Exam_2_SP16_140_S2 - Name Student MICROECONOMICS 1014-02...

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Name:_____________________________ Student #___________________ MICROECONOMICS 1014-02 EXAM 2 3/16/2016 Dr. Parsons VERSION: 140 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: 140 TWAG!! 1. The iconic blue-and-white Chinese porcelain sold to people all over the world (particularly between the fourteenth and the sixteenth centuries) was so successful, entrepreneurs in Persia, Netherlands, Syria, Iberia, Mexico, and many other areas attempted to copy it. The actual process for creating such high-quality ceramics was kept secret, but in 1708 a German alchemist finally found a way to replicate the ancient art. What do you expect happened to the price of porcelain after 1708, and why? 1) It should have fallen because of the increased competition. 2) It should have fallen because of the lower cost to create Chinese-style porcelain. 3) It should have risen because of the greater difficulty in keeping the method a secret. 4) It should not have changed at all because demand and supply will react accordingly. 2. Suppose that a monopolist can sell five units of output at a price of $5 or six units of output at a price of $4. What is the marginal revenue of the sixth unit? 1) $24 2) $49 3) –$1 4) $4
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2 Use the following to answer questions 3-4. Figure: Tax Imposed on Sellers 3. (Figure: Tax Imposed on Sellers) Which of the following statements is true? 1) Buyers and sellers share the same tax burden. 2) Buyers bear more of the tax burden. 3) Sellers bear more of the tax burden. 4) There is not enough information to determine who pays more of the tax burden. 4. (Figure: Tax Imposed on Sellers) According to the figure, the price that buyers pay AFTER the tax is imposed is: 1) $5. 2) $4.40. 3) $4. 4) $3.40.
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3 Use the following to answer question 5. Figure: Government Price Controls 5. (Figure: Government Price Controls) Refer to the figure. The government enacts a price control causing a shortage of 15 units of the good. Therefore, the ________ is set at ________. 1) price floor; $31 2) price floor; $10 3) price ceiling; $10 4) price ceiling; $17 6. In a competitive industry, entry and exit decisions: 1) allow some firms to earn above-normal profits in the long run. 2) ensure that labor and capital move across industries to optimally balance production. 3) rely on demand signals, not price signals.
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