Econ_1_Final_F04_Exam

# Econ_1_Final_F04_Exam - DARTMOUTH COLLEGE ECONOMICS 1:...

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D ARTMOUTH C OLLEGE P ROFESSOR J ESSE G IUMMO E CONOMICS 1: P RICE S YSTEM F INAL E XAM F ALL 2004: 140 POINTS Name_______________________ Instructions : You will have 3 hours to complete this exam. This exam is worth 140 points. There are 25 multiple-choice questions worth a total of 50 points, and 5 essay questions worth a total of 90 points. P ART I: 25 M ULTIPLE -C HOICE Q UESTIONS (50 POINTS ) 1. If the supply of labor decreases, which of the following events will occur? a) The wage rate will fall and firms will increase employment up until the point where MRP equals the new wage rate. b) The wage rate will fall and firms will decrease employment to the point where MRP equals the new wage rate. c) The wage rate will increase and firms will decrease employment to the point where MRP equals the new wage rate. d) The wage rate will increase and firms will increase employment up until the point where MRP equals the new wage rate. 2. Hanover Potato Chips is a perfectly competitive firm currently employing 30 workers. The marginal revenue product of the 30 th worker is \$7.00 per hour. The wage rate is \$8.00 per hour. To increase profits, this firm should a) decrease employment until the MRP of labor equals \$8.00 b) increase employment until MRP of labor equals \$8.00 c) continue hiring 30 workers because the firm earns a surplus of \$1.00 on each worker. d) increase the price of potato chips so the marginal revenue product increases to \$8.00 per hour. 3. If a firm could increase profits by hiring less labor and more capital, then a) the last dollar spent on labor must yield a smaller increase in output than the last dollar spent of capital. b) the last dollar spent of labor must yield a larger increase in output than the last dollar spent on capital. c) the price of labor exceeds the price of capital d) the optimal production technique must be capital intensive. 4. The Package store hires workers to wrap packages. The store sells this service for \$5. The marginal revenue product of the store 5 th worker is \$50. The marginal product of the 5 th worker is a) 0.1 packages b) 1 package c) 10 packages d) indeterminate from this information

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D ARTMOUTH C OLLEGE P ROFESSOR J ESSE G IUMMO E CONOMICS 1: P RICE S YSTEM 5. Assume that automobiles are a normal good. An increase in income will a) shift the marginal revenue product curve of autoworkers to the left. b) move a firm down the marginal revenue product curve of autoworkers. c) shift the marginal revenue product curve of autoworkers to the right. d) have no effect on the marginal revenue product of autoworkers. 6. When a monopolist perfectly price discriminates a) there is greater consumer surplus than if a single price is charged.
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## This note was uploaded on 10/30/2008 for the course ECON 001 taught by Professor Zarnowski during the Spring '08 term at Dartmouth.

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Econ_1_Final_F04_Exam - DARTMOUTH COLLEGE ECONOMICS 1:...

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