ECON1210 Introductory Microeconomics Midterm Examination 2024

发布时间：2024-06-28

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ECON1210 Introductory Microeconomics

Midterm Examination

Date: March 17, 2024, 14:30-15:30 (+ 10 minutes of grace period)

1. My university ID number is [ Answer01 ].

2. At the start of 2024, Calvin is deciding whether to put $77000 into a 12-month ﬁxed deposit of Bank A, Bank B, or Bank C. The per-annum deposit rate (for 12-month ﬁxed deposits) is 3.5% for Bank A, 5.6% for Bank B, 3.3% for Bank C. Suppose Bank A also in addition oﬀers $X cash coupon for customers who make 12-month ﬁxed deposits in 2024. Calvin should put all his money in Bank A if X is at least [ Answer02 ].

3. The equations below show May’s costs and beneﬁts (in $) of spending time to review for her economics exam:

Total cost ($):	TC(n) = 36n + 0.6n2
Marginal cost ($):	MC(n) = 36 + 1.2n
Total beneﬁt ($):	TB(n) = 240n − 1.3n2
Marginal beneﬁt ($):	MB(n) = 240 − 2.6n

where n is the number of hours spent on reviewing for the economics exam, which is perfectly divisible. We predict that May will allocate [ Answer03A ] hours to review for the exam, and the economic surplus corresponding to optimal time allocation will be $[ Answer03B ].

4. Serena walks past the same corner store every day. Two days ago, she noticed that the price of a bottle of orange juice was $18 per bottle and decided not buy any. Yesterday, she saw that the price of a bottle of orange juice was at $4 per bottle and bought a bottle. Today, Serena bought a bottle of orange juice at the price of $12 per bottle. Assuming that Serena’s valuation of orange juice remains unchanged, how many of the following statements is/are TRUE?

(1)	Serena may buy a bottle of orange juice if the price is $15 per bottle.
(2)	Serena will deﬁnitely not buy a bottle of orange juice if the price is $14 per bottle.
(3)	Serena will deﬁnitely not buy a bottle of orange juice if the price is $19 per bottle.
(4)	Serena’s cost of consuming a bottle of orange juice remains unchanged over time.

A) Zero of the above statements is true.

B) One of the above statements is true.

C) Two of the above statements are true.

D) Three of the above statements are true.

E) Four of the above statements are true.

[ Answer04 ]

5. You are considering to take a 4 days staycation to Park Island during the Christmas holiday. You are willing to pay $X for the trip. You have already bought a round trip ferry ticket at $175, which is non-refundable. To go to Park Island, you will have to apply for a leave from the part-time job where you normally work 8-hours a day at $18 per hour. You will live in your friend’s place so you don’t have to spend anything on accommodation. You currently live in a hotel with a daily rent of $414 that is non-refundable and typically pay $122 per day for food. You estimate that you need to pay a total of $613 for food during the staycation. You should go to the staycation if X is larger than or equal to [ Answer05 ].

Please refer to the background information below to answer the following two questions.

A coal mine owner is thinking of how to allocate mining hours to three workers, Andy, Betty and Cathy. The following table shows the daily compensation (in $) the owner has to pay to each worker, as a function of the number of hours they spend on mining each day. For instance, Cathy requires a total compensation of $116 to mine for two hours on a day.

Number of hours	Andy	Betty	Cathy
1	8	39	48
2	58	80	116
3	116	132	206
4	194	229	335
5	281	351	502
6	379	478	689
7	496	626	899
8	621	812	1141

6. Suppose a total of 7 mining hours are allocated each day. To minimize the total daily compensation to the three workers, the mine owner should allocate [ Answer06A ] hour(s) to Andy, [ Answer06B ] hour(s) to Betty, and [ Answer06C ] hour(s) to Cathy each day.

7. Now suppose there are no constraints on total mining hours to be allocated each day. If the beneﬁt of each mining hour to the mine owner is $121.7, to maximize the total economic surplus from mining, the mine owner should allocate [ Answer07A ] hour(s) to Andy, [ Answer07B ] hour(s) to Betty, and [ Answer07C ] hour(s) to Cathy each day.

Please refer to the background information below to answer the following four questions.

In a day, Steven can catch 90 lobsters, or 20 crabs. In a day, Cynthia can catch 100 lobsters, or 50 crabs.

8. Based on the information provided, we can conclude has the comparative advantage in

catching lobsters, and has the absolute advantage in catching crabs.

A) Steven; Steven

B) Steven; Cynthia

C) Cynthia; Cynthia

D) Cynthia; Steven

[ Answer08 ]

9. In order for both Steven and Cynthia to engage in trade and specialize in the production that they have comparative advantage in, the term of trade must be larger than [ Answer09A ] lobsters per crab and less than [ Answer09B ] lobsters per crab.

10. Suppose Steven and Cynthia will make consumption and production decisions together without trading with the rest of the world. If they are going to consume 50 lobsters in total every day, they can jointly catch a maximum of [ Answer10 ] crabs every day.

11. Suppose the two-person economy that consists of Steven and Cynthia can now trade in the world market, where the price per lobster is $26 and the price per crab is $65. Then, together they will catch [ Answer11A ] lobsters and [ Answer11B ] crabs each day.

Please refer to the background information below to answer the following two questions.

Chris and Dana form a two-person economy in Neverland. Suppose Chris has the comparative advantage in producing Banana. The following graph shows the two-person economy’s production possibilities, where the slope of AB is −0.72 and the slope of BC is −3.21. Suppose the world price of Banana is twice the world price of Tea (i.e., 2x dollars per kg of Banana and x dollars per kg of Tea, x > 0), and Neverland decides to open up to the world market and trade. Neverland is such a small nation that its behavior will not aﬀect the world market prices.

