spring+2013+final+exam

8/11/2019 SPRING+2013+Final+Exam

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Professor: M. Rush

ECO 2023

SPRING 2013

FINAL EXAMThis test is governed by UFs academic honesty code. It is intended to have 33

multiple choice questions. Please check to be sure your copy has all 33. Choose

the best answer for each question.

The next is important: Unless you are specifically told otherwise, on this test do

notassume 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.

TURN OFF ALL CELL PHONES AND OTHER

COMMUNICATION DEVICES

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 investigated the rumor that the ability to

correctly record these had been mastered by a few students at FSU. This rumor turned

out to be false. But, the rumor that an accounting major and a journalism major did

successfully record these on a test is true. These students have since been bronzed and

are on display outside their respective colleges to serve as an inspiration for all other

accounting and journalism students.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 6 POINTS (which equals 2 questions)!

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 allquestions

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 andbubble in all youranswers. When the TAs say that time is up, you musthand 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.


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An answer key will be posted on the class web page later this

evening at about 10:00.

The test scores will be on class web page probably by Tuesday or

Wednesday; the grades will be on the class page probably

Wednesday or Thursday.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

[email protected] 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 [email protected] If you email me about your test

score, I will not forward the email nor respond to youyouMUSTemail the

grader. You have one week after the curved score is posted to request a grade

check. After a week, the score will not be changed. If the web reportswhat you

bubbled in for each question and you ask the grader to check an answer becauseyou 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.


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1) The Sherman Act makes it illegal toA) increase market share.B) merge firms in the same industry.C) attempt to monopolize an industry.D) price discriminate.

E) set your price below the prices set by you competitors.2) Trumpets are a normal good and peoples incomes increase. As a result, the

equilibrium price of a trumpet ____ and the quantity ____.A) rises; increasesB) rises; decreasesC) falls; decreasesD) falls; increasesE) does not change; increases

3) In the above figure, if a single-price monopolist charged the profit-maximizing price, the triangle abcrepresents

A) consumer surplus.B) producer surplus.C) deadweight loss.D) the monopolys economic profitE) None of the above answers are correct.

4) In the above figure, if a single-price monopolist charged the profit-maximizing price, the rectangle bcderepresents

A) consumer surplus.B) producer surplus.C) deadweight loss.D) the monopolys economic profitE) None of the above answers are correct.


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5) Suppose Microsoft has a monopoly in producing operating systems(Windows). If the marginal cost of producing an additional copy ofWindows is $0, then when Microsoft maximizes its profit, its marginalrevenue is

A) positive.

B) equal to $0.C) negativeD) More information is nee4ded to answer the question

6) A new technology that raises the marginal product of labor ____ theequilibrium wage rate and ____ the equilibrium quantity of labor.

A) raises; increasesB) raises; decreasesC) lowers; increasesD) lowers; decreases

7) The figure above shows the market for pizza. Suppose the cheese used toproduce pizza falls in price. Which figure shows the effect of this change inthe market for pizza?

A) Figure AB) Figure BC) Figure CD) Figure D


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8) Cars and trucks are substitutes for consumers. The price of a car rises. As aresult, the equilibrium price of a truck

A) rises and the equilibrium quantity increases.B) falls and the equilibrium quantity decreases.C) rises and the equilibrium quantity decreases.

D) falls and the equilibrium quantity increases.9) Which of the following applies to the problem of a common resource?

i) In the absence of government action, there are incentives to overuse the commonresource.

ii) The resource is subject to free-riding.

iii) Even with government action, it is impossible for an efficient level of output to beachieved.

A) i only.B) i and ii.C) ii and iii.D) i, ii and iii.E) i and iii

Sears

Lower prices

Dont lower

prices

Lower

prices

S: $9 million

W: $7 million

S: $1 million

W: $3 million

Walmart Dont

lower

prices

S: $2 million

W: $4 million

S: $9 million

W: $1 million

10) Sears and Wal-Mart must decide whether to lower their prices, based on thepotential economic profits shown in the table above. Who has a dominantstrategy?

A) Walmart has a dominant strategy but Sears does not.B) Sears has a dominant strategy but Walmart does not.C) Both Walmart and Sears have dominant strategies.D) Neither Walmart nor Sears has a dominant strategyE) More information is needed to determine if either Sears or Walmart has

a dominant strategy.

11) A monopolistically competitive firm finds that its marginal revenue exceeds

its marginal cost. In order to increase its profit, the firm willA) raise its price and decrease its output.B) lower its price and increase its output.C) raise its price and increase its output.D) lower its price and decrease its output.E) More information is needed to answer the question.


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12) Travel by bus is an inferior good and peoples incomes decrease.Simultaneously, the price of the diesel fuel used by bus companies rises. Asa result, the equilibrium price of bus travel ____ and the quantity ____.

A) might change, but whether it rises or falls is ambiguous; increasesB) rises; increases

C) falls; decreasesD) rises; might change, but whether it increases or decreases is ambiguousE) might change, but whether it rises or falls is ambiguous; decreases

13) In the above figure, if the price is $10, the profit maximizing perfectlycompetitive firm will

A) produce 40 units.B) produce 35 units.C) produce 25 units

D) produce 10 units.E) choose not to produce.

14) Producing steel creates pollution. If the market for steel is unregulated, thereis

A) overproduction of steel compared to the efficient amount.B) underproduction of steel compared to the efficient amount.C) sometimes overproduction and sometimes underproduction of steel

compared to the efficient amount.D) an external benefit from producing steel.

