PASS MOCK EXAM FOR PRACTICE ONLY Course: ECON 1000A Facilitator: Colton Brydges Dates and locations

s of mock exam take-up: Tuesday October 15th (Paterson Hall 412) and Wednesday October 16th (Southam Hall 506) IMPORTANT: It is most beneficial to you to write this mock midterm UNDER EXAM CONDITIONS. This means: Complete the midterm in 1 hour(s). Work on your own. Keep your notes and textbook closed. Attempt every question. After the time limit, go back over your work with a different colour or on a separate piece of paper and try to do the questions you are unsure of. Record your ideas in the margins to remind yourself of what you were thinking when you take it up at PASS. The purpose of this mock exam is to give you practice answering questions in a timed setting and to help you to gauge which aspects of the course content you know well and which are in need of further development and review. Use this mock exam as a learning tool in preparing for the actual exam. Please note: Come to the PASS session with your mock exam complete. There, you can work with other students to review your work. Often, there is not enough time to review the entire exam in the PASS session. Decide which questions you most want to review the facilitator may ask students to vote on which questions they want to discuss. Facilitators do not bring copies of the mock exam to the session. Please print out and complete the exam before you attend. Facilitators do not produce or distribute an answer key for mock exams. Facilitators help students to work together to compare and assess the answers they have. If you are not able to attend the PASS session, you can work alone or with others in the class.

DISCLAIMER: PASS handouts are designed as a study aid only for use in PASS workshops. Handouts may contain errors, intentional or otherwise. It is up to the student to verify the information contained within.

Figure 1

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Refer to Figure 1. Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B? a. an increase in resources necessary to produce capital goods b. an improvement in the technology of producing consumer goods c. an increase in the overall level of technology in the economy d. an increase in unemployment Table 1 Labor Hours needed to make one unit of: Pants Shirts Helen 40 10 Carolyn 80 16 Amount produced in 160 hours: Pants Shirts 4 16 2 10

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Refer to Table 1. The opportunity cost of 1 pair of pants for Helen is a. 2 shirts. b. 3 shirts. c. 4 shirts. d. 5 shirts. Suppose that a worker in Saskatchewan can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Alberta can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Saskatchewan and 20 workers in Alberta. Which of the following statements is true? a. Both countries could gain from trade with each other. b. Neither country would gain from trade because Saskatchewan has an absolute advantage in both goods. c. Only Alberta could possibly gain from trade. d. Neither country would gain from trade because neither one has a comparative advantage. !

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Suppose that when the price of corn is $2 per bushel, farmers can sell 10 million bushels. When the price of corn is $3 per bushel, farmers can sell 8 million bushels. Which of the following statements is true? a. The demand for corn is income inelastic, and so an increase in the price of corn will increase the income of corn farmers. b. The demand for corn is income elastic, and so an increase in the price of corn will increase the income of corn farmers. c. The demand for corn is price inelastic, and so an increase in the price of corn will increase the income of corn farmers. d. The demand for corn is price elastic, and so an increase in the price of corn will increase the income of corn farmers. Figure 2

! 5. Refer to Figure 2. At the market-clearing equilibrium, total producer surplus is represented by the area a. F. b. F + G. c. D + E + F. d. D + E + F + G + H. ! Figure 3

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Refer to Figure 3 on the previous page. The price buyers pay after the tax is a. P1. b. P2. c. P3. d. impossible to determine. Orange juice and apple juice are substitutes. Bad weather that sharply reduced the orange harvest would a. increase consumer surplus in the market for orange juice but decrease producer surplus in the market for apple juice. b. increase consumer surplus in the market for orange juice and increase producer surplus in the market for apple juice. c. decrease consumer surplus in the market for orange juice but increase producer surplus in the market for apple juice. d. decrease consumer surplus in the market for orange juice and decrease producer surplus in the market for apple juice. Figure 4

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Refer to Figure 4. Consumer surplus in this market before trade is a. A b. A + B c. A + B + D d. C Refer to Figure 4Producer surplus in this market after trade is a. A b. A + B c. C + B + D d. C ! ! ! ! ! ! ! !

