Al Azhar University- Gaza

Faculty of Economics and Management Science

Course name: Introduction to Microeconomics
Midterm examination for Fall semester 2007- 2008
Note: Please answer the questions on the same page.
Q1: True or false? (7 points)
1-

Economics can be defined as the efficient use of scarce resources.

( +

2-

Consumer's choices are eliminated by his/ her budget constraint.

( +

3-

Entrepreneurship and human capital are both subdivisions of Labor.

4-

The optimal point may not change when the income increase as it already lies on the
highest indifference curve.
The study of individual markets and consumers' behavior maybe defined as
Microeconomics.

56-

Slope of a line equals the Marginal Rate of Substitution (MRS).

7-

Market supply curve is usually derived by summing up the supply of all individuals in
the market.

(
(

_)

+ )

(
( +

Q2: Choose the most accurate answer: (8 points)

P

In the opposite graph, S curve will shift to S' for which -1

:of the following reasons
a) an increase in the price of the good.
b) a new innovation of production techniques.
c) the government applying new taxes on this product.++++
.d) Increased consumer demand for this good

D
Q

If A is a prefect substitute for B, and C is a complement for ONLY A, then which of the following -2
?best describes the likely result of a rise in the price of A
.a) Increase in the demand for B, and decrease in the demand for C
.b) Increase in the supply for B, and increase in the demand for C
.c) Decrease in the demand for B, and increase in the demand for C
.d) Decrease in the supply for B, and increase in the supply of C
e) No change in the demand for B, and decrease in the demand for C.
Jane spends an hour studying instead of working at her part- time job which pays $5/hour. The -3
:opportunity cost to her studying is
.a) the improvement in her grades
.b) the difference between the time she would have spent working and the time she spent studying
++++++++++.c) the $5 she would have earned if she worked for another hour instead of studying
.d) zero, since she values studying more than working
A market consists of 4 buyers and 2 sellers. Each of the buyers has a demand given by this relation: -4
Qd = 10 - P. Each seller has a supply given by this relation Qs = 2 + P. The equilibrium price in the
:market is
+++++++++a) $4
b) $6
c) $7
d) $8

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Al Azhar University- Gaza

Faculty of Economics and Management Science
Course name: Introduction to Microeconomics
Midterm examination for Fall semester 2007- 2008

Q3) (10 points)
:The following table represents a consumer's utility earned from eating cheese- burger and drinking Pepsi
Number of
Cheese- burgers

Total Utility of
Cheese- burger

Marginal Utility
of Cheese
Burger

Number of pints
of Pepsi

Total Utility of
pints of Pepsi

Marginal Utility
of pints of Pepsi

___

___

20

___

___

36

___

___

___

12

___

___

20

___

___

20

___

.a) Complete the missing cells

b) If the price of a cheeseburger is $2 and the price of a pint of Pepsi is $1, and you have only $6 to spend on
those two goods (and you have to spend all of it), what is the utility- maximizing combination of cheeseburger
?and Pepsi

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