15) Two companies in a market agree to raise their price. This agreement is

A) legal only if the companies have market shares less than 5 percent.B) legal only if the price these two companies charge is lower than the price

charged by the other companies in the market.C) illegal only if the companies boost their price by more than 10 percent.D) always illegal.


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16) Suppose a natural monopoly does notinflate its costs. Then compared to thesituation in which it is unregulated, when the firm is regulated according toan average cost pricing rule, the firm produces ____ output and sets ____.

A) more; a lower priceB) more; the same price

C) less; a lower priceD) less; a higher priceE) less; the same price

Sears

Lower prices

Dont lower

prices

Lower

prices

S: $11 million

W: $9 million

S: $13 million

W: $8 million

Walmart Dont

lower

prices

S: $4 million

W: $1 million

S: $12 million

W: $6 million

17) Sears and Wal-Mart must decide whether to lower their prices, based on thepotential economic profits shown in the table above. Who has a dominantstrategy?

A) Walmart has a dominant strategy but Sears does not.B) Sears has a dominant strategy but Walmart does not.C) Both Walmart and Sears have dominant strategies.D) Neither Walmart nor Sears has a dominant strategyE) More information is needed to determine if either Sears or Walmart has

a dominant strategy.

18) A firms average variable cost is $60, its average fixed cost is $30, and itsoutput is 100 units. Its total cost is

A) less than $58.B) between $58 and $62.C) between $62 and $88.D) between $88 and $100.E) more than $100.

19) In perfect competition,A) each firm can influence the price of the good.B) there are few buyers.

C) there are significant restrictions on entry.D) all firms in the market sell their product at the same price.


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20) In the figure above, in which country do the 30 percent of households with

the highest-income have the largest fraction of the nations income?A) Country A.B) Country B.C) Country C.D) It is impossible to answer the question without more information.

21) A technological improvement lowers the cost of producing coffee. At thesame time, consumers preferences for coffee increase. The equilibrium priceof coffee

A) rises.B) falls.C) remains the same.

D) might rise, fall, or stay the same, depending on the relative size of theshifts in the demand and supply curves.

22) Free riding is a problem forA) common resources.B) public goods.C) private good.D) natural monopoly.

23) Teddy has a part-time job at which he is willing to work 30 hours each week.During Teddys annual review, his boss boosts his wage by 10 percent. As aresult of the wage hike, Teddy is now willing to work 25 hours each week.Teddys opportunity cost of time spent at ____ has risen and, for Teddy, thesubstitution effect of the wage hike is ____ than the income effect

A) work; greaterB) work; lessC) leisure; greaterD) leisure; lessE) None of the above answers are correct


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24) The more substitutes available for a good or service, theA) larger is its price elasticity of demand.B) smaller is its income elasticity of demand.C) smaller is its price elasticity of demand.D) higher its price.

E) larger is its income elasticity of demand.25) Since 1979, in the United States the share of income going to the top fifth of

all households has ____ and the share going to the bottom fifth of allhouseholds has ____.

A) risen; risenB) risen; fallenC) fallen; risenD) fallen; fallen

26) When operating on its PPFa country can produce 2 tons of butter and 200cars OR 3 tons of butter and 150 cars. The opportunity cost of 1 ton of butter

isA) 300 cars.B) 200 cars.C) 50 cars.D) 1 ton of butter.E) None of the above answers are correct.

27) When a tax is imposed on the sellers of a good or service, thenA) in general the sellers pay all the tax.B) in general the buyers pay all the tax.C) the buyers pay a larger part of the tax as the demand for the product

becomes less elastic.

D) the buyers pay a larger part of the tax as the demand for the productbecomes more elastic.

28) The number of firms producing solar panels to generate electricity decreases.As a result, the equilibrium price of a solar panel ____ and the equilibriumquantity ____.

A) rises; increasesB) rises; decreasesC) falls; decreasesD) falls; increasesE) does not change; increases

29) Two years ago cupcake producers were making an economic profit. Thereare no barriers to entry into this market, so in the long run cupcakeproducers will

A) make an economic profit.B) make a normal profit.C) incur an economic loss.D) More information is needed to answer the question.


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30) If the price of a pair of shoes increases by 4 percent and the quantity of shoesdemanded falls by 2 percent, the price elasticity of demand is ____ and thetotal revenue collected by shoe producers ____.

A) 2.0; increasesB) 4.0; decreases

C) 0.5; decreasesD) 4.0; increasesE) None of the above answers are correct.

31) When comparing a single-price monopoly to a perfectly competitiveindustry with the same costs, the monopoly produces ____ the perfectlycompetitive industry and the monopolys price is ____ the perfectlycompetitively industrys price.

A) less output than; less thanB) less output than; higher thanC) more output than; higher thanD) less output than; the same as

E) the same amount of output as; the same as

32) Sarahs Garage Cleaning is a monopoly that currently cleans 40 garages aweek. Sarahs marginal cost is $35, her price is $40, and her average total costis $45. Sarah

A) is maximizing her profit and is incurring an economic loss.B) might be maximizing her profit and is making an economic profit.C) might be maximizing her profit and is incurring an economic loss.D) is not maximizing her profit and is incurring an economic loss.E) is not maximizing her profit and is making an economic profit.

33) Keeping in mind that you are to email the grader (within 1 week after the

test scores are posted) at [email protected] if you have aquestion about your test score and you are to email me if you have aquestion about a question, then the director is so fat that

A) he eats Wheat Thicks.B) fat people jog around him for exercise.C) when he gets on the scale it says to be continued.

spring+2013+final+exam

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