You should read this note before attempting the practice questions for
Exam 1 (FALL 2018)
• Exam 1 will happen on Thursday, Week 5 (October 25th at 7pm). Your rooms will be announced on
Monday 22nd of October. Because the exam happens in the evening, we won’t have lecture on
Thursday October 25th at 9.30 am.
• Exam 1 will follow a very similar format to past exams: expect a total of 6 different problems,
including short definitions/multiple-choice questions and medium/longer problems.
• We have uploaded a collection of past exams for you to practice
• Exam 1 will cover the following lectures
o L1: introduction
o L2: demand, supply and market equilibrium
o L3: market shocks & movements along the line
o L4: regulation and price interventions; equity vs efficiency
o L5: elasticity
o L6, L7: Theory of the Firm (short run and long run)
à If you look at the folder “Exams/Past Exams/Past – Exam 1”, the practice exam for the Spring 2018
(most recent one) didn’t have any question on the Theory of the Firm, but you should still study it because
it is fair game for Exam 1 this Fall 2018. The Theory of the Firm will be on your first midterm. This is a
change from previous quarters that we have implemented following the requests of many students who
wanted more topics to appear on midterm #1 as opposed to midterm #2. We are hoping to achieve a
more balanced distribution of the topics that are tested on each midterm. To get practice questions on the
Theory of the Firm, you will have to look at “Exams/Past Exams/Past – Exam 2”.
à PSETs 1, 2 and 3 cover Lectures L1 to L7
à Discussion sections S1 to S4 all have problems and additional extra problems related to the topics that
will be tested in the exam
à A note on the exams & mastery: some students complain that the exam questions do not look like the
ones from past exams, lecture, the textbook, the problem sets or discussion sections. This is a college-
level class: we don’t want you to simply regurgitate the material. We want to test whether you have a
good understanding of the models and concepts. Are you able to apply the models and concepts we
taught you to new settings and scenarios? If so, then you have a good mastery. Mastery is often seen as
the ability to apply what you've learned to new situations or to solve new kinds of problems. In exams, we
are not going to copy past questions and simply change the parameter values.
à Recommendation: if you are going to tackle the practice exams, I recommend you replicate the exam
conditions. You should time yourself and be in a low-noise, low-distraction environment (by all means set
your cellphone aside).
• Please plan to arrive ahead of the start time. We want to make sure we start on time! You will be seated
by alphabetical order and you will each have a unique exam copy with student specific barcodes
and a label with your name. You will be assigned a seat in advance (released on October 22nd).
• I recommend you bring pencil(s), eraser, ruler and pen. The exams will be scanned right after in black
and white (do not use any fluorescent color, it won't show in the scan).
• Always show your work. If you write an answer that says that “the price is $20” but we don’t see how
you got to that answer (prices can’t fall from the skies, hello), we won’t give you any credit for it.
• If you are not familiar with the standards of academic integrity at NU, please read them carefully:
• When you get the exam, spend 2 minutes identifying the exercises you feel more comfortable with.
Start with those! It will help to build up some confidence and you will make sure you answer the
questions you know well. Just because we present the exercises in a particular order doesn't mean
you have to follow it. If you start with an exercise that you feel comfortable with, you will build up the
confidence needed to ace the rest of the test.
• Allocate your time wisely during exams: exams are out of 100 points. The point allocation can help
you determine how much time to spend on a particular exercise. Rule of thumb: if you get 100
minutes to complete the exam, you should spend 100 min / 100 points = 1 minutes per point. Thus,
an exercise that is worth 10 points should get 10 minutes of your time. If you overspend time in a
particular exercise, this has a high opportunity cost: you will be rushing and likely giving up points
later on another exercise. The exam is meant to be completed in 80 minutes (the duration of a
standard lecture) but because you are going to take it in the evening you will get extra time.
• You won't be allowed to use a calculator. We always try to give you nice numbers to work with.
Developing your numeracy skills is one of the learning goals of this class.
• You won't be allowed to leave the exam room to go to the restroom. Please plan to use the
• Okay: WildCard, water bottles.
• Not okay: brimmed caps, calculators.
• Bags in either side of room, near the front.
• Once you get exam, please no last-minute studying at your desk. Do not keep your notes at your desk,
leave them inside your bags.
• Any phone makes noise during exam? Minus one for you!
• Start when instructed only à starting ahead of the rest of your classmates when you haven’t been
instructed to do so is considered a violation of academic integrity by NU (you are trying to obtain an
If you have a question during the exam, we will hand you a piece of paper where you can write your
question. It will look like this: