Final - Final Exam ECON 101 Summer I 2015 Name ONYEN PID...

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Final Exam ECON 101 Summer I 2015 Name: ONYEN: PID: Honor code signature: This exam consists of 50 multiple choice questions and 2 short answer questions. Extra paper for scratch work is attached. The total number of points available on this exam is 100 . Multiple Choice [1.5 pts each] Clearly circle the answer choice that best answers the question given. 1. Suppose a per unit tax of $.50 is imposed on buyers of Pepsi. As a result, the price buyers end up paying is $1.25 for each can. Moreover, the amount Pepsi-Cola receives for every can of Pepsi sold decreases by $.15. Given this, we can say that bore most of the tax burden and the equilibrium price of Pepsi before the tax was imposed was . (a) sellers; $.75 (b) buyers; $.90 (c) sellers; $.90 (d) buyers; $.75 2. Firms in monopolistically competitive markets are similar to monopolies in that they both and are similar to rms in perfectly competitive markets in that they both . 1
3. Suppose the supply curve of neck ties shifts such that the market price for neck ties decreases. Which of the following statements must be true? i. Producer surplus decreases due to the lower price of neck ties. ii. Consumer surplus increases as existing buyers in the market pay lower prices on the neck ties they were already willing to buy. iii. New buyers enter the market as a result of the price decrease and realize surplus. For questions 4-5, refer to Figure 1 below, which shows demand curves relating to some good A . Assume that good A is an inferior good. Quantity Price D1 D2 Y Z Figure 1: Demand for Good A 4. Suppose the cross-price elasticity between goods A and B is - 2 . 5 . All else equal, a decrease in the price of good B would cause a move from 5. All else equal, an increase in the price of good A would cause a move from (a) D2 to D1. (b) Y to Z. (c) Z to Y. (d) D1 to D2. 2
6. Suppose the CPI in 1990 using 1980 as the base year was 114, while the CPI in 1980 using 1975 as the base year was 105. If average salary of engineers in 1990 was $74,500 and they were equally as well o in terms of purchasing power as engineers were in 1980, then the average salary of engineers in 1980 must have been approximately 7. Refer to Figure 2. 14 0 2 4 6 8 10 12 50 0 5 10 15 20 25 30 35 40 45 Quantity Prices Supply Demand Social Value Curve Figure 2: A Market Externality If the quantity exchanged in the market increased from the 6 units to 8 units, then the total external bene t realized would increase by , while deadweight losses would decrease by .

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