ECON5001_Microeconomics_2008Semester1_Mid_SemesterexamECON5001_2004..docVIP

Discipline of Economics ECON 5001: MICROECONOMICS Mid-Semester Test (Friday September 10, 2004) Instructions The test lasts for 1? hours. Maximum marks = 40. The test consists of two parts. You must answer ALL questions in both parts. Part A Multiple Choice: 20 questions (1 mark each). Answer on the sheet provided. Part B Problems: 2 problems (10 marks each). Answer in the booklet provided. Put your name, SID, and stream on the multiple choice answer sheet, and the exam booklet. Failure to comply may result in a mark of zero. This is a closed book exam: no notes are allowed. Non-programmable calculators are permitted. University of Sydney Examination Regulations apply. No person may leave the examination room in the first 30 minutes or in the last 20 minutes of the exam. GOOD LUCK! Part A: Multiple Choice (20 marks) 1. The slope of an indifference curve reveals: that preferences are complete. the marginal rate of substitution of one good for another good. the ratio of market prices. that preferences are transitive. none of the above. 2. Jane is trying to decide which courses to take next semester. She has narrowed down her choice to two courses Econ 1 and Econ 2. Now she is having trouble. She just cannot decide which of the two courses to take. It’s not that she is indifferent between the two courses, she just cannot decide. An economist would say that this is an example of preferences that: are not transitive. are incomplete. violate the assumption that more is preferred to less. all of the above. 3. If a consumer must spend her entire income on some combination of two commodities and chooses to spend it all on just one of the commodities then: the other commodity is an economic bad. the other commodity must have zero marginal utility. the other commodity generates less utility per dollar spent on the good. the two commodities must be perfect substitutes. 4. The change in the price of one good has no e