spring+2013+makeup+exam

5/19/2018 SPRING+2013+Makeup+Exam

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Professor: M. Rush

ECO 2023

SPRING 2013

MAKE UP 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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E C O 2 0 2 3 M A K E U P T E S T S P R I N G 2 0 1 3

2

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 Thursday or

Friday.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 because

you believe you bubbled in something other than what is reported and thereported answer on the web is correct, you will lose 1 additional question.


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1) Some Mexican food restaurants close. As a result, the equilibrium price forMexican food ____ and the equilibrium quantity ____.

A) rises; increasesB) rises; decreasesC) falls; increases

D) falls; decreasesE) does not change; decreases

Output

(frijoles)

Total cost

(dollars)

0 1,000

1000 3,000

3000 5,000

4000 7,000

4500 9,000

2) The above table gives some production and cost information for FlamingFernandos, a restaurant that sells Fiery Frijoles. What is the average variablecost of producing 4,000 frijoles?

A) $1.00B) $1.50C) $1.75D) $2.00E) More information is needed to determine the answer.

3) Automobiles are a normal good and peoples incomes rise. Simultaneously,auto manufacturers must pay more for their workers health insurance. As aresult, the equilibrium price of an automobile ____ and the equilibriumquantity ____.

A) rises; decreasesB) does not change; probably changes, but in an ambiguous directionC) probably changes, but in an ambiguous direction; increasesD) probably changes, but in an ambiguous direction; decreasesE) None of the above are correct.

4) I read in the Wall Street Journalthat in March in China fear of bird fluaffected Kentucky Fried Chicken. (KFC has, by far, the largest number ofoutlets in China of any food chain.) To analyze what happened, suppose thatconsumers become concerned that they can catch bird flu from fried chicken.

As a result, the equilibrium price of fried chicken _____ and the equilibriumquantity _____.

A) rises; increasesB) rises; decreasesC) falls; increasesD) falls; decreasesE) does not change; decreases


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5) The market for pork is perfectly competitive. If the demand for porkincreases so that the market price of pork rises, then an individual hogproducer _____ its equilibrium quantity of hogs and _____.

A) increases; incurs an economic lossB) increases; makes an economic profit

C) does not change; makes an economic profitD) decreases; makes an economic profitE) decreases; incurs an economic loss

6) Which of the following is true?A) MSC=MC+ Marginal external costB) MC= Marginal external cost MSCC) MC= Marginal external benefit +MSCD) MSC= Marginal external cost + marginal external benefit

7) The figure above shows the market for pizza. For consumers, tacos are asubstitute for pizza. Suppose that the price of tacos falls. Which figure showsthe effect of this change in the market for pizza?

A) Figure A

B) Figure BC) Figure CD) Figure D


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8) The number of firms producing computer memory chips decreases. As aresult, the price of a memory chip ____ and the quantity of memory chips____.

A) rises; increasesB) rises; decreases

C) falls; increasesD) falls; decreases

9) Suppose a monopolistically competitive firm is making an economic profit.As a result, as time passesI. new firms produce a similar product.II. the industry becomes perfectly competitive.III. the economic profit of the existing firm eventually decreases.

A) I, II and III.B) I and II.C) II and III.D) I and IIIE) None of the above answers are correct.

Sears

Lower prices

Dont lower

prices

Lower

prices

S: $9 million

W: $5 million

S: $10 million

W: $30 million

Walmart Dont

lowerprices

S: $12 million

W: $11 million

S: $9 million

W: $13 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) Research is publishing which claims that eating one rutabaga (a potato-likevegetable) a day helps prevent cancer. As a result, the equilibrium quantityof rutabagas ____ and the efficient quantity ____.

A) increases; increasesB) increases; decreasesC) decreases; increasesD) decreases; decreases


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12) If the marginal social benefit of a good exceeds its marginal social costA) we are producing the efficient quantity of the product.B) we are producing less than the efficient quantity.C) we are producing more than the efficient quantity.D) we cannot tell if we are producing more or less than the efficient

quantity.

13) The figure above shows the market for pizza when the government imposesa tax. The amount of the tax is ____ per pizza and once the tax is imposedthe deadweight loss equals ____.

A) $12; $480,000B) $9; $225,000C) $3; $30,000D) $3; $15,000E) None of the above are correct.

14) The price elasticity of demand is 5.0 if a 10 percent increase in the priceresults in a ____ decrease in the quantity demanded.

A) 2 percentB) 5 percentC) 10 percentD) 50 percent

15) A perfectly competitive firm shut downs in the short run when the price isless than

A) marginal cost.B) average total cost.C) average fixed cost.D) average variable cost.


