Exam 2 FS15 339-2

# Exam 2 FS15 339-2 - Name Student MICROECONOMICS 1014-2 EXAM...

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Name:_____________________________ Student #___________________ MICROECONOMICS 1014-2 EXAM 2 10/21/2015 Dr. Parsons VERSION: 339 Please do not begin the exam until you are told to. You have 60 minutes to finish the exam. When the time is up do not write anything more on the scantron. On the scantron sheet, fill in NAME and STUDENT NO. Only pencil, erasers, both sides of one 8.5 x 11 cheat sheet, and a standard function calculator may be used on this exam. No other devices are allowed. You may not use the calculator on your cell phone. Fill all answers on your scantron. No answers will be accepted unless they have been filled into the scantron.

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1 Version: 339 TWAG!! 1. When there are many buyers and sellers of a good and the product sold is identical across firms,: 1) the industry demand curve is perfectly inelastic. 2) the industry demand curve is perfectly elastic. 3) the demand curve for each firm's output is perfectly inelastic. 4) the demand curve for each firm's output is perfectly elastic. 2. If consumers pay 100 percent of a commodity tax, what could one conclude? 1) Suppliers have more effective lobbying in Washington than consumers. 2) The commodity in question has a perfectly elastic demand curve. 3) The commodity in question has a perfectly elastic supply curve. 4) Neither side has a perfectly elastic curve but the supply side is more elastic than the demand side. Use the following to answer question 3. Figure: Market with External Cost 3. Suppose that the figure displays the demand and supply curves for dry cleaning, a service that creates pollution. The marginal external cost of dry cleaning is: 1) P 2 P 0 . 2) P 1 P 0 . 3) P 0 . 4) P 2 .
2 4. At a price ceiling of \$1 per loaf of bread, quantity supplied is 99 loaves, which is less than quantity demanded. What must be true for the 100th loaf of bread? 1) Consumers do not value the 100th loaf of bread. 2) Consumers value the 100th loaf of bread more than it costs producers to make it. 3) Consumers value the 100th loaf of bread at less than \$1.00. 4) The cost of producing the 100th loaf of bread is less than \$1.00. 5. As the price of a good fluctuates, a profit-maximizing firm will expand or contract production along its: 1) average cost curve. 2) marginal cost curve. 3) average product curve. 4) marginal product curve. Use the following to answer question 6. Figure: Two-Firm Industry 6. (Figure: Two-Firm Industry) Refer to the figures. At a market price of \$25, the total quantity supplied in the industry is: 1) 32 units. 2) 25 units. 3) 15 units. 4) 45 units.

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3 7. If a \$2 tax on cigarettes causes no deadweight loss then: 1) either demand or supply is perfectly inelastic. 2) it must generate no tax revenue. 3) tax revenues will be more than the amount of the lost consumer and producer surplus. 4) either demand or supply is perfectly elastic. 8. Brazil is the world's largest sugar cane producer and sugar cane can be used for producing sugar and the fuel ethanol for automobiles. Which sequence of events is correct?
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