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Sample Mid Semester Assessment Questions

This document provides a sample exam with multiple choice questions, true/false questions, and diagram/data analysis questions testing knowledge of microeconomic concepts like supply and demand. The exam has 4 parts: Part A contains 20 multiple choice questions worth 1 mark each. Part B contains 4 true/false questions worth 1 mark each for the answer and 3 marks for explaining using a supply and demand model. Part C contains diagram and data analysis questions worth between 5-11 marks. Part D contains 3 essay questions worth 8 marks each, requiring supply and demand analysis in 50-100 words. The exam tests concepts such as producer and consumer surplus, market equilibrium, taxes, and gains from trade.

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Cittle Lunt
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117 views7 pages

Sample Mid Semester Assessment Questions

This document provides a sample exam with multiple choice questions, true/false questions, and diagram/data analysis questions testing knowledge of microeconomic concepts like supply and demand. The exam has 4 parts: Part A contains 20 multiple choice questions worth 1 mark each. Part B contains 4 true/false questions worth 1 mark each for the answer and 3 marks for explaining using a supply and demand model. Part C contains diagram and data analysis questions worth between 5-11 marks. Part D contains 3 essay questions worth 8 marks each, requiring supply and demand analysis in 50-100 words. The exam tests concepts such as producer and consumer surplus, market equilibrium, taxes, and gains from trade.

Uploaded by

Cittle Lunt
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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SAMPLE QUESTIONS

NOTE: the numbers of questions that follow in each Part are not equal to the number in that Part on
the actual exam.

PART A: Indicate the correct answer to each multiple choice question in the line following the
question. Each correct answer is worth 1 mark.

[THERE WILL BE 20 QUESTIONS ON THE EXAM]

1. Producer surplus is
a. The difference between what a seller receives for the goods and the costs of producing
them.
b. The difference between what the buyer pays for the good and the cost of producing it.
c. The difference between what the buyer pays and what the seller receives.
d. The difference between the cost of the good and what the buyer is willing to pay for it.

ANSWER a. b. c. d.

2. Which of the following is not a normative statement


a. An increase in the tax on cigarettes will reduce smoking
b. Polluting activities (like smoking) should be taxed
c. Smoking should be reduced by a tax on tobacco
d. Smokers are taxed too much.

ANSWER a. b. c. d.

3. A country’s production possibility frontier measures


a. The maximum value of output that can be produced
b. What it is willing to trade with the rest of the world
c. The efficient combinations of output that can be produced.
d. Its absolute advantage.

ANSWER a. b. c. d.

4. Perfect competition is characterised by


a. A large number of small buyers and sellers
b. Price elastic demand and supply curves
c. The absence of government taxes
d. A large consumer surplus relative to producer surplus

ANSWER a. b. c. d.

5. Which of the following shifts the demand curve for detective novels
a. An increase in the price of detective novels
b. An increase in the cost of paper

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c. An increase in the price of detective magazines
d. A tax imposed on publishers.

ANSWER a. b. c. d.

6. If a nation has an absolute advantage in the production of a good;


a. It can produce the good at a lower opportunity cost than its trading partner
b. It can produce the good using fewer resources than its trading partner
c. It can benefit by restricting imports of that good
d. It will specialise in the production of that good and export it.

ANSWER a. b. c. d.

7. A freeze that destroys half the coffee crop in South America would likely raise the price of
coffee which would:
a. Reduce the demand for coffee and increase the demand for tea
b. Reduce the quantity demanded for coffee and increase the demand for tea
c. Reduce the demand for both tea and coffee
d. Reduce the quantity demanded for both coffee and tea.

ANSWER a. b. c. d.

8. If Australia buys cars from Japan, then in Australia:


a. Car producers lose and consumers gain
b. Car producers gain and consumers lose
c. Both car producers and consumers lose
d. Both car producers and consumers gain.

ANSWER a. b. c. d.

9. When a country imports:


a. The total surplus remains the same
b. The rise in consumer surplus is greater than the rise in producer surplus
c. The total surplus decreases
d. The rise in consumer surplus is greater than the fall in producer surplus.

ANSWER a. b. c. d.

10. A tax on the buyers of popcorn will:


a. Make buyers and sellers worse off
b. Make buyers worse off and sellers better off
c. Make buyers better off and sellers worse off
d. Have no effect on the welfare of buyers and sellers.

ANSWER a. b. c. d.

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PART B. Answer each of the following TRUE or FALSE by crossing out the incorrect alternative (1
mark). Then explain your answer (50-100 words) using the Supply and Demand model (3 marks).

1. A binding price floor reduces consumer surplus. TRUE/FALSE. Explanation:


2. In a given market a reduction in a tax will reduce its deadweight cost only if it reduces the
revenue collected. TRUE/FALSE. Explanation:
3. In a given market the larger the revenue collected by a tax the greater the deadweight cost
of the tax. TRUE/FALSE. Explanation:
4. If supply is perfectly inelastic a tax will have no deadweight cost, but will generate no
revenue. TRUE/FALSE. Explanation:

PART C. The following questions require you to determine answers based on a given diagram or
data.

11. [11 marks] The following Supply and Demand diagram shows the effects of opening a market
to international trade in a small country:

Price Domestic Demand Domestic Supply

B C F World Price

A E

O G H J Quantity

a. The domestic price in autarky is ________


b. The quantity demanded in autarky is_______
c. The quantity demanded at the world price is ________
d. The quantity supplied at the world price is ________
e. (select one) IMPORTS/EXPORTS at the world price are ______
f. The change in consumer surplus is a (select one) GAIN/LOSS of area _______
g. The change in producer surplus is a (select one) GAIN/LOSS of area_________

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h. The gains from trade are given by area _______

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[5 Marks] The Table below shows the time it takes each of two workers (John and David) to produce
a Hat or a Bag.

Minutes to make
Hat Bag
John 10 40
David 20 60

a. The worker with the absolute advantage in producing hats is ________


b. The worker with the absolute advantage in producing bags is_________
c. John’s opportunity cost of producing a hat is ______
d. David’s opportunity cost of producing a bag is ________
e. The worker with the comparative advantage in producing hats is ______.

25. [30 marks] Consider the following demand and supply schedules for shirts.

Price ($) Quantity Demanded Quantity Supplied


1 160 0
2 150 10
3 140 20
4 130 30
5 120 40
6 110 50
7 100 60
8 90 70
9 80 80
10 70 90
11 60 100
12 50 110
13 40 120
14 30 130
15 20 140
16 10 150
17 0 160

a. The autarky equilibrium price is ________


b. The autarky equilibrium quantity produced is ________
c. If the government imposes a price ceiling of $7 there is a (select one)
SURPLUS/SHORTAGE of _______
d. If the government imposes a price floor of $11 there is a (select one)
SURPLUS/SHORTAGE of ________

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Part D. Answer the following [8 marks each]. (50 to 100 words) There will be 3 questions in part D

26. If x is a normal good, illustrate the effects of an increase in income on the equilibrium price
and quantity traded of x in a supply and demand diagram
27. Use the supply and demand model to explain the effects of an increase in the supply of golf
courses on the price of playing golf and the price of golf balls.
28. Use the Supply and Demand model to explain the welfare effects of rent controls.
29. Use the Supply and Demand model to show why the legal incidence of a tax is irrelevant to
its economic incidence.

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