ECON 001 Georgetown Test102013A

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Published on 15 Feb 2019
School
Georgetown University
Department
Economics
Course
ECON-001
Professor
SUBJ SCORE #_____________ Version A: Page 1 of 9
Economics 001 NAME _____________________
Professor Levinson GU ID # (9 digits) ________________
Midterm #1 Seat _____________________
12:30 pm October 2, 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. 5 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.
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Version A: Page 2 of 9
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. [6pts] The island of Columbia has two types of businesses (sectors) that employ low-skill,
low-wage labor: Type "A" and Type "B". The supply and demand curves for labor in both
sectors are depicted below. Workers can easily switch sectors, market wages in both sectors
are the same, and both A and B sectors have about the same total employment.
Some well-meaning people in Columbia propose a minimum wage that applies only to
Type A businesses. The Island Council passes the ordinance, and Mayor Gray (no
relation) signs it into law.
a) Indicate on the graph the new amount of labor working in Type A businesses.
b) For Sector A, shade in and label on the graph the deadweight loss from the minimum
wage.
c) What happens to the Sector B labor market? Shift the demand or supply curves
accordingly.
d) Does employment in Type B rise, fall, or not change relative toLB*? _________
e) Does the wage in Type B rise, fall, or not change relative to wB*? _________
f) For Sector B, is there a deadweight loss from the law? If so, shade it in and label it
on the graph. If not, write "none" here: ___________
wA
LA
DL SL
Sector A
LA*
wA*
w
B
LB
DL SL
Sector B
LB*
wB*
min wage
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Version A: Page 3 of 9
2. [5 points] Suppose that you are a farmer choosing whether to plant wheat or corn on your
field. The table below gives your production possibilities.
Possiblefarmoutputperyear.
Wheat
(Thousandbushels)
Corn
(Thousandbushels)
15
10
5
0
0
10
17
22
a) In the axes below, sketch your Production Possibilities Frontier (PPF), putting
wheat on the bottom axis. Assume the PPF is linear between the four points in
the table. Label each intercept, each kink point, and each slope.
b) What is the approximate opportunity cost of producing one extra bushel of wheat,
when between 10 and 15 thousand bushels are being produced? (Be sure to
include the units in your answer.)
_____________
c) Suppose the market price of wheat is $1 per bushel, and corn is $5 per bushel. To
maximize revenues, how much wheat would you plan on growing?
_____________
Wheat
Corn
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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.