Exam 2 v1 with Answers

Exam 2 v1 with Answers - v1 Name UMID Section Chad Hogan...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
v1 Name___________________________ UMID___________________________ Section___________________________ Chad Hogan Winter 2008 Second Exam Economics 101 The University of Michigan NOTES: 1. For each question, a correct answer is worth 5 points, no answer is worth 1 point, and an incorrect answer is worth 0 points. 2. Given that the exam has 30 questions, the maximum possible score is 150. 3. Given that each question has 5 possible answers, a wild guess will earn 1 point on average, the same number of points earned by providing no answer. Guessing only gives you a better return than leaving the question unanswered if you can eliminate at least one answer (in which case a guess will earn more than 1 point on average). 4. The use of calculators, cell phones, personal digital audio players, or any other electronic devices will not be permitted during the exam. 5. Have your UMID with you at all times during the exam. 6. In order for your scantron to be correctly graded, YOU MUST FILL IN THE VERSION NUMBER OF YOUR EXAM ON YOUR SCANTRON (the version number is in the upper left corner of this page). 7. When you are done with the exam, you will turn in this page (with name, UMID, and section number filled in) along with your scantron. 8. Unless a question explicitly notes otherwise, assume that all supply and marginal cost curves slope upward and that all demand and marginal value curves slope downward.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
1. ___The speed of broadband internet cable services is dependent on the number of users of the network. If there are many users, then the cable network becomes congested and the service slows down. This suggests that: (a) customers will tend to avoid broadband internet cable services, and the cable network will be underutilized; (b) in order to encourage efficient use of the cable network, a customer should be offered a subsidy to compensate for the congestion costs she suffers; (c) in order to encourage efficient use of the cable network, a customer should have to pay for the congestion costs she imposes on others, in addition to the costs of providing the service to her house; (d) if customers pay any fees that are positively related to use of the cable network, it will result in inefficiently low provision of the service; (e) we wish to have as many people using the cable network as possible, since it is always optimal to increase the size of a network to take advantage of the network externalities. 2. ___The estimated demand function for ramen noodles is Q d = 5 Pop – 25 P – 10 Y + 2.5 P m where P is the price of the noodles, P m is the price of a box of macaroni-and-cheese, Y is median income (in thousands of dollars/month) and Pop is population (in hundreds of thousands). If the population is 2 million people, median income is $3,000/month, the price of a box of macaroni-and-cheese is $2 and the price of ramen noodles is $1, then the: (a) elasticity of demand with respect to population is 2 and the elasticity of demand with respect to income is -0.6;
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 17

Exam 2 v1 with Answers - v1 Name UMID Section Chad Hogan...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online