SUBJ SCORE #_____________ Version A: Page 1 of 10

Economics 001 NAME _____________________

Professor Levinson GU ID # (9 digits) ________________

Midterm #2 Seat _____________________

2:00 pm November 6, 2013

DO NOT TURN TO PAGE 2

UNTIL THE INSTRUCTOR TELLS YOU TO DO SO.

FOLLOW THESE INSTRUCTIONS FIRST.

1. Please read and sign the following statement: "In keeping with the Georgetown Honor

System, I assure that this exam is the product of my own work, that I will not make use of

unauthorized resources or collaborate with any other student."

(signature) _________________________________

2. Please write your name, GU ID # (9 digits), and seat carefully and legibly at the top of this

page.

3. IMPORTANT: Please fill out a ParScore sheet follows.

Under “ID NUMBER” fill out your GU ID # (9 digits) number and corresponding

bubbles, right-justified.

Write your name and shade the appropriate bubbles.

Under “CODE” enter “AA” for the 12:30 exam, “BB” for the 2pm exam.

Under “TEST FORM” shade in the letter corresponding to the Version at the top

right of this page.

Under “SUBJ Score” fill in the number at the top left of this page.

4. You have 1 hour to complete the exam, which consists of

TA Use Only.....

I. 6 short-answer questions (30 points)

II. 15 multiple-choice questions (30 points)

The exam is worth 60 points, so allocate your time

accordingly.

Page 2 ________

Page 3 ________

Page 4 ________

Page 5 ________

Part I total ______/30

5. You may refer to one 3x5 card with your written notes and use a calculator, but you may

not use any other notes or references.

6. If you have a question during the exam, stay seated and raise your hand.

7. When you are done: If there are fewer than 10 minutes left in the exam period, please

wait patiently and quietly until the exam period is over. If you have finished more than

10 minutes early, you may quietly bring this exam booklet to the place indicated by the

instructors.

Read the questions carefully. I have tried to be clear. Good luck.

Version A: Page 2 of 10

BONUS: 5 easy extra points.

Make sure you have completed the instructions on the front page completely and

accurately.

Part I: [30 points out of 60 total].

1. [3 pts] A small town has five (5) taxi cabs. Each of the taxi cabs has an identical supply

curve as follows:

qiS = 2×P – 20

The town has 100 potential tax customers. Each of the customers has demand as follows:

qiD = 2 – 0.05×P

What is the equilibrium quantity of taxi rides in the town? Q*= _______________

2. [3 pts] A farmer produces two crops: Sheep and

Flowers. The flowers grow in the soil, and the sheep

graze on the land. The problem is, sheep eat the

flowers and become sick. Sheep are bad for flowers,

and flowers are bad for sheep.

On the axes, sketch what you think the farmer's PPF

might look like.

[Be clear and careful. Neatness counts.]

Flowers

Sheep

0

0

Version A: Page 3 of 10

3. [10 pts] For this problem, do not worry if prices and quantities are not "realistic." Suppose

that the market for photocopies in Washington DC is perfectly competitive, and is given by

the following equations:

QD = 72 − P QS = 5P

where QD is the daily demand for copies in DC and QS is the total supply curve of all

copy stores together in DC.

a) What is the equilibrium price and quantity of copies in DC?

P*=__________ Q*=__________

Now, consider the cost schedule for Kinky's Kopies, a typical copy store in DC:

TC = 2q2 + 18 MC = 4q

where q (lower-case q) is the number of copies made by the single store.

b) What is Kinky's fixed cost? _______________

c) Assuming Kinky's behaves as a profit maximizing firm in a perfectly competitive

market, how many copies will it produce?

_______________

d) What is the total revenue of Kinky's ? __________________

e) What is the total cost for Kinky's? __________________

f) What is Kinky's average total cost (ATC) and marginal cost (MC)?

ATC =______________ MC =________________

g) What is the profit of Kinky's? __________________

h) If all of the other copy stores in this perfectly competitive market in DC have

identical cost curves and behave exactly like Kinky's Kopies, how many copy

stores will there be in long-run equilibrium?

_________________

## Document Summary

Until the instructor tells you to do so. Please read and sign the following statement: "in keeping with the georgetown honor. System, i assure that this exam is the product of my own work, that i will not make use of unauthorized resources or collaborate with any other student. " (signature) _________________________________ Please write your name, gu id # (9 digits), and seat carefully and legibly at the top of this page. Important: please fill out a parscore sheet follows. Under id number fill out your gu id # (9 digits) number and corresponding bubbles, right-justified. Write your name and shade the appropriate bubbles. Under code enter aa for the 12:30 exam, bb for the 2pm exam. Under test form shade in the letter corresponding to the version at the top right of this page. Under subj score fill in the number at the top left of this page. You have 1 hour to complete the exam, which consists of.