FinalS07s - Econ 101 Final Exam Alan C Marco Spring 2007...

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Econ 101 Final Exam Alan C. Marco Spring 2007 Baseline [10] 1. [+] Assume that co/ee is supplied competitively. If the price of tea rises sharply, explain what will happen to the co/ee market in the short run and in the long run. S-R: Demand shifts right, P and Q increase. Q up and P down. 2. [+] Show the deadweight loss from a binding price ceiling. Label consumer surplus and producer surplus. Tell a story [10] Tell me a story about how the following situations may come about in a perfectly competitive market. 3. In the short run, price and quantity decrease. In the long run, there is a recovery in price, but quantity continues to decrease. Demand shifts left. P and Q go down. & < 0 : Firms exit. S shifts left. P up and Q down. 4. In a particular competitive market, we observe a long run expansion of the size of the market, but a shift towards AC goes down, so long run supply shifts down, Q " p # mc stay the same, but ac slide down. So, in long run equilibrium, q # T/F Explain [10] State whether the following statements are true or false, and explain your reasoning. 5. monopolists. TRUE. Negative externalities lead to too much of a good being produced. But, monopolies create a negative quantity distortion.
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FinalS07s - Econ 101 Final Exam Alan C Marco Spring 2007...

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