Econ_1_Final_F04_Exam

# Econ_1_Final_F04_Exam - DARTMOUTH COLLEGE ECONOMICS 1 PRICE...

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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 3. If a firm could increase profits by hiring less labor and more capital, then 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
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