final_sp06 - Final Economics 304K: Principles of...

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1 Final Economics 304K: Principles of Microeconomics Prof. Meg Ledyard Spring 2006 3 hours Name: _____________________ UTEID: _____________________ You have 3 hours for the exam. There are a total of 180 points. This gives you one min per point. You may NOT use calculators or other aids. You may leave any fractions un-simplified. Please show all of your work on the following pages. If you need more space, please use the back. Properly label all graphs. You should have 17 pages including this one. Please count them to be sure. Have a good summer!!!!
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2 Question 1: Definitions(9 points; 3 pts each word) Define 3 of these. If you answer more than 3, I will grade them all, and give you the LOWEST 3 scores. a. Excludability b. World Price c. Tradable permits d. Free Rider
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3 Question 2 (13 points) Jeremy and John are trapped on a desert island. Only two production possibilities exist on the island, wedding toasts and divorce counseling. The table below shows the time required to produce one unit of each good for each person: Wedding Toast Divorce Counseling Jeremy 20 min 10 min John 16 min 4 min a. (7 points) Calculate their opportunity costs and fill in the table below with your answers: Opportunity Cost of: Wedding Toasts Divorce Counseling Jeremy John c. (3 points) Who has a absolute advantage in Wedding Toasts? Why (what numbers did you compare?)? d. (3 points) Who has comparative advantage in Wedding Toasts? Why (what numbers did you compare)?
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4 Question 3(15 points) Consider the perfectly competitive market for granola bars. a. (5 points) Sketch a demand/supply diagram for the market for granola bars. Label the equilibrium price and quantity as P*, Q* on your diagram. b. (5 points) You study survey data and observe that if the price of cookies is equal to $2 then 400 granola bars are demanded and 300 cookies are demanded, while if price of cookies is $4 then 200 granola bars are demanded, and 200 cookies are demanded. Calculate the Cross price Elasticity of Demand of granola bars for cookies. (you do not need
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This note was uploaded on 06/08/2008 for the course ECON 304K taught by Professor Ledyard during the Spring '08 term at University of Texas at Austin.

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final_sp06 - Final Economics 304K: Principles of...

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