million+ documents and flashcards
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Pages:9School:Drexel UniversityCourse:Econ 201 - Principles of MicroeconomicsSign up for free to view:Econ 201 Midterm 1This document and 3 million+ documents and flashcards
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Sign UpUnformatted text preview: Economics Professor Philip Luck Exam 1 NAME There are two parts to this exam Part I is made up of 15 multiple choice problems and is worth 45 points Answer all multiple choice questions on your Scantron Part II is made up of 3 short answer problems and is worth 55 points Answer all short answer problems in your blue book Be sure to put your name and ID on your test Scantron and blue book Be sure to read each question carefully before answering Do not use any books or notes You have 110 minutes to complete the full 100 point exam Be sure to budget your time BE SURE TO BUBBLE IN YOUR STUDENT ID ON YOUR SCANTRON PART I MULTIPLE CHOICE PROBLEMS Read each of the following questions carefully and circle the letter of the one best answer Note that diagrams are often helpful in determining the correct answer Each question is worth 3 points 1 2 The Tampa Bay Rays baseball team has the lowest payroll in the league and has relatively low attendance at Tropicana Field If the Rays want to increase revenue they A should increase prices no matter what the elasticity of demand for baseball is B should decrease prices no matter what the elasticity of demand for baseball is C should increase prices only if demand for baseball is relatively elastic D should decrease prices only if demand for baseball is relatively elastic Mark and Julie are going to sell brownies and cookies for their third annual fund raiser bake sale In one day Mark can make 40 brownies or 20 cookies and Julie can make 15 brownies or 15 cookies Based on this information has the comparative advantage in making brownies and has the comparative advantage in making cookies A Mark Julie B Mark Mark C Julie Mark D Julie Julie 3 Which situation would most likely cause a decrease in consumer surplus in the toy market A The cost of shipping increases due to higher oil prices B Consumer income increases C There is an unexpected baby boom D A new assembly line design increases worker productivity 1 4 Which of the following is a determinant of demand A expectations regarding future prices B the technology of production C the cost of production D consumer tastes 5 The opportunity cost of attending college is A the cost of the tuition B the cost of the highest valued alternative to attending college C the cost of the highest valued alternative to attending college plus the cost of tuition D the cost of tuition books and the lost wages for the hours spent studying 6 In 2000 there were 200 000 gas grills demanded at a price of 500 In 2001 there were more than 200 000 gas grills demanded at the same price This increase could be the result any of the following EXCEPT A an increase in the supply of gas grills B an increase in income if gas grills are a normal good C a fall in the price of natural gas a complement for a gas grill D an increase in population Use the following to answer question 7 7 Table Music Downloads Two consumers Eli and Madison like to download songs to their MP3 players The table represents their willingness to pay for each downloaded song If an individual song can be downloaded at a price of 1 what is the total consumer surplus received by these consumers A 19 25 B 18 C 10 D 11 2 8 After graduation from college you will receive a substantial increase in your income from a new job If you decide that you will purchase more T bone steak and less hamburger then for you hamburger would be considered a n A normal good B substitute good C complementary good D inferior good Use the following to answer question 9 Figure Market for Blue Jeans 9 Figure Market for Blue Jeans Suppose the government believes blue jeans are too expensive and it wants to make sure blue jeans are affordable to more citizens This type of price control is called a and the price could be set equal to A price floor 100 B price floor 55 C price ceiling 55 D price ceiling 100 3 10 Nick can purchase each milkshake for 2 For the first milkshake purchased Nick is willing to pay 4 for the second milkshake 3 for the third milkshake 2 and for the fourth milkshake 1 What is the value of Nick s consumer surplus A 2 B 9 C 3 D 10 11 Suppose the U S government imposes a quota on the number of Japanese made cars allowed into the United States the quota is set at a quantity below equilibrium Then we would expect the price of Japanese cars to and the price of U S made cars to A increase increase B increase decrease C decrease increase D decrease decrease 12 A rancher in Oklahoma decides to raise the price of her beef by 19 over what the prevailing market price equals If the demand for beef is perfectly elastic this rancher s quantity demanded will A fall to 0 B not change C fall slightly D increase slightly Use the following to answer question 13 Figure Consumer Surplus 4 13 Figure Consumer Surplus In the figure when the price falls from 30 to 25 consumer surplus for a total consumer surplus of A increases by 25 74 14 B decreases by 15 34 C increases by 15 64 D increases by 5 54 If the income elasticity of demand for a good is the good is said to be A positive inferior good B negative substitute good C positive normal good D positive positive good 15 A fall in the price of lemons from 10 50 to 9 50 per bushel increases the quantity demanded from 96 to 104 million bushels The price elasticity of demand is A 0 80 B 1 20 C 1 25 D 8 00 5 PART II Read each of the following questions carefully and write your answer in your bluebook Diagrams are often helpful in determining the correct answer Be sure to label all diagrams you provide 1 15 points The graph below shows the individual PPF s for Maria and Anna s production of shirts and ties Use this information to answer the questions below a 5 points What are Maria and Anna s opportunity costs for shirts for and ties ANSWER Maria s opportunity cost of one shirt 5 12 ties while here opportunity cost of one tie is 12 5 shirts Anna s opportunity cost of one shirt 1 tie and here opportunity cost of one tie is also 1 shirt b 5 points Who has a comparative advantage in ties Explain ANSWER Anna because she has a lower opportunity cost of producing ties 1 12 5 c 5 points Who has a comparative advantage in shirts Explain ANSWER Maria because she has a lower opportunity cost of producing shirts 5 12 1 6 2 20 points Supply and Demand shifts For all graphs label all axes all equilibrium points …
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