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MGEC61H3 Study Guide - Midterm Guide: Government Spending, Kolmogorov Space, United States Dollar

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School
UTSC
Department
Economics for Management Studies
Course
MGEC61H3
Professor
Iris Au

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Document Summary

The followings are collections of part midterm questions. These questions are compiled from different midterms (the total marks do not add up to 100) and are for your practice only. You should also practice the review questions and assignment. Re-grade will not be done for penciled answer. You must submit this question sheet with your examination booklet(s) in order to receive the grade. If the question has more than one part, label each part of your answer. Latter part(s) of the question will not be graded if you failed to label your answer. Do not write e/q/ee increases/decreases in your answer, you have to answer. Subtracted if you do not follow this instruction. the currency appreciates/depreciates. Label your graph; otherwise, marks will be subtracted. No credit will be given if you do not show your work. Your answer should be structured in a way such that those know little about economics will have no difficulty understanding your argument/answer.

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Related Questions

Carol holds a two-digit number X and wants Alice and Bob to recover the number. She gives them the following information.

  • Both Alice and Bob know that the number held by Carol is one of the following.
  • 21  26
  • 31  32  35
  • 42  44
  • 52  54  57
  • 62  67
  • Alice knows the number of ones of X but not the number of tens.
  • Bob knows the number of tens of X but not the number of ones.

Alice and Bob exchange the following messages.

  1. (a)  Bob to Alice: ’You might know X’.
  2. (b)  Alice to Bob: ’I did not, but, after what you have said, I do’.

Based on the above information, please answer the following questions. For each question, please accompany your answer with a short explanation of why your believe your answer is correct. Marks will not be awarded for answers without any explanation.

  1. (a)  Based on the statement of Bob it is possible to narrow down candidates for the number of tens from the initial five possibilities down to just two. What are these two possibilities? (7 marks)
  2. (b)  Based on the ’I did not’ statement of Alice, the number of candidates for X can be narrowed down to just three. What are these candidates (6 marks)
  3. (c)  The remaining part of Alice’s statement allows to identify X precisely. What is X? (7 marks)

The North American Free Trade Agreement (NAFTA) came to fruition in 1994. For your discussion essay, thoroughly answer at least two of the below questions.

1. How is it doing now?

2. Compare and contrast some of NAFTAs good and bad points.

3. Was it a good agreement for the American worker?

4. Was it a good agreement for the American consumer?

5. How did implementation of NAFTA impact the United States balance of trade and trade deficit.

6. If you were the sole decision maker for the implementation of NAFTA, what would you have done and why?

Essays and responses are not to include definitions, historical perspectives, talking points, or personal attacks. References to individual must include a title where applicable, i.e., President Clinton, not Bill Clinton or Vice President Gore, not Al Gore.

Use of the textbook, Encyclopedia, Wikipedia, Econopedia, or similar …pedia’s as a reference in any cited work results in an automatic two-grade level deduction before I read what you submitted. Any critique containing the phrase “I agree,” “great post,” “my thoughts”, “ we think the same,” or phrases of similar meaning that do not enhance the discussion process will not be graded and receive a zero.

1. Alice lives in a town with only one movie rental store. Suppose Alice's demand for movie rentals per month is Q = 16 - 2P. The movie store currently charges $5 per movie but is thinking of adding a flat monthly cardholder fee and dropping the price to $2 per rental. At this new price, what is the largest cardholder fee that Alice will pay? If the rental store has a constant marginal cost of $2, which strategy is more profitable?

2. A monopolist faces a demand curve given by,

Y = 100 -  P

with the inverse demand curve equal to,

P = 100- y and MR = 100- 2y.

The monopolist's total and marginal cost functions are,

TC = 700 + 20y and MC = 20.

a) Calculate the monopoly output level, the monopoly price, and the profits of the firm.

b) Draw a diagram to illustrate your answers to part a). Calculate the deadweight loss from this monopoly. [Hint: you need to work out the perfectly competitive quantity and price. The diagram will help you work out how to calculate the DW L using the simple geometry of triangles and rectangles.]

c) Explain why this market might be considered to be a natural monopoly.

d) Illustrate and explain the problem that emerges when the government regulates the monopolist by imposing marginal cost pricing.

e) If the government regulates the monopolist by imposing average cost pricing, what will be the monopolist's price and quantity? Draw a diagram to illustrate your answers. Explain the problem that exists with this average cost pricing. [Note: this is a trickier part than the others, so don't worry if you can't do it. If this question came up in the exam, I would miss out e) and have a)-d), making you feel a bit better! To answer it, you have to set p = AC and solve for output. It requires solving a quadratic equation with 2 potential output levels and working out which output level is the one the monopolist would produce. The quadratic equation is a simple one, but if you are not comfortable with maths, even its mention probably sounds like a nightmare.