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Final

201-final-Winter-2010-v1-answers.doc

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Department
Economics
Course
ECON 201
Professor
All Professors
Semester
Fall

Description
Concordia UniversityDepartment of EconomicsECON 201INTRODUCTION TO MICROECONOMICSWinter 2010COMMON FINAL EXAMINATION AND ANSWERS VERSION 1STUDENT NAME STUDENT NUMBER Please read all instructions carefully1This is a threehour exam 180 minutes The questions are worth 150 marks altogether It is a good strategy to spend one minute per mark for your answers 150 minutes and spend the remaining time 30 minutes to review your answers2The exam consists of four parts iPart I 25 multiplechoice questions 25 marksiiPart II Choose 5 out of 7 truefalse questions 25 marksiiiPart III Choose 4 out of 5 long questions 80 marks and ivPart IV Choose 2 out of 3 current events questions 20 marks3Write your answers for the multiplechoice questions on the computer scansheet with a pencil For Parts II to IV write all your answers on this exam Do not use additional booklets 4You are allowed to use a nonprogrammable calculator and a dictionary You may use either pen or pencil to provide your answers for Parts II to IVGradesPart I Part II Part IIIPart IV Total1Part I Multiple Choice Questions Write your answers on the computer sheet in PENCIL Total25 marks1If the price faced by a perfectly competitive firm is equal to 60 then the maximum profit this firm will earn is a60Dx2 b60Cx3 c60Bx4 d60Bx5 e60Ax5 2 Consider a perfectly competitive firm in the following positionthe firm produces 4000 units the market price is 1 fixed costs are equal to 5000 variable costs equal 900 and marginal cost equals 110 In order to maximize profit in the shortrun the firm should a reduce output b increase output c shut down d increase the market price e not change output 3 Suppose the perunit tax on cars is raisedIf the demand for cars is unit elastic and the supply curve is upward sloping then this will cause tax revenue toHintTax revenueSpending by consumers minus firm revenue Use elasticity to figure out what happens to consumer spending Use diagram to figure out what happens to firm revenue a rise b fall c stay constant d rise if the supply elasticity is greater than one and fall if the supply elasticity is less than one e rise if the supply elasticity is less than one and fall if the supply elasticity is greater than one 4 Data on the prices quantities sold and average incomes of buyers of Jolt Cola and Coke over several years are shown belowAverage Quantity of Jolt YearPrice of JoltPrice of CokeIncome of SoldBuyers2000100can100can2500015000 cases2001100can140can2500025000 cases2002100can140can3500015000 cases2003140can140can350005000 casesThe income elasticity of Jolt isa 15 b 067 c 067 d 15 e not determinable given that all the variables are changing 5 The demand equation for widgets is P2005Q The absolute value of the price elasticity of demand between Dquantity demanded of 23 and 27 is 2
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