BA_315_Midterm_Spring_04

BA_315_Midterm_Spring_04 - BA 315: Midterm Exam Spring 2004...

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1 BA 315: Midterm Exam Student Name:______________ Spring 2004 HW Team #:________________ Lundquist College of Business University of Oregon Ali Emami This exam has five parts. Part A consists of general multiple choice questions ( 51 points), Part B: One problem on the analysis of perfect competition in both short-run and long-run (25 points). Part C: one problem on monopoly and perfect competition pricing (20 points). Part D: one problem on accounting costs, economic costs, and normal profit (4 points). Part E: one extra credit question on U.S. current economic indicators (12 points). Please provide mathematical, graphical, or intuitive support for questions marked with (*). Correct answers without such support will receive any credit. Part A: General Multiple Choice Questions (3 Points Each, total 51 points) *1. Suppose the local government decides to reduce traffic congestion on a bridge by imposing a toll. The toll will be most effective if the price elasticity of demand for the bridge is: A) Inelastic. B) Elastic. C) Unitary. D) Either unitary or inelastic. *2. If the price elasticity of demand is 1.5, and a firm raises its price by 20 percent, the quantity sold by the firm will, ceteris paribus : A) Rise by 13.3 percent. B) Fall by 13.3 percent. C) Fall by 30.0 percent. D) Rise by 30.0 percent. 3. When a firm raises the price of its product, total revenue will: A) Always increase because the firm will receive more revenue per unit sold. B) Always decrease because the firm will sell fewer units. C) Increase if the price elasticity of demand is inelastic. D) Increase if the price elasticity of demand is elastic. 4. A university's football games usually bring larger crowds than its stadium can seat. By which of the following means can the university reduce the size of the crowd and simultaneously earn more revenue to finance a new stadium? A) By raising ticket prices when demand for tickets is inelastic. B) By raising ticket prices when demand for tickets is elastic. C) By lowering ticket prices when demand for tickets is inelastic. D) By lowering ticket prices when demand for tickets is elastic. *5. If the price elasticity of demand for Baja Fresh tacos is 3.5, then Baja Fresh can: A) Reduce the price of tacos by 35 percent and total revenue will remain the same.
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BA_315_Midterm_Spring_04 - BA 315: Midterm Exam Spring 2004...

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