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Economics for Management Studies
Michael Krashinsky

aQUAOq Page3of 14 ]ool Fival- Thisfinalexainclud40'multiple-choquestio(plusa4l'! identifierqueAnswereachquestion by choosithebestalternatandindicatingychoiceitheappropriateplaonthescantrsheet providewiththiexam(youwilturnit in atendof [email protected] *rough 44 arcrobe answereon theAnsweSheet(whicyou wilalstumin attheenof theexam).oi maytakethe questiosheetawaywithou,soyoucanusethefrontsandbackotheseagesiorourroughwork.ffou wishtokeeparecorofyouranswersmakeanoteofthemonyourquestioJh""ts. Eachcorrectanswto questio1through4isworth2marks(theris nodeductfor wronganswers). PART I: MULTIPLE CHOICE eUESTIONS (80marks) 1-3. A countryprodugoodsX andY andhathefollowinequatifor itsoductiopossibilities frontier: 5Y+X3n-IZs1< . 3 lzl-- Tstzz &2= e -Al*- Questions through3concethiscountry. '1994- - / - -x ilr-i - lCc{ .- ola " t' it""??l dp a I ^ LL^- ft,n)Zigiz',"* )L- loD '' I u - -.-grf)zl ,oooo - ^ O a iui;5;,iv-"vl- h-- . , : ' i j p !- "j'!, Page 6of 14 d$nqi1J in - 511r L_ r__--_r I p ' ( jwhictof thefollow-ng statemenabouttheelasticiof demandisare)generallytrue? L12. v qIfthedemandisinelasticarisein pricwill ineneral by consumers causethetotal amountspenonthegood torise. trIf thedemandis inelastweknowtlat amonopolist willwantto lowertheprice y') Uthedemand iselasticandproducersttosellmore of theood,thetotd rlvenuereceiveby producerswillgenerallrise. {P 1'l?, / \ A) onlyI B) onlytr D)I&tr F)tr&m c)r,tr&m II) noneofththree [')ttm 13-24' A firmin aperfectcompetitivconstant costindustrhastotacostsin theshortrunivenbv: TC=0.25q2+5q+625 q>2 tac=0.5r*, whereqis outputperdayandTC is thetotalcostpedayin dollarsThefirm hasfixedcostsof$400 (alreadincludedintheTC equationabove).TheTC equationgeneratesmilimum averagecostsofg30 (per urut)at q = 50. Youarealsotoldthatthisizefirmgenerateminimum longrun average LACoccursatq=50,withminLAC=$30). costs(thais,minimum 1-srI tl.5 euestions13through24can>"-O"2.9+a+,'#j,ot:ffift;. Tu tr1+ -:zS?-rl\ 13.Intheshortrun,shutdown priceforthisfiris: *v.= o"2"5+* e i '. A)$30 B)$2s o$25 el$zz di;1:l- t,Li ' t.*, F)$10 c)$ls H)$18 F\s24 .; , ;r,-, . r,,,,' \ 090 D$21 )- ') O=>sao"(t!.zfw\-/ you aretoldthatintheshortrun f,,2 V' 5') thereare1250firmsincludingthisoni,? ,rr"inaor*y, all with "/,)dresemecoJtcurv-sdescribeabove.Suppose thatthedemand curvefacingtheindusryisgivJnbythe ' equation P = 75 .0006Q whereP isthepriceperuniand Qsthenumber of unitsdemandedperdav. The profreamed bvanindividu4em perday intheshorrtunis:- ls - q.ot.e1\.;'&il1" .g ut g A) $0 B)$^t:9. D)$165 E) o = F) $320 c)_$241 H/_$r+s? $348 I. l.LsV D $77 J)$8e v=54' 15.Continuing (. - thesituatiodescribeinquestion14 (thshortrun,with 1250firmsanddemandeivenbv :27 P = 75 .0006Q),theequilibriupricein theshortrunis: (rsLt A A)$25 B)$30 c)$31 D)$32 S: F) $34 c)$3s $ae $38 GJ) Jdt |-l_1,r, D D $40 16.continuing thesituatiodescribeinquestion14(demand givenby p = 75 -.0006e, 1250firmsin the shortrun),supposnowthatwemoveinto thelongrun(you ar- remindedthainformatioonlongruncosts was givenatthebeginningof theroblem).Thenumber of firmsin theindustroundingtothenearest integeris: iS - o."oc A O A)r2s0 B)1000 c) 1400 D)l4s0 (rr)soo ?o QE -- F)1600 c) 1750 - ?5 oo,f H)1800 D 2000 )fioo (--- J 17. Continuinwith questio16,supposethatwearestill in tlongrun.Thetotal outpuof theindustry perdayin thelongrunis: A)25,000 B) s0,000 D) 120,000 E)12s,000 F)e0,000 c) s0,000 _91100,000 @s,ooo D ?0,000 I) 66,667 PageTof 14 18. Nowretum tothesituatiodescribein question P = 75- '0006Q). Now suppose 14 (thshortrun,with 1250firmand demandgivenby unit. Itheshof run,thfractionof the gov€rnmeimposes ataxonthe selleof thisroductofg10per taxtha,*dlEonleflerswilbeequalto: A)0 B)1/10 c) 7ts ( nlzb E)u2 D 3/5 c)'7t70 H)4/s f,otto J)1 19' Continuethe probleinquestio18 (inwhichthegovemment lmposesa taxon thesellersofthis productof$10perunit).In thshort run, totalricepaidby buyerswill be equto: c) F)$3410 til-s:s $38 D)$37 E)$:o D $32 liir ii$]t 20'continue theproblem product begun inestion 18(inwhichthegovemment imposesatax onthesellerof this of $10perunit).Thefg\E rhshortrunwilleam prifrtof: A)$0 B)-$102 (cl -Fs D) _$40r E)_$s0 F)$st c) $431 }J$'gsr D $225 J)noneoftheabove 2l' Continuethproblembegun inestion 18 (inwhichthegovemment mposesatax onthesellers productof$10 perunig. Now supposethatwearein thelong-runThenumber of this tothenearesintegerwill be: of firmin thelonrun, -A) 1250ed B)1000 c) 1400 D) 1450 E) 1500 F) 1133 c) 1167 H) 1083 I) 1033 J)833 I F l:- O'r5.F : Orzq+12 ':- f-z-a 1t--t- -\ "!, ; : , 1), - | ' / " = ^ t \ t \ \ ) . - , L . - ' y + l 7 c y t A 7i5 >-t,<> ' 17:a vL'L
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