Professor: M.

Rush
ECO 2023
SUMMER B 2013
MIDTERM 1
Read all instructions on this page
This test is governed by UFs academic honesty code. It is intended to have 30 multiple
choice questions. Please check to be sure your copy has all 30. Choose the best answer
for each question.
The next is important: Unless you are specifically told otherwise, on this test do not
assume that demand or supply is either perfectly elastic or perfectly inelastic.
On the bubble sheet, please enter:
1. Your name and initials
2. Your UF ID number
3. Form code: A
4. Sign your name on the bubble sheet.
Check that the form code and UF ID number you bubbled-in are correct now. Also check to be
sure your name is correctdo it now. I have heard a rumor that the ability to correctly record
these had been mastered by a few students at FSU as well as a couple of accounting and
journalism students. I will investigate these rumors but in the meanwhile,
CHECK YOUR FORM CODE AND UF ID NUMBER. IF YOU GET EITHER OF
THESE WRONG, YOUR TEST MIGHT NOT BE GRADED AND IF IT IS GRADED,
YOU WILL LOSE CREFIT FOR 2 QUESTIONS

TURN OFF ALL CELL PHONES AND OTHER
COMMUNICATION DEVICES
You may not use a cell phone or any other sort of device that allows for communication as your
calculator.
I have become increasingly concerned that some students are at a real disadvantage because
they are unwilling to ask questions during the exam while others ask a lot of questions. Hence,
to level the playing field, I have decided to eliminate all questions during the test. I dont like
this policy, but it seems the fairest policy.
Do not ask questions of me or the TAs; in the interest of fairness I have
instructed them not to answer any questions during the exam.
You will have one hour (60 minutes) to complete the exam and bubble in all your answers.
When the TAs say that time is up, you must hand in your exam. We will not give extra time to
finish bubbling in the answers, so be sure you are done when the 60 minutes are up. Of course,
you may hand in your test at any time before the 60 minutes are up.
An answer key will be posted on the class web page after 10 PM.
The test scores will be on class grade card within a few days.
Once you see the answer key, you might have a question about why one answer is right
and another is wrong. For these questions, email me at mark.rush@warrington.ufl.edu
ECO 2023 MIDTERM 1 SUMME R B 201 3
Do NOT email the grader about these questions! After the scores are posted, if you think
your posted score is incorrect, then email the grader at
eco2023.grader@warrington.ufl.edu If you email me about your test score, I will not
forward the email nor respond to youyou MUST email the grader. You have one week
after the score is posted to request a grade check. After a week, the score will not be
changed. If the web reports what you bubbled in for each question and you ask the
grader to check an answer because you believe you bubbled in something other than
what is reported and the reported answer on the web is correct, you will lose 1
additional question.



2
ECO 2023 MIDTERM 1 SUMME R B 201 3
1) Suppose UF raises the price of tickets to its football games and the total revenue
increases. Based on this, then it is most likely the case that
A) UF football games are a normal good.
B) there are not many substitutes for UF football games.
C) if ticket prices were lowered, then total revenue would increase by even more.
D) the supply of tickets to UF football games is elastic.
2) Suppose jet fuel rises in price. Then the equilibrium price of travel by plane ____
and the equilibrium quantity of travel by plane ____.
A) rises; increases
B) does not change; decreases
C) falls; decreases
D) rises; does not change
E) rises; decreases
3) The income elasticity of demand for natural Christmas trees is positive. This result
means that
A) natural and artificial Christmas trees are substitutes.
B) natural Christmas trees are a normal good.
C) the demand for natural Christmas trees is inelastic.
D) the demand for natural Christmas trees is elastic
4) Over the past few years the government issued new regulations that increased the
amount of ethanol that had to be added to gasoline. These new regulations ____ the
equilibrium price of ethanol and ____ the equilibrium quantity of ethanol.
A) raised; increased
B) raised; decreased
C) lowered; decreased
D) lowered; increased
5) Vera Bradley makes a specific style of cloth purses. The elasticity of demand for a
Vera Bradley purse likely is ____ the elasticity of demand for purses in general.
A) larger than
B) the same as
C) smaller than
D) not comparable to
6) When the price of a pizza is $11, 27 million pizzas per day are demanded. When the
price of a pizza is $9, 33 million pizzas per day are demanded. The price elasticity of
demand equals
A) 0.33.
B) 3.00.
C) 1.73.
D) 1.00.
E) None of the above are correct.

3
ECO 2023 MIDTERM 1 SUMME R B 201 3

7) The above figure shows the market for pizza. Suppose the tomato sauce used to
produce pizza rises in price. Which panel shows the effect of a rise in the price of
tomato sauce?
A) Figure A.
B) Figure B.
C) Figure C.
D) Figure D
8) Suppose the number of Mexican restaurants falls as some restaurants close. As a
result, the equilibrium price of Mexican food ____ and the equilibrium quantity
____.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
9) The price elasticity of demand for Pizza Hut pizza is 4.0. If Pizza Hut decides to
decrease the quantity of pizza it produces by 2 percent, then the price of Pizza Hut
pizza will rise by ____ percent.
A) 2.0
B) 0.5
C) 8.0
D) 1.0
E) None of the above are correct.

