Escolar Documentos
Profissional Documentos
Cultura Documentos
STUDENT NUMBER___________________________________________
um
en
Do
c
ap
Th
ink
sw
2.
a.
a.
b.
c.
d.
e.
en
um
Do
c
4.
The most reasonable explanation for the upward-sloping supply curve and the law of
supply is that:
the costs of producing additional units increases and thus sellers will only be willing to
offer more for sale if the price is higher.
the good being produced is a necessity and sellers know they can raise prices.
producers are willing to reduce price only for volume purchases.
the demand curve for most goods is stationary and rarely moves.
the increase in price will lead to an decline in demand.
ap
a.
b.
c.
d.
e.
If one nation can produce a good at a lower resource cost than another nation, then we
can confidently say that, with respect to that good, it has
a comparative advantage
an absolute advantage.
comparative and absolute advantage.
relative advantage.
none of the above
sw
3.
ink
c.
d.
e.
Th
b.
1.
a.
b.
c.
d.
e.
5.
a.
c.
e.
If the supply curve for motor oil is P = 4*Q, then at a price of $16 the price elasticity of
supply is
4.
b.
1 1/3
1.
d.
3/4
0
7.
a.
b.
c.
d.
e.
8.
If an increase in income causes a decrease in the quantity demanded of some good, then
the good is called
a Giffen good
an inferior good
a luxury good
a substitute good
10.
a.
b.
c.
d.
e.
en
um
Do
c
ap
a.
b.
c.
d.
e.
Suppose we observe that the equilibrium price of coffee falls and the equilibrium
quantity falls. Which of the following best fits the observed data?
An increase in demand with supply constant.
An increase in demand coupled with a decrease in supply.
An increase in demand coupled with an increase in supply.
A decrease in demand with supply constant.
A decrease in supply with demand constant.
A firm operating in circumstances of perfect competition faces a market price of $10 for
its product. It is producing 2000 units of output daily, at a total cost of $19,000. this
firm:
should increase the amount of its output to increase its profit.
should reduce the amount of its output to increase its profit.
should shut down to minimize its loss.
may or may not be at the output level yielding maximum profit---the information
furnished is not sufficient to answer this question.
is apparently now at its maximum-profit position.
sw
9.
ink
a.
b.
c.
d.
a.
c.
e.
If the supply curve for motor oil is P = 4 + 4*Q, then at a price of $16 the price elasticity
of supply is
4.
b.
1 1/3
1.
d.
3/4
0
Th
6.
11.
a.
b.
c.
d.
e.
12.
a.
b.
c.
d.
e.
Suppose that the firm described in the previous question sees its total cost increase to
$19,025 as it increases its output to 2001 units. This firm:
should increase the amount of its output to increase its profit.
should reduce the amount of its output to increase its profit.
should shut down to minimize its loss.
may or may not be at the output level yielding maximum profit---the information
furnished is not sufficient to answer this question.
is apparently now at its maximum-profit position.
A firm in a competitive industry has a short-run marginal cost function given by SMC(y)
= 15 + 2y. An excise (per-unit) tax of $10 is imposed on all firms in the industry. This
firms short-run marginal cost will change to
25 + 12y
15 + 12y
15 + 20y
25 + 2y
25 + 20y
Which of the following is true of a monopoly at its profit maximizing quantity?
P=MR=AR
P=MR, P is less than AR
MC=MR=P
MC=MR, MC is less than P
none of the above is necessarily true, since a monopoly can choose both P and Q without
any regard for the demand curve.
14.
a.
c.
e.
If the monopolist's demand curve is P=50 10*Q, then marginal revenue is zero when Q
equals
50 units.
b.
10 units.
5 units.
d.
2.5 units.
0 units.
15.
a.
b.
c.
d.
e.
16.
a.
b.
c.
d.
e.
Th
ink
sw
ap
Do
c
um
en
13.
a.
b.
c.
d.
e.
19.
a.
c.
e.
The amount of tax revenue raised by this tax is equal to the area
EGJCI.
b.
AGJH.
EAHI.
d.
EGJI.
IJC.
20.
a.
c.
e.
After the tax is imposed, consumer surplus and producer surplus are represented,
respectively, by the areas
MAC and KAC
b.
MEI and KGJ
MGJI and KGJ.
d.
EAHI and GAHJ
IHC and JHC.
21.
a.
c.
e.
a.
b.
c.
d.
e.
en
um
Do
c
ap
sw
ink
22.
a.
c.
e.
After the tax is imposed, the equilibrium price paid by buyers and equilibrium quantity
sold are given respectively by
A and B
b.
E and F
G and F
d.
E and B
A and F
If buyers and sellers were free to pursue their own selfish interests, according to the
invisible hand theory, the result would be
anarchy.
exploitation of workers and natural resources.
an equitable allocation of resources.
poor consumers service.
an efficient allocation of resources.
