Practice Midterm Exam 2

Practice Midterm Exam 2 - page 1 of 6 Economics 2 Winter...

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page 1 of 6 Economics 2 your name _______________________________ Winter 2007 your TA’s name __________________________ day and time of your discussion section ________ PRACTICE SECOND EXAM DIRECTIONS: No calculators, books, or notes of any kind are allowed. All papers and notebooks must remain closed and on the floor at all times throughout the exam, and students are not allowed to leave the examination room until finished. Answer all questions in the space provided with the exam. HINTS: Feel free to use the following formula if you find it useful. Area of a triangle = (1/2) (base) (height) PART I: MULTIPLE CHOICE—circle the correct answer (4 points each, 68 points total) 1.) Which of the following is the least appropriate example of a natural monopoly? a.) electricity distribution b.) natural gas distribution c.) urban rail system d.) taxi service 2.) The key problem a regulator faces in choosing a price to allow a natural monopoly to charge is that at the socially optimal price, a.) the firm will necessarily lose money b.) the firm would earn monopoly profits c.) average cost will be less than marginal cost d.) the regulator has a hard time estimating the true value of the firm’s fixed costs 3.) Most economists believe that the primary effect of the Interstate Commerce Commission was a.) to prevent the trucking industry from operating as a successful cartel b.) to lower the price of trucking c.) to reduce the efficiency of the trucking industry d.) to promote more commerce between states 4.) Which of the following antitrust statutes was signed into law over a century ago? a.) Sherman Act b.) Clayton Act c.) Celler-Kefauver Act d.) none of the above 5.) Under the original antitrust legislation a.) the courts ruled that both Standard Oil and U.S. Steel had to be broken up b.) the courts ruled that neither Standard Oil nor U.S. Steel had to be broken up c.) the courts ruled that Standard Oil but not U.S. Steel had to be broken up d.) the courts ruled that U.S. Steel but not Standard Oil had to be broken up
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page 2 of 6 6.) The Coase Theorem suggests that the solution to the externality between beekeepers and the
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This note was uploaded on 03/21/2009 for the course ECON 2 taught by Professor Kim during the Spring '08 term at UCSD.

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Practice Midterm Exam 2 - page 1 of 6 Economics 2 Winter...

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