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Final

CAS EC 101 Final: EC101EEFinal V2 2017ExamPremium

8 pages32 viewsFall 2018

Department
Economics
Course Code
CAS EC 101
Professor
All
Study Guide
Final

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EC101 DD/EE Final Exam December 16, 2017 Version 02
Name (last, first): |__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
Student ID: |U|__|__|-|__|__|-|__|__|__|__| Discussion Section: |__|__|
Signature____________________________________
p. 1 v. 02
EC101 EE Final Exam F17
INSTRUCTIONS (***Read Carefully***):
ON YOUR QUESTION BOOKLET:
Fill in your name, Student ID, Discussion Section Number (e.g. D5) and your signature.
ON YOUR SCANTRON:
Enter the Course Number (EC101 DD or EE) and date on the lines at the top-left. In the boxes below,
enter your Student ID, your DISCUSSION SECTION number (D1 - D9, E0 - E9), your NAME and
your EXAM VERSION. Be sure that you “bubble” all entries (fill in the small circles) . I will subtract
up to 5 points as punishment for errors in these data!
DURING THE EXAM:
Students who wish to leave the room for any reason must leave the Question Booklet and Scantron
sheet with the instructor or teaching fellow. Students taking the exam on Saturday MUST turn in both
their Question Booklets and their Scantrons when they complete the exam. Students taking the exam
on Tuesday should keep their Question Booklets and turn in only their Scantrons. All students must
show their BU Student IDs when they turn in their Scantrons.
MULTIPLE-CHOICE QUESTIONS:
Choose the BEST answer for each of the multiple-choice questions. (Only ONE answer is allowed,
even when more than one of the answers are technically correct.) On the Question Booklet, CIRCLE
the letter that you chose, so that you have a record of your answers. Then BUBBLE it on the
Scantron.
NEVER CROSS OUT AN ANSWER ON YOUR SCANTRON. Use a PENCIL to bubble your
answers, and keep a good ERASER with you. If you bubble the wrong answer on the Scantron, erase
your mark COMPLETELY, and then bubble the correct answer.
YOU MAY NOT USE A CALCULATOR, CELL PHONE OR LAPTOP.
However, INTERNATIONAL STUDENTS may use electronic translators or dictionaries.
You have 120 minutes to complete the exam. Good luck!
Hint: the area of a triangle = base x height / 2
DO NOT OPEN THIS BOOKLET OR TURN IT OVER
[until told to do so]
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p. 2 v. 02
Scenario MRZ. Suppose Firm XYZ produces in a
perfectly competitive market and has the following
marginal costs: for each unit from 1 to 100, MC =
$20, and for each unit from 101 to 1000, MC = $30.
1. See Scenario MRZ. If the market price is $25, then
the firm will produce ______ units and get a producer
surplus of ______.
a. 100, $500
b. 1000, $5000
c. 0, 0
d. UNDEFINED, because price doesn’t equal
marginal cost
2. See Scenario MRZ. If the market price is $15 then
Firm XYZ will
a. produce 100 units and raise its price to $20.
b. produce zero.
c. continue to produce until price equals marginal
cost.
d. NONE of the above
3. Which of the follow is not a true statement about
capital goods?
a. Literacy is a capital good.
b. Capital goods are tools that increase the
productivity of labor.
c. Paper money is a capital good if it is issued by
the government.
d. Capital goods cannot be created if people
consume everything they produce.
4. A professional soccer game is broadcast by the BBC
(free public television without advertising). Anyone
with a TV can watch it. The broadcast is
a. efficient, because watching the game doesn’t
prevent others from watching it.
b. inefficient, because professional soccer teams
are privately owned businesses.
c. inefficient, because all viewers are free riders.
d. inefficient, because the BBC loses money by
broadcasting the game.
5. When you calculate your (opportunity) costs of going
to college, what portion of your room-and-board
expenses should be included?
a. your room-and-board expenses minus the
income you earn while attending college
b. your room-and-board expenses minus
room-and-board expenses you would have had
if you weren’t in college
c. none of your room-and-board expenses
d. your full room-and-board expenses
Figure WPE. Emily’s Marginal Willingness to Pay
6. See Figure WPE. Emily’s total willingness to pay for
3 plums is about $______. [Choose the closest value.]
a. 10
b. 0
c. 41
d. 33
7. See Figure WPE. At a price of $5, how many plums
will Emily demand?
a. 10
b. 4
c. 5
d. 0
8. See Figure WPE. If the price is $6, Emily’s consumer
surplus will be about $_____. [Choose the closest
value.]
a. 17
b. 40
c. 9
d. 0
9. Patent and copyright laws are major sources of
a. resource monopolies.
b. antitrust regulation.
c. government-created monopolies.
d. natural monopolies.
10. In competitive markets, the payment of economic
rents increases economic efficiency, because
economic rents
a. create jobs.
b. direct resources to the most productive use.
c. are a reward for hard work.
d. reward people for financial investments.
11. In market economies, goods are usually consumed by
a. those who are most deserving.
b. those who are politically well connected.
c. those who are willing to pay the most for them.
d. those who work the hardest.
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p. 3 v. 02
12. A student spends $80 for a ticket to a concert of the
Ungrateful Living. But after an hour, she decides that
loud music is hurting her ears. If she is economically
rational, she should
a. stay at the concert, because she doesn’t want to
waste $80.
b. stay at the concert, because $80 is a sunk cost.
c. stay at the concert, because the tickets are not
refundable.
d. leave and do something more fun.
13. Suppose winter comes early in California and reduces
the size of the lemon crop. What happens to consumer
surplus in the market for lemons?
a. It depends on whether the elasticity of demand
for lemons is more or less than 1.
b. Consumer surplus decreases.
c. Consumer surplus increases.
d. Consumer surplus is not affected by this change
in market forces.
14. If a product creates a negative externality, then
a. the free-market equilibrium output of the
product exceeds the efficient level.
b. the social cost of production is lower than the
marginal cost.
c. the marginal benefit of an additional unit of
production is increased.
d. the free-market equilibrium quantity is the
efficient one.
15. Suppose medical researchers announce that drinking
exactly a half liter of milk per day increases life
expectancy, but the good effect disappears if people
drink less or more. Then the demand for milk would
a. become inelastic.
b. become elastic.
c. shift to the right.
d. shift to the left.
16. The Ogallala aquifer is a large underground pool of
fresh water under several western states in the United
States. Any farmer with land above the aquifer can
pump water out of it. We might expect that
a. over time, the aquifer will be overused.
b. resources would be used more efficiently if the
US Government paid for the pumps farmers use
to get the water.
c. each farmer will have a sufficient incentive to
conserve the water.
d. each state government will have an incentive to
make sure that their own farmers do not
overuse the water.
17. Xavi is an extremely talented soccer player with a
salary of almost $10 million per year. What is true
about Xavi?
a. Most of his income is an economic rent to his
talent.
b. Most of his income can be explained by his
hard work.
c. His behavior is a good example of rent seeking.
d. NONE of the above
Scenario BST. Suppose farmers begin to treat cows
with the hormone BST, which causes the cows to
produce a lot more milk. However, many people
believe that milk from BST-treated cows can cause
cancer in humans.
[You may draw in the space below to help you
answer. The drawing will NOT be graded.]
18. See Scenario BST. The supply curve for milk will
a. shift right.
b. shift left.
c. be unaffected.
d. rotate.
19. See Scenario BST. The demand curve for milk will
a. shift left.
b. shift right.
c. be unaffected.
d. rotate.
20. See Scenario BST. The equilibrium quantity of milk
a. will increase.
b. will decrease.
c. could increase or decrease.
d. will not change.
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