12. The opportunity cost for Chris to produce one kg of Tea is [ Answer12A ] kg(s) of Banana. The opportunity cost for Dana to produce one kg of Tea is [ Answer12B ] kg(s) of Banana.

13. Chris should produce [ Answer13A ]. Dana should produce [ Answer13B ].

A) Tea only

B) Banana only

C) both Tea and Banana

D) undetermined

Please refer to the background information below to answer the following two questions.

Suppose the individual supply curves for pineapples in East Utopia and West Utopia are given as follows:

Supply (East Utopia): P = 83 + 0.6QE

Supply (West Utopia): P = 37 + 0.2QW

where P is price per kg (in $), and Q is quantity supplied of pineapples in kgs.

14. If the price of pineapples in Utopia is $144 per kg, the total quantity supplied from Utopia as a whole is [ Answer14 ] kgs.

15. If the price of pineapples is $144 per kg, the total producer surplus is $[ Answer15 ].

Please refer to the background information below to answer the following two questions.

There are two groups of consumers, A and B, for good X with the following individual demand relations respectively:

Demand A: P = 190 − QA

Demand B: P = 95 − QB

The market supply is

P = 0.5Q

where P is price per unit of good X (in $), Q is quantity of good X in units.

16. The market equilibrium price is $[ Answer16A ] per unit and the market equilibrium quantity is [ Answer16B ] units.

17. The total consumer surplus at the equilibrium is $[ Answer17 ].

Please refer to the background information below to answer the following two questions.

The demand and supply for accountants in Utopia are given by the following equations (W is annual wage in terms of thousand dollars and N is number of accountants in thousand per year):

Demand: N = 33 − 0.6W

Supply: N = 2.3W − 9

The unregulated market annual equilibrium wage is 14.48 thousand dollars, and equilibrium accountants employed is 24.31 thousand per year. Note (1 thousand) × (1 thousand) = 1 million.

18. Suppose the Society of Accountants in Utopia persuades the government to set up a limited 14.6

thousand licenses for accountants per year. The equilibrium annual wage will be [ Answer18A ] thousand dollars and the equilibrium accountants employed will be [ Answer18B ] thousand per year.

19. With the license policy implemented, in the accountant market, the consumer surplus will be [ Answer19A ] million dollars per year, and the producer surplus will be [ Answer19B ] million dollars per year. The welfare loss to the society due to the policy will be [ Answer19C ] million dollars per year.

20. Consider a perfectly competitive market that consists of numerous potential buyers and numerous potential sellers. Assume that each potential buyer can buy at most one unit of the good, and each potential seller can sell at most one unit of the good. Also assume downward-sloping demand curve and upward-sloping supply curve. Evaluate whether the following statements are True or False.

A) When there is excess demand, the competition among unsatisﬁed buyers will drive the market price up.

[ Answer20A ] (T. True, F. False)

B) There is no excess supply or excess demand when the market is in equilibrium. [ Answer20B ] (T. True, F. False)

C) When there is excess supply, the competition among unsatisﬁed sellers will drive the market price down.[ Answer20C ] (T. True, F. False)

21. Consider the market for aviation fuel. Assume downward-sloping demand curves and upward-sloping supply curves and positive equilibrium quantity. How many of the following events would cause an increase in the price paid by buyers under the new equilibrium?

(1) The government subsidizes new electric airplane production.

(2) Government encourages the use of trains by constructing more high-speed rail tracks.

(3) Crude oil extraction workers demand more protective equipment.

(4) The price of crude oil rises.

A) 0

B) 1

C) 2

D) 3

E) 4

[ Answer21 ]

22. Consider the market for electric cars in China. Assume downward-sloping demand curves and upward-sloping supply curves and positive equilibrium quantity. After the occurrence of the following events:

(1) The United States president signs a new order which prohibits exporting electric cars to China.

(2) The price of gasoline decreases, and is expected to remain low for a long time.

We would expect the equilibrium price to [ Answer22A ] and the equilibrium quantity to [ An- swer22B ].

A) increase

B) decrease

C) be undetermined

23. Good X and good Y are substitutes. Assume downward-sloping demand curves and upward-sloping supply curves. Suppose initially we have PY = 18 and QY = 6. Now, given an increase in supply in the market of good X, other things being equal, which of the following price and quantity pairs (PY, QY ) can be true under the new equilibrium in the market of good Y?

A) (20,8)

B) (18,4)

C) (20,6)

D) (16,6)

E) None of the above

[ Answer23 ]

Please refer to the background information below to answer the following four questions.

Suppose the Western nations have been donating 55 thousand tons of grain to Neverland each year. Except for such donation, all grains available in Neverland are supplied by domestic producers. With Western donation, the market demand and supply of grain in Neverland are given as follows (P is the grain price in terms of thousand dollars per ton):

Market Demand:	Q = 370 − 9P	thousand tons of grain per year
Market Supply:	Q = 16P + 180	thousand tons of grain per year

With the Western aid, the grain market equilibrium price and quantity are, respectively, 7.6 thousand dollars per ton and 301.6 thousand tons per year. Note: (1 thousand) × (1 thousand) = 1 million.

Suppose the Neverland government is considering to implement a foreign policy A, which is against the national interests of Western nations. The Western nations threaten to impose an economic sanction on Neverland if policy A is implemented – they will withdraw the donation of 55 thousand tons of grain to Neverland each year, regardless of grain price.