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Figure 5

10. Refer to Figure 5. With a price ceiling present in this market, when the supply curve for gasoline shifts from S1 to S2 a. the price will increase to P3. b. a surplus will occur at the new market price of P2. c. the market price will stay at P1 due to the price ceiling. d. a shortage will occur at the price ceiling of P2. 11. Refer to Figure 5. Without the price ceiling in this market for gasoline, when the supply curve shifts from S1 to S2 the price will a. increase to P3, but a shortage will still exist. b. increase to P3 and the market will clear. c. remain at P1 and a shortage will still exist. d. eventually move to P2 without government assistance. Figure 6

12. Refer to Figure 6. As price falls from PA to PB, which demand curve is most elastic? a. D1 b. D2 c. D3 d. All of the above are equally elastic.

Figure 7

13. Refer to Figure 7. The elasticity of demand from point A to point B, using the midpoint method would be a. 0.4. b. 1. c. 1.5. d. 2. e. 2.5. 14. Refer to Figure 7. The elasticity of demand from point B to point C, using the midpoint method would be a. 0.5. b. 0.75. c. 1.0. d. 1.3. e. 1.5. 15. If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price would result in a a. 4.0 percent decrease in the quantity demanded. b. 10 percent decrease in the quantity demanded. c. 40 percent decrease in the quantity demanded. d. 400 percent decrease in the quantity demanded. e. Not enough information is provided to answer this question. 16. Because the demand for wheat tends to be inelastic, the development of a new, more productive hybrid wheat would tend to a. increase the total revenue of wheat farmers. b. decrease the total revenue of wheat farmers. c. weaken the demand for wheat. d. weaken the supply of wheat.

Figure 8

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Refer to Figure 8. In which market will the majority of a tax be paid by the buyer? a. market (a) b. market (b) c. market (c) d. All of the above are correct. Refer to Figure 8. In which market will the majority of a tax be paid by the seller? a. market (a) b. market (b) c. market (c) d. All of the above are correct. If a shortage exists in a market we know that the actual price is a. below equilibrium price and quantity demanded is greater than quantity supplied. b. above equilibrium price and quantity demanded is greater than quantity supplied. c. above equilibrium price and quantity supplied is greater than quantity demanded. d. below equilibrium price and quantity supplied is greater than quantity demanded.

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Figure 9

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Refer to Figure 9. If the government imposes a binding price ceiling in this market at a price of $5.00, the result would be a a. shortage of 20 units. b. shortage of 10 units. c. surplus of 10 units. d. surplus of 20 units. e. surplus of 30 units. ! Figure 10

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Refer to Figure 10. The section of the demand curve labeled B represents the a. elastic section of the demand curve. b. inelastic section of the demand curve. c. unit elastic section of the demand curve. d. perfectly elastic section of the demand curve. A decrease in resource costs to firms in a market will result in a. a decrease in equilibrium price and an increase in equilibrium quantity. b. a decrease in equilibrium price and a decrease in equilibrium quantity. c. an increase in equilibrium price and no change in equilibrium quantity. d. an increase in equilibrium price and an increase in equilibrium quantity. !

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Figure 11

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Refer to Figure 11. The shift of the frontier from A to B was most likely caused by which of the following? a. technological improvement in the production of batteries b. more labour available in the economy c. a general technological breakthrough d. more capital available in the economy e. None of the above are correct. Table 2 Labour hours needed to make one unit of Cheese Bread 1 2 2 8 Amount produced in 40 hours Cheese Bread 40 20 20 5

Italy France 24.

Refer to Table 2. The opportunity cost of 1 unit of bread in Italy is a. 4 cheeses. b. 2 cheeses. c. 1 cheese. d. 1/2 cheese. Refer to Table 2. The opportunity cost of 1 unit of cheese in France is a. 2 breads. b. 1 bread. c. 1/2 bread. d. 1/4 bread.

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Figure 12

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Refer to Figure 12. Which point or points are inefficient? a. A, C b. D, C c. C d. D Refer to Figure 12. The economy CANNOT produce at which point or points? a. A b. C c. A, C d. A, C, D,

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! Figure 13

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Refer to Figure 13. Which of the four graphs represents the market for peanut butter after a major hurricane hits the peanut-growing south? a. A b. B c. C d. D Refer to Figure 13. Which of the four graphs represents the market for winter boots in June? a. A b. B c. C d. D Refer to Figure 13. Which of the four graphs represents the market for cars after new technology was installed on assembly lines? a. A b. B c. C d. D

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