practice final exam 101 W2008

practice final exam 101 W2008 - Name_ Chad Hogan PRACTICE...

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Name___________________________ Chad Hogan Winter 2008 PRACTICE Final Exam Economics 101 The University of Michigan NOTES: 1. The actual exam will share the same format as this practice exam. 2. For each question, a correct answer is worth 5 points, no answer is worth 1 point, and an incorrect answer is worth 0 points. 3. Given that the exam has 30 questions, the maximum possible score is 150. 4. 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). 5. The use of calculators, cell phones, personal digital audio players, or any other electronic devices will not be permitted during the exam. 6. Have your UMID with you at all times during the exam. 7. 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.
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1. ___Suppose Wisconsin produces both cheddar and mozzarella cheeses. The marginal pound of cheddar cheese produced in Wisconsin has an opportunity cost of 2 pounds of mozzarella production. For Wisconsin consumers, the marginal pound of mozzarella is as valuable as 2/3 of a pound of cheddar, while in Illinois the marginal pound of mozzarella is valued at one pound of cheddar. From this information we know that (a) Wisconsin produces an efficient quantity of mozzarella; (b) it would be more efficient if Wisconsin were to produce an additional pound of cheddar, as long as that cheddar is consumed in Wisconsin; (c) it would be more efficient if Wisconsin were to produce an additional pound of cheddar, regardless of whether that cheddar is consumed in Wisconsin or Illinois; (d) it would be more efficient if Wisconsin were to produce an additional pound of mozzarella, as long as that mozzarella is consumed in Wisconsin; (e) it would be more efficient if Wisconsin were to produce an additional pound of mozzarella, regardless of whether that pound of mozzarella is consumed in Wisconsin or Illinois. 2. ___While the overwhelming majority of electricity in the US is produced by coal-burning, nuclear and hydroelectric generators, a small fraction of generators use wind turbines. In much of the US, all of these generators sell their electricity to firms that manage local distribution networks. The electricity distributors don’t care how their electricity is generated: they will simply purchase from the cheapest source. Suppose that the wind turbine generators form a competitive market (i.e. all are small, price takers), and that this market is so small that it has no impact on the prices of electricity produced by other types of generators. If the federal government were to offer a production subsidy of $0.05 per kilowatt hour to generators using wind turbines, we would anticipate that the price local electricity distributors pay to
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This test prep was uploaded on 04/21/2008 for the course ECON 101 taught by Professor Gerson during the Winter '08 term at University of Michigan.

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practice final exam 101 W2008 - Name_ Chad Hogan PRACTICE...

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