# MICROECONOMICS Midterm Test (sample)

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1 Student Name:.. MICROECONOMICS Midterm Test (sample) Time: 60 minutes Student Number:. Total Mark:... /50 Class:. Converted Mark:../10 Section A: QUIZ 20 marks Show your answers on the ANSWER SHEET at the end of this section. T-F Questions 1. A movement along a supply curve is called a change in supply while a shift of the supply curve is called a change in quantity supplied. 2. Normal goods have negative income elasticities of demand, while inferior goods have positive income elasticities of demand. 3. If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium increases because of the exports of chocolate. 4. Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is pleased since she paid \$8,000 for the car but would have been willing to pay \$11,000 for the car. Susie's consumer surplus is \$2, When a good is taxed, the tax revenue collected by the government equals the decrease in the welfare of buyers and sellers caused by the tax. 6. Producing a soccer ball costs Jake \$5. He sells it to Darby for \$35. Darby values the soccer ball at \$50. For this transaction, the total surplus in the market is \$ If the income elasticity of demand for a good is negative, then the good must be an inferior good. 8. The market demand curve shows how the total quantity demanded of a good varies as the income of buyers varies, while all the other factors that affect how much consumers want to buy are held constant. 9. The more elastic are supply and demand in a market, the greater are the distortions caused by a tax on that market, and the more likely it is that a tax cut in that market will raise tax revenue. 10. Cross-price elasticity of demand measures how the quantity demanded of one good changes as the price of another good changes.