midterm-f01 - Department of Economics University of...

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Econ 121 Fall 2001 Page 1 Midterm Exam Department of Economics Fall 2001 University of California Woroch/Lopez/Pinsonneault Economics 121 MIDTERM EXAM GENERAL INSTRUCTIONS : Write your name and your TA’s name on the front cover of each of TWO BLUE BOOKS. The exam has 3 parts. Put Part I and Question II.1 in one blue book, and Question II.2 and Part III in a second. The exam is worth 100 points. Point assignments are given in the instructions for each part. Check your calculations on scratch paper but be certain to put all of your answers in the bluebooks . I. TRUE or FALSE or UNCERTAIN and EXPLAIN : For each of the following 4 statements, decide whether each is true or false or uncertain, and then explain the reasoning behind your answer in a few sentences; if appropriate, provide a diagram. Each question is worth 7 points for a total of 28 points. 1. The two-product cost function C(q 1 , q 2 ) = 100 + q 1 + q 2 + q 1 q 2 exhibits falling ray average cost when two units of q 2 are produced for each unit of q 1 . 2. In an industry composed of two equal-sized firms, if a new firm enters at the same time that the two incumbent firms merge, the change in the HHI will indicate that the industry is more concentrated. 3. An airline may find it profitable to offer an “express service” that allows a passenger paying an
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midterm-f01 - Department of Economics University of...

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