ECON 102 Midterm: ECON 102 Exam 1 Winter 2005 sOLUTIONS

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turquoisegnu128

31 Jan 2019

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ECON 102 Full Course Notes

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Part i: multiple choice: (26 questions, 3 pts each = 78 pts) Pick the best answer among the given choices: e, b, a, e, c, b, d, d, d, c, d, a, d, a, c, e, a, b, b, b, d, c, a, a, c, b. Write a solution to each of the following problems: kristen gets a two year job offer from ugg manufacturing company in australia. Her perspective employer offers the following two salary options: Option #1: ,000 paid at the end of year 1 and ,000 paid at the end of year 2. She tells you that the global interest rate is set at 10%. Defend your answer by showing all of your work. (4 points) In order to answer this question, one needs to calculate the net present value (npv) of each of the two salary options: Option #1: [5,000/1. 1] + [10,000/(1. 1)^2] = 4,545 + 8,264 = ,809.

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QUESTION 17

[Table 2] This firm will maximize its profit if it produces at the point when:

	a.	Profit is maximized.
	b.	Total revenue is maximized.
	c.	Total Cost is minimized.
	d.	All of the above
	e.	None of the above

4 points

QUESTION 18

[Table 2] This firm will maximize its profit if it produces at the point when:

	a.	Profit is maximized.
	b.	Marginal cost is equal to marginal revenue
	c.	Firm cannot be better off by producing more or less quantity
	d.	A quantity of 13 units
	e.	All of the above

4 points

QUESTION 19

[Table 2] This firm will maximize its profit if it produces the following quantity:

Table 2

-1	-2	-3	-4	-5	-6	-7
	Quantity Sold	Marginal Revenue	Marginal	Total	Total	Profit
Price	Quantity Sold	Marginal Revenue	Cost	Cost	Revenue
$10	10			80	$100	$20
$10	11	(A)	8	88	$110	$22
$10	12	(B)	(E)	97	(G)	(I)
$10	13	(C)	(F)	107	(H)	(J)
$10	14	(D)	11	118	$140	$22

	a.	$9
	b.	$10
	c.	$11
	d.	$13
	e.	$14

4 points

QUESTION 20

[Table 2] If price increases from $10 to $11, this firm will maximize its profit if it produces the following quantity:

Table 2

-1	-2	-3	-4	-5	-6	-7
	Quantity Sold	Marginal Revenue	Marginal	Total	Total	Profit
Price	Quantity Sold	Marginal Revenue	Cost	Cost	Revenue
$10	10			80	$100	$20
$10	11	(A)	8	88	$110	$22
$10	12	(B)	(E)	97	(G)	(I)
$10	13	(C)	(F)	107	(H)	(J)
$10	14	(D)	11	118	$140	$22

	a.	$9
	b.	$10
	c.	$11
	d.	$12
	e.	$14

4 points

QUESTION 21

A perfectly competitive firm should increase its level of production as long as

	a.	total revenue is less than total cost.
	b.	the total revenue curve is rising.
	c.	marginal revenue is greater than marginal cost.
	d.	the marginal revenue curve is rising.

silverbeaver496

The Demand for soft drink (in cans per capita per year) is estimated as Log Q = a + b log P+ c log I + d log T

where Q = Soft drink consumption in cans per capita per year

P = 6-pack price

I = Income Per capita

T = Mean temperature across the 48 contiguous states in the United States

Soft Drink Demand Data:
	cans/capita/yr	6 pack price	income/capita	mean temp
	Q	P	I	T
Alabama	200	2.19	13	66
Arizona	150	1.99	17	62
Arkansas	237	1.93	11	63
California	135	2.59	25	56
Colorado	121	2.29	19	52
Connecticut	118	2.49	27	50
Delaware	217	1.99	28	52
Florida	242	2.29	18	72
Georgia	295	1.89	14	64
Idaho	85	2.39	16	46
Illinois	114	2.35	24	52
Indiana	184	2.19	20	52
Iowa	104	2.21	16	50
Kansas	143	2.17	17	56
Kentucky	230	2.05	13	56
Louisiana	269	1.97	15	69
Maine	111	2.19	16	41
Maryland	217	2.11	21	54
Massachusetts	114	2.29	22	47
Michigan	108	2.25	21	47
Minnesota	108	2.31	18	41
Mississippi	248	1.98	10	65
Missouri	203	1.94	19	57
Montana	77	2.31	19	44
Nebraska	97	2.28	16	49
Nevada	166	2.19	24	48
New Hampshire	177	2.27	18	35
New Jersey	143	2.31	24	54
New Mexico	157	2.17	15	56
New York	111	2.43	25	48
North Carolina	330	1.89	13	59
North Dakota	63	2.33	14	39
Ohio	165	2.21	22	51
Oklahoma	184	2.19	16	82
Oregon	68	2.25	19	51
Pennsylvania	121	2.31	20	50
Rhode Island	138	2.23	20	50
South Carolina	237	1.93	12	65
South Dakota	95	2.34	13	45
Tennessee	236	2.19	13	60
Texas	222	2.08	17	69
Utah	100	2.37	16	50
Vermont	64	2.36	16	44
Virginia	270	2.04	16	58
Washington	77	2.19	20	49
West Virginia	144	2.11	15	55
Wisconsin	97	2.38	19	46
Wyoming	102	2.31	19	46

( Data in Excel have been saved in the folder of Exam I on weekly study materials

In order to receive full points, you need to show me in details how to get your answers. )

1) What is regression equation using multiple linear regression model?

How would you interpret the coefficients of each independent variable in the model? (5 points)

2) What is price elasticity of demand ? How would you interpret it? (5 points)

3) The approximate percentage increase or decrease in demand if 6-pack price percentage increases by 3%.

****MUST SHOW ALL WORK

emeraldsnake786

13. If the price of X is set at $24.00 per unit, the number of units of X purchased by this consumer each month will be: A) 1 B) 2 C) 3 D) 4 E) 5 F) 6 G) 7 H)8 1) 9 J) 10 K) 12 L) 14 M) 16 N) 18 0) 20 P) 22 Q) 24 R) 26 S) 28 T) 30 U) 36 V) 40 W) 44 X) 52 Y) 56 Z) none of the above

ECON 102 Midterm: ECON 102 Exam 1 Winter 2005 sOLUTIONS

ECON 102 Full Course Notes

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