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Final

CAS EC 101 Study Guide - Final Guide: Scantron Corporation, Marginal Utility, Perfect CompetitionExamPremium

8 pages63 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 03
Name (last, first): |__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
Student ID: |U|__|__|-|__|__|-|__|__|__|__| Discussion Section: |__|__|
Signature____________________________________
p. 1 v. 03
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. 03
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.]
1. See Scenario BST. The supply curve for milk will
a. shift left.
b. rotate.
c. be unaffected.
d. shift right.
2. See Scenario BST. The demand curve for milk will
a. shift right.
b. shift left.
c. rotate.
d. be unaffected.
3. See Scenario BST. The equilibrium quantity of milk
a. will increase.
b. could increase or decrease.
c. will decrease.
d. will not change.
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 the BBC loses money by
broadcasting the game.
c. inefficient, because all viewers are free riders.
d. inefficient, because professional soccer teams
are privately owned businesses.
5. Arbitrage in the copper market is most likely to occur
when
a. copper demand is unusually high.
b. copper is selling at different prices in different
places.
c. copper mining is very profitable.
d. new copper mines have been opened.
6. Suppose a thief breaks your car window and steals
$100 that you left on the driver’s seat. You decide to
be more careful in the future. Which of the following
does NOT represent a loss of social surplus?
a. the stolen $100
b. the broken car window
c. the thief’s labor
d. your future theft-prevention efforts
7. When firms have an incentive to exit a competitive
market, their exit will
a. lower market price.
b. reduce demand for the product.
c. raise profits for firms that remain in the market.
d. necessarily raise the costs of firms that remain
in the market.
8. Nondiscriminating monopolies use their market power
to
a. increase the quantity sold as they increase
price.
b. charge a price that is higher than marginal cost.
c. to sell to consumers at prices above their
willingness to pay.
d. produce the quantity at which average cost is
minimized.
9. 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. shift to the right.
b. become elastic.
c. become inelastic.
d. shift to the left.
10. A family financial adviser states: “In my experience,
most obese (very overweight) people have financial
difficulties.” Her point of view could reflect the fact
that
a. employers discriminate against obese people.
b. obese people with good incomes are unlikely to
see financial advisers.
c. unemployed people are more likely to eat to
much than the average person is.
d. ALL of the above
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p. 3 v. 03
11. In market economies, goods are usually consumed by
a. those who are politically well connected.
b. those who are willing to pay the most for them.
c. those who are most deserving.
d. those who work the hardest.
Figure WPE. Emily’s Marginal Willingness to Pay
12. See Figure WPE. Emily’s total willingness to pay for
3 plums is about $______. [Choose the closest value.]
a. 41
b. 0
c. 33
d. 10
13. See Figure WPE. At a price of $5, how many plums
will Emily demand?
a. 4
b. 0
c. 10
d. 5
14. See Figure WPE. If the price is $6, Emily’s consumer
surplus will be about $_____. [Choose the closest
value.]
a. 0
b. 9
c. 40
d. 17
15. 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. Consumer surplus is not affected by this change
in market forces.
b. It depends on whether the elasticity of demand
for lemons is more or less than 1.
c. Consumer surplus increases.
d. Consumer surplus decreases.
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.
16. See Scenario MRZ. If the market price is $25, then
the firm will produce ______ units and get a producer
surplus of ______.
a. 0, 0
b. 1000, $5000
c. 100, $500
d. UNDEFINED, because price doesn’t equal
marginal cost
17. See Scenario MRZ. If the market price is $15 then
Firm XYZ will
a. continue to produce until price equals marginal
cost.
b. produce zero.
c. produce 100 units and raise its price to $20.
d. NONE of the above
18. If a product creates a negative externality, then
a. the social cost of production is lower than the
marginal cost.
b. the free-market equilibrium output of the
product exceeds the efficient level.
c. the free-market equilibrium quantity is the
efficient one.
d. the marginal benefit of an additional unit of
production is increased.
19. When you calculate your (opportunity) costs of going
to college, what portion of your room-and-board
expenses should be included?
a. your full room-and-board expenses
b. none of your room-and-board expenses
c. your room-and-board expenses minus
room-and-board expenses you would have had
if you weren’t in college
d. your room-and-board expenses minus the
income you earn while attending college
20. 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 $80 is a sunk cost.
b. leave and do something more fun.
c. stay at the concert, because she doesn’t want to
waste $80.
d. stay at the concert, because the tickets are not
refundable.
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