4
ECO 2023 MIDTERM 1 SUMME R B 201 3
10) If the price is above the equilibrium price, then there is a
A) surplus, and market forces will operate to lower price.
B) surplus, and market forces will operate to raise price.
C) shortage, and market forces will operate to lower price.
D) shortage, and market forces will operate to raise price.
11) From 9:30 to 10:45 AM, Fred can sleep in, go to his economics lecture, or play tennis.
Suppose that Fred decides to go to the lecture but thinks that, if he hadnt, he would
otherwise have slept in. The opportunity cost of attending the lecture is
A) sleeping in and playing tennis.
B) playing tennis.
C) sleeping in.
D) one hour of time.
12) Taco Bell determines that their total revenue for tacos increases by $20 million per
day when they decrease the price of a taco by 10. The value for the elasticity of
demand is
A) between 0 and 1.
B) greater than 1.
C) equal to 0.
D) some amount that is impossible to determine without more information.
13) Plywood is used in the construction of houses. If the price of plywood rises, what
happens in the market for houses?
A) The supply of houses increases.
B) The supply of houses decreases.
C) The demand for houses increases.
D) The demand for houses decreases.
E) Both answers B and D are correct.
14) Suppose that this winter more people worry about the flu than in previous winters.
If the supply of flu vaccine is perfectly elastic, then the equilibrium price of flu
vaccine ____ and equilibrium quantity ____.
A) rises; increases
B) rises; decreases
C) rises; does not change
D) does not change; increases
E) falls; increases
15) New cars and used cars are substitutes for consumers and the price of a new car
rises. As a result, the equilibrium price of a used car ____ and the equilibrium
quantity ____.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases

5
ECO 2023 MIDTERM 1 SUMME R B 201 3

16) The figure above illustrates a linear demand curve. In the range from $8 to $6, the
elasticity of demand
A) is greater than 1.0.
B) equals 1.0.
C) is less than 1.0..
D) more information is needed to answer the question.
17) If the price elasticity of demand for a good is zero, then its
A) supply curve is vertical.
B) demand curve is horizontal.
C) demand curve must be vertical.
D) demand curve is positively sloped.
E) None of the above are correct.
18) Cupcakes and bread are substitutes in production for bakeries. If cupcakes rise in
the price, then the equilibrium price of bread _____ and the quantity of bread _____.
A) increases; increases
B) increases; decreases.
C) decreases; increases
D) decreases; decreases
E) more information is needed to answer the question.
19) Moving along a bowed-out PPF between milk and cotton, as more milk is produced
the marginal cost of an additional gallon of milk
A) rises.
B) does not change.
C) falls.
D) probably changes, but in an ambiguous direction.

6
ECO 2023 MIDTERM 1 SUMME R B 201 3
20) Suppose that the price of beans used to produce burritos increases. As a result, the
equilibrium price of a burrito ____ and the equilibrium quantity ____.
A) rises; increases
B) rises; decreases
C) falls; increases
D) falls; decreases
21) Opportunity cost is
A) zero for services, because services do not last for very long, and positive for goods,
because goods are long lasting.
B) paid by society not by an individual.
C) the highest-valued alternative foregone by making a choice.
D) all the alternatives foregone by making a choice.
22) Doctors find that one aspirin per day reduces the risk of heart attacks. As a result,
the equilibrium price of aspirin will ____ and the equilibrium quantity will ____.
A) rise; increase
B) rise; decrease
C) fall; increase
D) fall; decrease
23) Cotton shirts are a normal good and peoples incomes increase. Simultaneously the
price of the cotton used to make the shirts falls. The effect of the increase in income
is larger than the effect of the fall in the price of cotton. As a result, the equilibrium
price of a cotton shirt ____ and the equilibrium quantity ____.
A) rises; increases
B) rises; decreases
C) falls; increases
D) rises; does not change
E) None of the above answers is correct.
24) If technological advances lower the cost of computer chips, in the market for
computers the equilibrium price will ____ and the equilibrium quantity will ____.
A) fall; increase
B) fall; decrease
C) rise; increase
D) rise; decrease
25) If the cross elasticity of demand is 5 between Pepsi and Mt. Dew, then Pepsi
A) and Mt. Dew are complements.
B) and Mt. Dew are substitutes.
C) is a normal good and Mt. Dew is an inferior good.
D) is an inferior good and Mt. Dew is a normal good

7
ECO 2023 MIDTERM 1 SUMME R B 201 3
26) The Law of Increasing Opportunity Cost implies that
A) producing additional units of one good results in increasingly smaller reductions in the
production of the other good.
B) producing additional units of one good results in increasingly larger reductions in the
production of the other good.
C) the production possibilities frontier is a straight line.
D) the society will be producing inside its production possibilities frontier.
27) When the market for belts is in equilibrium,
A) everyone has all the belts they want.
B) there is no shortage and no surplus of belts at the equilibrium price.
C) the number of buyers is exactly equal to the number of sellers.
D) the supply curve has the same slope as the demand curve.
28) Suppose the price of paper used to produce magazines increases and
simultaneously people decide to spend less time reading and more time on the
Internet. As a result, the equilibrium price of a magazine ____ and the equilibrium
quantity ____.
A) probably changes but more information is needed to determine if it rises, falls, or stays
the same; decreases
B) probably changes but more information is needed to determine if it rises, falls, or stays
the same; increases
C) rises; probably changes but more information is needed to determine if it increases,
decreases, or stays the same
D) falls; probably changes but more information is needed to determine if it increases,
decreases, or stays the same
29) Suppose the demand for Taco Bell tacos is elastic. If Taco Bell raises the price of its
tacos, then the
A) quantity of Taco Bell tacos demanded increases.
B) total revenue Taco Bell receives for its tacos increases.
C) total revenue Taco Bell receives for its tacos decreases
D) None of the above answers is correct.
30) After the scores are posted, if you have a question about your test score, email the
grader at ECO2023.Grader@cba.ufl.edu and the director is so stupid that (HINT: Be
SURE to answer this question because youll get credit for any answer.)
A) he called me to get my phone number.
B) named his two dogs Rolex and Timex because they are watch dogs.
C) couldnt learn to water ski because he couldnt find a lake with a slope.
D) was trapped on an escalator for hours when the power went out.


8