Th
18.
23.
a.
b.
c.
d.
e.
24.
a.
b.
c.
d.
e.
25.
a.
b.
c.
d.
e.
26.
a.
b.
c.
d.
e.
100 A
75 B
50 A
400 B
200 A
50B
150 A
300 B
en
um
28.
a.
b.
c.
d.
e.
Which of the following would not be subject to the tragedy of the commons?
Whales in the ocean.
Timber on public lands.
Cattle on a ranch.
Buffalo roaming free in the West.
The atmosphere.
ink
sw
ap
Do
c
a.
b.
c.
d.
e.
If people can purchase and sell the right to perform activities that cause externalities, the
resulting solution will be efficient. This describes
the Tragedy of the Commons.
a positional externality.
an external benefit.
the Coase Theorem.
the problem of unpriced resources.
Th
27.
A
B
29.
a.
b.
c.
d.
e.
If you buy a new car, use it for a day, and then try to sell it, you will find that the price
you can get is several thousand dollars less than its price when new. This is because
buyers prefer new cars to used cars regardless of price
you paid too much for your new car
used cars are unreliable
there have been technological improvements in car design
your desire to sell the car signals that there is a problem with the car
30.
a.
b.
c.
d.
e.
31.
a.
b.
c.
d.
e.
en
33.
Do
c
ap
sw
ink
34.
a.
b.
c.
d.
e.
Th
a.
c.
e.
um
32.
a.
b.
c.
d.
e.
36.
a.
b.
c.
d.
e.
37.
a.
b.
c.
d.
e.
38.
a.
b.
c.
d.
e.
39.
a.
b.
c.
d.
e.
40.
a.
b.
c.
d.
e.
Th
ink
sw
ap
Do
c
um
en
35.
a.
b.
c.
d.
e.
(b)
(c)
What is a public good? What are the main reasons that such a good cannot be
profitably produced by private firms?
(d)
Th
ink
sw
ap
Do
c
um
en
(a)
10
(1 + 2 + 3 marks)
Left
Right
Top
0, 0
-1, -1
Bottom
-1, -1
1, 1
Left
Right
Top
1, 1
4, -1
Bottom
-1, 4
3, 3
Row
b.
Column
um
en
Row
Do
c
c.
You: $100
Them: $100
C
ap
They choose
D
You: $60
Them: $105
Th
ink
sw
You Choose
B
E
You: $500
Them: $400
They choose
F
You: $50
Them $420
Question 3
11
(2 + 2 + 2 marks)
PD = 9 x
PT = 11 x
Where P is the price the person is willing to pay per acre of parkland created, and x is the
number of acres of parkland.
The social marginal cost of creating parkland is:
MC(x) = x
What is the efficient number of acres of parkland that should be created?
b.
If this many acres were established, what is the efficient level of contribution per acre
that each person should make?
c.
If the three individuals were required to make equal contributions per acre, how many
acres would be established?
en
a.
(2 + 2 + 2 marks)
um
Question 4
Do
c
The supply and demand curves for t-shirts are given below.
supply:
P = 5 + 0.15 Q
P = 30 - 0.1 Q
ap
demand:
b.
The process of making t-shirts results in chemical waste that is dumped in to a nearby
stream, creating $5 worth of damage to the environment per shirt. What is the socially
optimal number of t-shirts that should be produced?
c.
Describe a policy that the government could implement to assure that the socially optimal
number of t-shirts is produced and sold, and explain why the policy would work.
Th
ink
sw
a.
Question 5
12
(1 + 2 + 3 marks)
A medium-sized town has 100 identical barbershops, all owned by the conglomerate
Haircuts-To-Go.
Each barbershop can produce up to ten haricuts a day at a constant marginal cost of $10, and a
further ten haircuts a day at a constant marginal cost of $15. No more than twenty haircuts can
be produced.
The demand curve for haircuts in the town (served by the 100 shops) is given by:
P = 26 0.001 Q
or
P = 26
1
100
a.
b.
In response to a public outcry, the government breaks up Haircuts-To-Go, and the 100
barbershops come to be owned by separate small businessmen (mostly the former store
managers). The haircuts industry is now perfectly competitive.
Find the equilibrium price and quantity in the newly competitive industry.
en
c.
Question 6
(1 + 2 + 1 + 2 marks)
P = 10 + 0.1 Q
Do
c
Supply:
um
The market for widgets has a supply and a demand curve given by:
b.
Calculate the consumer surplus, producers surplus, and total surplus generated in this
equilibrium.
sw
ap
a.
Th
ink
The government judges widgets to be immoral, and places a quantity restriction on the
production of widgets. Henceforth, no more than 100 widgets can be produced in this economy.
c.
d.
Find the loss in total surplus that is caused by this government restriction.
END OF EXAM