Prof. Charles Roussel
Spring 2018
Exam #1
Answer key with explanations at the end!
Use the following for questions 1-2: Suppose Joel decides to go fishing at Lake Veronica, but he
faces a choice: he can fish on the north, south, east, or west side of the lake. His expected
catch for the day is as follows: 1 fish on the north side, 4 fish on the south side, 7 fish on the
east side, 2 fish on the west side.
1. In the situation above, what is Joel’s benefit of fishing on the south side of the lake?
A. -6 fish
B. -3 fish
C. 2 fish
D. 3 fish
E. 4 fish
2. In the situation above, what is Joel’s opportunity cost of fishing on the west side of the lake?
A. 1 fish
B. 2 fish
C. 4 fish
D. 7 fish
E. 12 fish
3. If a 6 percent ____ in price results in a 9 percent increase in quantity demanded, it can be
concluded with certainty that demand is price _______.
A. Increase; elastic
B. Decrease; elastic
C. Decrease; inelastic
D. Increase; inelastic
4. Suppose, at a given point in time, a market is in equilibrium. An increase in the number of
sellers in the market causes market supply to _____, resulting in a _____ that will be eliminated
as the market price of the good ____, everything else held constant.
A. Decrease; surplus; decreases
B. Decreases; shortage; increases
C. Increase; surplus; increases
D. Increase; surplus; decreases
E. Increase; shortage; decreases
5. Suppose both buyers and sellers expect the world price of oil to increase next week.
Everything else held constant, the demand for oil will _____ and the equilibrium price of oil will
______ TODAY.
A. Decrease; increase
B. Increase; decrease
C. Decrease; decrease
D. Increase; increase
, Use the following to answer questions 6-7: Suppose an online retailer of batteries has the
following price scheme (with free shipping) for its 315 Oxide Button Cell Battery:
Quantity Purchased Price per Battery
1-4 $3.00
5-24 $1.50
25 or more $1.00
6. In the situation above, what is the marginal cost of the fifth battery purchased?
A. -$4.50
B. -$1.50
C. $1.50
D. $3.00
E. $7.50
7. In the situation above, would a rational consumer ever purchase three 315 Silver Oxide
Button Cell Batteries from this site?
A. Definitely yes.
B. Definitely no.
C. Yes, but only if the consumer needed exactly three batteries.
8. “On Friday, February 2, the latest monthly snapshot of the American labor market revealed
that wages had climbed 2.9% in January compared with a year earlier. The tight job market was
forcing employers to pay more.” This is an example of a news item about a _____ issue.
A. Macroeconomic
B. Microeconomic
9. Suppose ramen is an inferior good. ______ in national income will cause _______ in the
demand for ramen and an increase in its equilibrium price, everything else held constant.
A. A decrease; a decrease
B. An increase; a decrease
C. An increase; an increase
D. A decrease; an increase
10. Suppose Agnes is a rational decision maker with a reservation price of $400 for a good.
Suppose further that the actual price of the good is $500 and a transaction took place. It can be
concluded with certainty that Agnes was the _____ of the good.
A. Seller
B. Buyer
11. Suppose that goods x and y are substitutes in consumption. Suppose further that the supply
of good x decreases. Everything else held constant, this will cause the ______ good y to _____.
A. Supply of; decrease
B. Supply of; increase
Spring 2018
Exam #1
Answer key with explanations at the end!
Use the following for questions 1-2: Suppose Joel decides to go fishing at Lake Veronica, but he
faces a choice: he can fish on the north, south, east, or west side of the lake. His expected
catch for the day is as follows: 1 fish on the north side, 4 fish on the south side, 7 fish on the
east side, 2 fish on the west side.
1. In the situation above, what is Joel’s benefit of fishing on the south side of the lake?
A. -6 fish
B. -3 fish
C. 2 fish
D. 3 fish
E. 4 fish
2. In the situation above, what is Joel’s opportunity cost of fishing on the west side of the lake?
A. 1 fish
B. 2 fish
C. 4 fish
D. 7 fish
E. 12 fish
3. If a 6 percent ____ in price results in a 9 percent increase in quantity demanded, it can be
concluded with certainty that demand is price _______.
A. Increase; elastic
B. Decrease; elastic
C. Decrease; inelastic
D. Increase; inelastic
4. Suppose, at a given point in time, a market is in equilibrium. An increase in the number of
sellers in the market causes market supply to _____, resulting in a _____ that will be eliminated
as the market price of the good ____, everything else held constant.
A. Decrease; surplus; decreases
B. Decreases; shortage; increases
C. Increase; surplus; increases
D. Increase; surplus; decreases
E. Increase; shortage; decreases
5. Suppose both buyers and sellers expect the world price of oil to increase next week.
Everything else held constant, the demand for oil will _____ and the equilibrium price of oil will
______ TODAY.
A. Decrease; increase
B. Increase; decrease
C. Decrease; decrease
D. Increase; increase
, Use the following to answer questions 6-7: Suppose an online retailer of batteries has the
following price scheme (with free shipping) for its 315 Oxide Button Cell Battery:
Quantity Purchased Price per Battery
1-4 $3.00
5-24 $1.50
25 or more $1.00
6. In the situation above, what is the marginal cost of the fifth battery purchased?
A. -$4.50
B. -$1.50
C. $1.50
D. $3.00
E. $7.50
7. In the situation above, would a rational consumer ever purchase three 315 Silver Oxide
Button Cell Batteries from this site?
A. Definitely yes.
B. Definitely no.
C. Yes, but only if the consumer needed exactly three batteries.
8. “On Friday, February 2, the latest monthly snapshot of the American labor market revealed
that wages had climbed 2.9% in January compared with a year earlier. The tight job market was
forcing employers to pay more.” This is an example of a news item about a _____ issue.
A. Macroeconomic
B. Microeconomic
9. Suppose ramen is an inferior good. ______ in national income will cause _______ in the
demand for ramen and an increase in its equilibrium price, everything else held constant.
A. A decrease; a decrease
B. An increase; a decrease
C. An increase; an increase
D. A decrease; an increase
10. Suppose Agnes is a rational decision maker with a reservation price of $400 for a good.
Suppose further that the actual price of the good is $500 and a transaction took place. It can be
concluded with certainty that Agnes was the _____ of the good.
A. Seller
B. Buyer
11. Suppose that goods x and y are substitutes in consumption. Suppose further that the supply
of good x decreases. Everything else held constant, this will cause the ______ good y to _____.
A. Supply of; decrease
B. Supply of; increase