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16) If a severe hurricane struck Tampa and destroyed many apartments andhouses, then the demand curve for housing ____ and the supply curve ofhousing ____.

A) does not shift; does not shiftB) shifts rightward; shifts rightward

C) shifts rightward; does not shiftD) does not shift; shifts leftwardE) shifts rightward; shifts leftward

Sears

Lower prices

Dont lower

prices

Lower

prices

S: $12 million

W: $9 million

S: $6 million

W: $8 million

Walmart Dont

lowerprices

S: $14 million

W: $1 million

S: $9 million

W: $3 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) Game theory is most useful for determining the outcome when ____.A) the market structure is oligopolyB) monopolistic competition existsC) prison terms are involvedD) the market is dominated by a monopoly

19) (This is an out-of-the-book question.) Price discriminationA) eliminates the producer surplus.B) turns consumer surplus into economic profit.C) decreases output below the profit-maximizing level.D) lowers a monopolys economic profit.


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20) The above figure necessarilyshows a

A) perfectly competitive firm in the long run.B) monopoly in the short run.C) monopolistically competitive firm in the short run.D) monopolistically competitive firm in the long run.E) None of the above are correct.

21) In the above figure, the firms economic profit isA) $0.B) $288.C) $192.D) $96.E) More information is needed to answer the question.

22) Suppose that the University of Florida agrees that only Pizza Hut pizza canbe sold at UF athletic events. This agreement is an example of ____ and ismost likely ____.

A) a tying contract; illegalB) product discrimination; legalC) price fixing; illegalD) an exclusive deal; legal

23) Suppose a monopoly can sell 10 units of output for $21. In order to sell 11units of output, the monopoly must lower its price to $20. What is themarginal revenue of the 11th unit?

A) $41B) $20C) $10D) $1E) None of the above are correct.


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24) Which of the following statements regarding the production possibilitiesfrontier is true?

A) Points outside the frontier are attainable.B) Points inside the frontier are attainable.C) Points on the frontier are less efficient than points inside the frontier.

D) None of the above because all of the above statements are false.25) If a natural monopoly is broken up into many smaller firms then

A) the price will decrease.B) the firms average costs of production will increase.C) efficiency will increase.D) None of the above because it is illegal to break up a natural monopoly

into smaller firms.

26) A monopoly creates a deadweight loss because the monopolyA) sets a price that is too low.B) makes a normal profit.

C) does not maximize profit.D) produces less than the efficient quantity.

27) A difference between a perfectly competitive industry and a monopoly isthat

A) in the long run, firms in a perfectly competitive industry make a normalprofit and a monopoly can make an economic profit.

B) a firm in a perfectly competitive industry can perfectly pricediscriminate but a monopoly cannot.

C) only monopolies have an incentive to maximize profit.D) perfectly competitive firms can have a public franchise.

28) The ABC Nail Company has entered into a collusive agreement with theother firm in the industry, the DC Nail Company. What occurs in the nailindustry if ABC decides to cheat on the agreement?

I. ABC lowers the price of its nails.II. The total industry output increases.III. The total profits in the nail industry will decrease.

A) Only III.B) Only I.C) I and III.D) I, II, and III.D) Only I and II.

29) A perfectly competitive firms marginal revenueA) increases as the firm produces more output.B) decreases as the firm produces more output.C) is less than the market price of its product.D) equals the market price of its product.


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30) Under a marginal cost pricing rule, a regulated natural monopolyA) earns a positive economic profit, and there is a deadweight loss.B) earns zero economic profit, and there is no deadweight loss.C) incurs an economic loss, and there is a deadweight loss.D) incurs an economic loss, and there is no deadweight loss.

31) A single-price monopoly finds that its marginal cost is less than its marginalrevenue. In order to increase its profit, the firm will

A) raise its price and decrease its output.B) lower its price and increase its output.C) raise its price and increase its output.D) continue to produce this level of output because any change will lower

its profit.

32) Sarahs Garage Cleaning is a perfectly competitive firm that currently cleans40 garages a week. Sarahs marginal cost is $35, her price is $40, and heraverage total cost is $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

anyway.C) might be maximizing her profit and is making a normal profit.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 thetest scores are posted) if you have a question about your test score, then thedirector is so stupid that

A) if he spoke his mind, hed be speechless.B) he said whats the letter after x and I said Y he said Cause I wanna

know...C) he thought hamburger helper came with another person.

spring+2013+makeup+exam

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