Economics 103 Worksheet With Answers - Fall 2012
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36Economics 103 Fall 2012: Short answer/graphing review questions for first midterm.
Additional practice questions are in the text within and at the end of each chapter.
Midterm is in class on Wednesday, October 10. Bring #2 pencil and a calculator. No
telephone-based calculators are allowed.
Make sure in your answers that you identify all axes, curves and original and new points
of equilibrium and all other relevant points.
1. Trade
u nions
i n
t he
s teel
i ndustry
g et
a n
a greement
f or
a nnual
w age
increases.
A t
t he
s ame
t ime,
c oal,
a n
i nput
t o
s teel,
i s
m ade
m ore
e xpensive
by
a
s trike
o f
c oal
w orkers.
D raw
o n
a
g raph
a nd
e xplain
i n
w ords
w hat
happens
t o
t he
m arket
e quilibrium
p rice
a nd
q uantity
o f
s teel
o nce
t hese
t wo
changes
h ave
h appened.
2. The
p rice
o f
c ar
o il
f ilters
r ises.
E xplain
i n
w ords
a nd
s how
o n
a
g raph
w hat
happens
i n
t he
m arket
f or
c ar
o il.
3. UMass
r aises
i ts
t uition
s o
t he
i ncome
s tudents
c an
s pend
o n
p izza
f alls.
Show
o n
a
g raph
a nd
e xplain
i n
w ords
w hat
h appens
i n
t he
p izza
m arket.
4. You
w ake
u p
t his
m orning
t o
r ead
i n
t he
C ollegian
t hat
s ugar
h elps
t he
b rain
recover
f aster
f rom
s tudy
e xhaustion.
S how
o n
a
g raph
a nd
e xplain
i n
w ords
what
h appens
i n
t he
m arket
f or
s ugar.
5. Draw
a nd
e xplain
i n
w ords
t he
s hape
o f
t he
f ollowing
d emand
c urves:
perfectly
e lastic,
p erfectly
i nelastic
a nd
u nitary
e lastic.
6. Demonstrate
o n
a
g raph
a nd
e xplain
i n
w ords
( making
r eference
t o
t he
elasticity
f ormula)
w hy
e lasticity
o f
d emand
v aries
a long
a
s traight
l ine
demand
c urve.
7. Demonstrate
o n
a
g raph
a nd
e xplain
i n
w ords
t he
d eadweight
l oss
t hat
would
o ccur
i f
c onstruction
o f
n ew
r ental
u nits
w as
p rohibited
i n
A mherst.
Be
s ure
t o
e xplain
w here
t he
p oint
o f
e fficiency
i s
a nd
w hy
a fter
t he
prohibition
t he
n ew
o utput
l evel
w ould
b e
i nefficient.
8. The
c ross
e lasticity
o f
d emand
f or
t wo
g oods
i s
g reater
t han
z ero.
E xplain
what
t he
r elationship
i s
b etween
t hese
t wo
g oods
a nd
d raw
o n
a
g raph
w hat
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