Midterm Exam Solution
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Midterm Exam
MBA501
There are 25 multiple choice questions and each question is worth 3 points.
1) Until recently you worked as an accountant, earning $30,000 annually. Then you inherited a piece of commercial real estate bringing in $12,000 in rent annually. You decided to leave your job and operate a video rental store in the office space you inherited. At the end of the first year, your books showed total revenues of $60,000 and total costs of $30,000 for video purchases, utilities, taxes, and supplies. What is the total economic cost of operating the video store?
A. $60,000
B. $42,000
C. $30,000
D. $72,000
Answer d.
2) In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price ceiling of $3 will result in a
A. shortage of 30 units.
B. shortage of 15 units.
C. excess supply of 30 units.
D. excess supply of 12 units.
Answer: A
3) Which of the following would not shift the demand for IPAD?
A. drop in price of IPAD.
B. drop in price of Kindle.
C. consumer’ income doubles.
D. Apple increase the advertising of IPAD.
Answer: A
4) Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM. If ay is positive, then:
A. goods y and x are complements.
B. goods y and x are inferior goods.
C. goods y and x are normal goods.
D. goods y and x are substitutes.
Answer: D 5) Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium quantity is:
A. 92.
B. 81.
C. 45.
D. 62.
Answer: D 6) Suppose there is a simultaneous increase in demand and decrease in supply, which of the following statements is correct?
A. Price will rise and quantity may rise or fall.
B. Price will fall and quantity may rise or fall.
C. Price may rise or fall and quantity will rise.
D. Price may rise or fall and
Midterm Exam
MBA501
There are 25 multiple choice questions and each question is worth 3 points.
1) Until recently you worked as an accountant, earning $30,000 annually. Then you inherited a piece of commercial real estate bringing in $12,000 in rent annually. You decided to leave your job and operate a video rental store in the office space you inherited. At the end of the first year, your books showed total revenues of $60,000 and total costs of $30,000 for video purchases, utilities, taxes, and supplies. What is the total economic cost of operating the video store?
A. $60,000
B. $42,000
C. $30,000
D. $72,000
Answer d.
2) In a competitive market, the market demand is Qd = 60 - 6P and the market supply is Qs = 4P. A price ceiling of $3 will result in a
A. shortage of 30 units.
B. shortage of 15 units.
C. excess supply of 30 units.
D. excess supply of 12 units.
Answer: A
3) Which of the following would not shift the demand for IPAD?
A. drop in price of IPAD.
B. drop in price of Kindle.
C. consumer’ income doubles.
D. Apple increase the advertising of IPAD.
Answer: A
4) Suppose the demand for good X is given by Qdx = 10 + axPx + ayPy + aMM. If ay is positive, then:
A. goods y and x are complements.
B. goods y and x are inferior goods.
C. goods y and x are normal goods.
D. goods y and x are substitutes.
Answer: D 5) Suppose market demand and supply are given by Qd = 100 - 2P and QS = 5 + 3P. The equilibrium quantity is:
A. 92.
B. 81.
C. 45.
D. 62.
Answer: D 6) Suppose there is a simultaneous increase in demand and decrease in supply, which of the following statements is correct?
A. Price will rise and quantity may rise or fall.
B. Price will fall and quantity may rise or fall.
C. Price may rise or fall and quantity will rise.
D. Price may rise or fall and