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Carleton University
ECON 3403

This exam is in four parts Part I is worth 20 marks part II is worth 20 marks part III is worth 30 marks and part IV is worth 50 marks for a total of 120 marksPART I Multiple choice questions Answer ALL of the following questions Two marks each for a total of 20 marks1Canada solves the problem of adverse selection in the health care market byaMaking everyone use publiclyfinanced health carebProviding doctors with treatment guidelinescRequiring people to pay for prescription medications either directly or through private insurancedSeparating high risk and low risk individuals2Suis demand for books is given by p202q Sue borrows Suis books and reads them The benefit Sue gets from reading Suis books is MB10q If the price of books is 6 the efficient quantity of books isa4c8b6d103Mickys demand for hog dogs is given by p5q where p is the price in dollars and q is the number of hot dogs The marginal benefit Micky gets from the third hot dog he consumes isa1b2c3dThere is not enough information given to determine Mickys marginal benefit4Every point on a social indifference curveaProvides each individual in society with the same level of utilitybIs efficientcIs inefficientdProvides society as a whole with the same level of social welfare5A pure private good isanonrival and nonexcludablebrival and excludablecrival and nonexcludablednonrival and excludable6The marginal cost of coffee is constant at 10 per pound The marginal damage associated with coffee production pesticide use is given by MDq5 where q is the quantity of coffee in pounds The marginal social cost when 10 pounds of coffee are being produced isa120c12b100d107Equalization payments areaAn unconditional block grantbA conditional block grantcAn unconditional matching grantdA conditional matching grant
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